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Venture Capital “Secret” #10
• The purpose of your business plan is not
to get your company funded
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Venture Capital “Secret” #10
• The purpose of your business plan is not
to get your company funded
– The goal of your business plan is to
progress to a meeting
Typical Annual VC Deal “Funnel”
1,000 Plans Received
150 Companies Met
25 SeriousDue
Diligence
5-10 DealsDone
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Venture Capital “Secret” #9
• Start-up companies don’t get funded by
VC firms
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Venture Capital “Secret” #9
• Start-up companies don’t get funded by
VC firms
– Start-up companies get funded by partners
at VC firms
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Venture Capital “Secret” #8
• VCs are inherently lazy
(well, at least overworked)
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Venture Capital “Secret” #8
• VCs are inherently lazy
(well, at least overworked)
So it’s your job to make it easy for the VC
– Get a high-quality intro
– Develop a great executive summary
– Why is your proposal compelling?
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Venture Capital “Secret” #7
• Not everyone at a venture capital firm is
actually a venture capitalist (i.e., has
investment authority)
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Venture Capital “Secret” #7
• Not everyone at a venture capital firm is
actually a venture capitalist (i.e., has
investment authority)
Analyst Associate Principal Partner
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Venture Capital “Secret” #6
• VCs may not always be (totally) honest
with you
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Venture Capital “Secret” #6
• VCs may not always be (totally) honest
with you
Example 1: Does the VC firm currently have
capital available to invest?
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Venture Capital “Secret” #6
• VCs may not always be (totally) honest with
you
Example 1: Does the VC firm currently have
capital available to invest?• When did they raise their last fund?• When did they invest in their last new portfolio
company?
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Venture Capital “Secret” #5
• VCs may not always be (totally) honest
with you
Example 2: In what potentially competitive
companies has the VC firm already
invested?
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Venture Capital “Secret” #5
• VCs may not always be (totally) honest with you
Example 2: In what potentially competitive
companies has the VC firm already invested?• Which companies do you view as directly
competitive?• Most portfolio companies are listed on their
website!
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Venture Capital “Secret” #4
• VCs may not always be (totally) honest
with you
Example 3: The reason a VC passes on
your deal may not be exactly what they
tell you
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Venture Capital “Secret” #4
• VCs may not always be (totally) honest
with you
Example 3: The reason a VC passes on your
deal may not be exactly what they tell you• Nobody wants to burn bridges
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Venture Capital “Secret” #3
• The squeaky wheel really does get the
grease
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Venture Capital “Secret” #3
• The squeaky wheel really does get the
grease
Unless, of course, the VC learns to dread
the interaction• Be brief• Be pleasant• Be informative
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Venture Capital “Secret” #2
• You know more about your science… but
the VC knows more about venture capital
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Venture Capital “Secret” #2
• You know more about your science… but the VC
knows more about venture capital
• “I’ll give you your price… if you give me my terms”
– Liquidation preferences
– Dividends
– Redemptions
– Voting Features
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Venture Capital “Secret” #1
•VCs are not in the
investment business
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Venture Capital “Secret” #1
•VCs are not in the
investment business
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Venture Capital “Secret” #1
•VCs are not in the investment
business
– VCs are in the returns
business
