Fundraising

6 Effective Ways to Connect With Investors One of the first questions on a startup owner’s mind is how to find investors. Angel investors, grants, venture capital: all of it goes towards making sure that your business can grow and thrive. Finding funding is one of the most pressing concerns for a startup, especially a new company. And it can be difficult to know where to start. How to find investors to start a business will vary depending on the type of business you have, as well as the type of funding you’re looking to procure. You may need to change your strategies depending on your industry, the size of your business, and your business model. There are certain types of funding that are more useful depending on the type of business. Yet regardless of the type of business you have, there are specific things that your business will need to do to ready itself to procure investors. To find investors, you’ll need to have a clear and concise business plan, in addition to current financials. Your financial statements will need to be accurate and timely, as you have to show that your company is stable. Related Resource: 6 Helpful Networking Tips for Connecting With Investors Related Resource: How to Find Venture Capital to Fund Your Startup: 5 Methods Learn more about finding the right investors for your business below: 1) Use a Powerful Online Platform When searching for investors the best place to start is with the resources that are immediately available to you. Thankfully for startup founders, there is countless platforms, lists, and databases full of active startup investors. At Visible, we offer a free investor database, Visible Connect, with the data and information founders need to build out their fundraising pipeline. Give it a try here. Related Resource: How To Find Private Investors For Startups 2) Get Your Startup at a Networking Event After you’ve done some preliminary research, it is time to hit the ground running and get in front of the investors that you believe are the best fit for your business. One of the most common ways to find investors is by attending a networking event. Startup networking events have become very common and can be found in most major cities. Related Resource: Investor Relationship Management 101: How to Manage Your Startups Interactions with Investors Related Resource: 7 of the Best Online Communities for Investors 3) Reach Out to Friends and Family Members If you’ve determined that venture capital or particular investors might not be best for your business you can turn to friends and family (or angel investors). Approaching friends and family can be a delicate situation and needs to be treated thoughtfully. Learn more about raising capital from friends and family in our guide below: Related Resource: 7 Tips for Raising a Friends & Family Round 4) Network Online Using Social Media Startup investors are notorious for their use of Twitter and other social media platforms. Social media, especially Twitter, can be a powerful tool for a founder looking to find an introduction to an investor. If you find an investor you have on your target list is a frequent Twitter user, don’t be afraid to Tweet at them or reach out via direct message. 5) Utilize a Crowdfunding Platform As the startup space continues to grow so do the funding options available to startup funders. Over the past decade, crowdfunding has taken the funding world by storm. While it is not for every business, crowdfunding can be a valuable tool. Learn more about raising crowdfunding below: Related Resource: How to Raise Crowdfunding with Cheryl Campos of Republic 6) Apply for an Incubator Program As put by the team at Investopedia, “An incubator firm is an organization engaged in the business of fostering early-stage companies through the different developmental phases until the companies have sufficient financial, human, and physical resources to function on their own.” Incubators can be a valuable tool for startups looking to work through the early phases of building their business and model. Oftentimes, this comes with a built-in network of startup investors and opportunities to pitch them for future investment. How to Find Angel Investors How do you find angel investors? They may be closer than you think. Angel investors are usually your very first investors, and many of them come from your family and friends. An angel investor is simply an individual who has money to invest: they invest it directly through you. Often, angel investors are available even when you can’t get venture capital or a traditional bank loan. Angel investors have numerous advantages. They are less likely to have strict requirements. They are more likely to loan you affordable money — either at low interest rates, or for a small share in your business. While traditional investors often require that you have a proven business model and financial statements to match, angel investors simply need to believe in your business. When courting investors from family and friends, you’re working with those who already know you best. These are individuals who know that you’re trustworthy, that you are confident and capable, and that you have a solid business idea on your hands. Rather than having to prove yourself through business proposals and raw numbers, you can instead bank on their familiarity with yourself as an entrepreneur. If there are no prospective investors in your immediate family or friend group, you can begin networking with those you know. By letting the people you’re close to know that you’re in need of funding, you may be able to connect with a friend-of-a-friend or a more distant family member. This is an opportunity not only for you but for them. If you truly believe in your business, then you know that you’ll be able to pay the money back and more. And an angel investor doesn’t necessarily need to be someone you know. There are networks of angel investors online who are specifically looking for opportunities, though they may be more difficult to court than someone you have a prior existing relationship with. An angel investors network will connect you to a broad spectrum of investors, often who specialize in different types of business. If you cannot find angel investors, you may need to instead turn to venture capital or a bank. But this is going to take a lot more work. You may need to fund your business yourself until you can prove that it has revenue-generating potential, or you may need to grow slowly as you prove yourself capable of dealing with conventional credit lines and debt. Angel investors are by far the easiest way to aggressively grow your business, and they should be courted whenever possible. But because it relies upon knowing someone who has the cash to invest — or at least finding someone through someone you know — it can be a challenge. Related Resource: How To Write the Perfect Investor Update (Tips and Templates) How to Find Small Business Grants If you’re unable to find an angel investor, a small business grant may be a better solution. Small business grants are grants awarded to small business owners in specific locations, industries, or of particular demographics. These grants are intended to encourage the health of small businesses: a successful small business is often foundational to a local economy’s strength. Most small business grants have fairly specific restrictions. There are grants for rural businesses, technology-focused businesses, and innovative businesses. A business must often write a grant proposal which outlines why the business needs the grant, why they are worthy of the grant, and what they will do with the grant money. This is very much like a proposal for a loan. However, as long as the small business meets the terms of the grants, it doesn’t need to pay the grant money back: the grant money is gifted to the business to help it grow. Grant proposal writing is a fairly niche specialization, so many businesses (especially startups) may want to hire a grant writer to complete their proposal. There’s no limit to the number of grants a business can apply for; small business owners may want to apply for as many as they feel qualified for. Connect With More Investors With Visible Connecting with the right investors is crucial to funding success. In order to better help with your fundraise, we’ve got you covered. Related Resource: A Step-By-Step Guide for Building Your Investor Pipeline Find the right investors for your business with our investor database, Visible Connect. Add them directly to your fundraising pipelines in Visible, share your pitch deck, and send investor Updates along the way. Give Visible a free try for 14 days here.

Last week, we hosted a webinar on how to raise a Series A. In it, Zylo CEO & Co-Founder Eric Christopher and I shared tactics and advice on how to make sure your Series A raise is a successful one. If you made it, thanks! We had a great turnout of engaged audience members. If you weren’t able to make it, you can check out the recording below: Today, I want to share three key takeaways from the webinar, in the hopes that they might help you raise your next funding round. How to know if you’re ready to raise? Series A readiness is a difficult thing to pin down. So much depends on your specific situation: the industry you’re in, the product you’ve built, your business model. A good breakdown of specific numbers you should be hitting can be found here, but even that list isn’t universal. As a general rule, though, you’ll know you’re probably ready to raise your Series A when you have these three things: an engine, healthy metrics, and a compelling story to tell. “An engine” refers to a predictable engine for acquisition. Acquisition of what, exactly, will depend on your company; it could be users, customers, revenue, etc. The important thing is, do you have a predictable way to acquire more? Healthy metrics refers to three general patterns: accelerated growth, low churn, and efficient acquisition. If your metrics demonstrate all three of these things, you’ll be very attractive to potential investors. The third item is this: can you tell a compelling story? This is potentially the most important item of the three. Every investor wants to invest in a good story. If you can effectively communicate what you’ve done so far, then paint a clear picture of what the future will look like if you keep succeeding, you’re likely to have success with your raise. If an investor likes the sound of that future and they believe you can make it happen, they’ll invest. Before you raise, commitment is key If you think your company is ready to raise a Series A, the first thing you have to do is prepare yourself. You have a lot of hard work ahead of you. A Series A raise takes, on average, about 5.5 months to complete. That’s a lot of time where your focus will be outside of the day-to-day of your business. You’re also going to face a lot of rejection—the most common answer after pitching an investor, after all, is “no.” A CEO/Founder who is undertaking a Series A round needs to be fully prepared to do so—committed to seeing it through, confident in their pitch, and always working with a specific goal in mind. Before diving into your Series A raise, you need to make sure you’re prepared for what it means. Don’t forget about your current investors Your current investors can be absolutely essential in closing your Series A round—whether they participate in the round or not. If your current investors choose not to follow on—for whatever reason—they can still be a huge help to you as you raise your round. They can provide everything from pitch feedback to warm introductions to other investors who might be a better fit. These are just three takeaways from our webinar on raising your Series A round, but there’s plenty more content where that came from. Check out the recording below:

Y Combinator has funded over 1900 startups since their inception in 2005. In the process of funding those startups, YC receives thousands of investor updates on an annual basis. As Aaron Harris, Partner at YC, puts it, “At YC, we get lots of updates from our alums. There seems to be a correlation between quality and frequency of updates and the goodness of the company and founders.” Over the past year, we’ve had thousands of founders share Updates with their investors and other stakeholders. While investor updates come in all different shapes and sizes, we’ve found that most, if not all, include some form of the following: a quick recap of the last month, metrics and KPIs, and specific asks for your investors. To this point, Aaron Harris of YC suggests using the same components but has interesting thoughts about the order of these components what specific information should be shared. Metrics & KPIs Metrics and KPIs are included in almost every Update template we’ve seen come across our table. Including your key metrics with growth percentages is widely expected. Aaron Harris suggests sharing your KPIs and growth percentages first when reporting to your investors. Sharing high-level growth metrics and financial status metrics are what you are looking for here. Examples include revenue, cash in bank, and burn rates. No matter what you decide to share, make sure the metrics are defined and explained to your investors and repeated on a monthly basis. Targeted Asks Making targeted asks to your investors is arguably the most impactful part of an investor update. If engaged properly, investors are more than a source of capital. They have experience, advice, and networks you can leverage. Don’t be afraid to ask your investors help with closing deals, finding talent, and future fundraising. Regardless if you put asks first or second in order, Aaron recommends putting it as close to the top as possible to make sure your investors see it and can help where needed. Quick Recap Interestingly, Aaron suggests putting the qualitative recap of your month towards the bottom of your investor update. While we often see founders lead with a recap, ending with a recap will ensure that your investors see both your metrics and targeted asks. Make this as short as possible and be sure to only add things that are vital to your success. At the end of the day, investors are busy and you want to make sure they read your entire update. These are just a few elements to consider when deciding on the structure of your investor update. To see these elements in context or create an update yourself, check out our Y Combinator update template below. Check out an example of the Y Combinator Investor Update Here >>>

What is a Business Pitch Deck Overview A pitch deck is a vital part of a successful fundraise. Nurturing and constantly communicating with your investors and potential investors throughout the process can double your chances of raising follow-on funding. Founders and other startup leaders choose Visible for their investor reporting because we make it dead-simple to compose, distribute and track all of your updates in one place. Being able to quickly and effectively pitch your business or product is vital to raising capital, attracting talent, and closing customers. A pitch deck should tell a compelling story and give reason for outside stakeholders to invest their time, money, and resources into your business. There are hundreds of free pitch deck presentation templates on the internet. Below we lay out our favorite free pitch deck templates and examples. Recommended Reading: The Understandable Guide to Startup Funding Stages What is a Business Pitch? A Business Pitch Template for Success. A business pitch is a presentation to a group of stakeholders, mainly investors, but can also include potential customers, team members, and potential hires. A business pitch can be given in many forms including a pitch deck, email, PDF, or an impromptu conversation. Once you have a business idea you most likely work on putting together a business plan. Once you have a business plan in place it is time to get a pitch dialed for your startup. The most effective business pitches include a combination of the forms listed. Everyone in your business should be able to pitch your business in some form (e.g. elevator pitch). So what makes up a great business pitch template? First, make sure your business pitch is concise and easy-to-understand. You should be able to pitch your business in a few sentences and should be easy to understand what your business does. Everyone in your organization should be able to complete a simple pitch of your business. Second, you need to answer this question; who is your audience? You need to tailor your business pitch to who are you pitching. Think about what you are trying to accomplish and what the person’s ultimate end goal is. If you’re pitching an investor, why should they give your business money? If you’re pitching a customer, why should they pick your solution over other options? If you’re pitching a potential hire, why should they pick to work for you over a different company? Create a business pitch template to make sure everyone in your business can tell the same story and pitch your business in an effective manner. Below we lay out a free pitch deck template that will help turn your business pitch into a compelling story. Related Resource: Investor Outreach Strategy: 9 Step Guide How to Build Your Investor Pitch Deck (A Best Practices Template) The free pitch deck template here is largely based off of the Guy Kawasaki Pitch Deck Template. Guy’s free pitch deck template is a great start for putting together your pitch deck then tailoring it to your needs. The pitch deck design is built for a total of 10 slides. Below are the pitch deck design and slides that Guy recommends using to pitch your business or product. Download our free pitch deck template here or below: Related resource: 23 Pitch Deck Examples Pitch Deck Slide 1: Company Information The first pitch deck slide of your business pitch is straightforward. A simple slide that shares an overview of your business. Use this slide to set the stage for your pitch deck design. The most important thing to remember when making your cover slide is this is often your first impression with the investors you’re pitching. These are investors who have seen a lot of pitches, so getting their interest and attention quickly is important. Your cover slide is your best shot at doing that. Related resource: Our Guide to Building a Seed Round Pitch Deck: Tips & Templates So what makes a great cover slide? Just a few important elements: Sharp design. If there’s a slide to fuss over, design-wise, it’s this one. Remember, you’re making a first impression here. Good design is key. Related Reading: Pitch Deck Designs That Will Win Your Investors Over Your logo. Obviously. What you do (or tagline). This is the element that is most often omitted, but it’s critical. You want to provide context right away, orienting the listener to what your business is all about. Don’t get cute here—the more straightforward, the better. Contact info. This is especially important when you’re sending the deck via email before or after the pitch. You want the names of the people who are pitching, some direct contact info (probably email) and a place online where the investor can learn more about you, whether that’s your home page or a social media profile. As I mentioned, a lot of startups get this slide wrong. A good example is the cover slide from SteadyBudget, which is now Shape.io. Pitch Deck Slide 2: Problem Solving The second pitch deck slide consists of what problem you are solving. This can take form in what the opportunity is or what the pain your potential customers are feeling. Use social proof or a story to clearly demonstrate how potential customers are evaluating and solving the problem with current solutions vs. your solution. The problem slide from Airbnb’s original pitch deck is a great example. Related Reading: How to Write a Problem Statement [Startup Edition] Pitch Deck Slide 3: Value Proposition The third pitch deck slide should explain the value proposition that you are offering. This explains the direct value that your customers receive when choosing your product or solution. This is where your business pitch template will come in handy as you describe your value. Statistics, stories, and first hand data can be a valuable tool for the third slide. Pitch Deck Slide 4: Your Differentiator The fourth pitch deck slide explains what differentiates your solution than others in the market. Guy Kawasaki suggests using a visual pitch deck design here by using images, charts, and diagrams of your “secret sauce.” Instead of using text to explain the differentiator use visuals. If your secret is in the product, use this as an opportunity to show product screenshots or a demo video. Pitch Deck Slide 5: TAM & Opportunity Breakdown The fifth pitch deck slide should contain your business model. This shows how you are, or plan, to make money. The goal of this slide is to demonstrate the addressable market and portraying why your company has the ability to generate huge amounts of revenue to attract a large payout for the investors. Check out our Total Addressable Market Template to help get started with your TAM model. Mathilde Collins, CEO of Front, has a great example of an opportunity in her Series C pitch deck. The slide clearly shows how the large the opportunity is (and later details how the Front product can win the market). Pitch Deck Slide 6: Customer Acquisition and Go-to-Market Being able to show a repeatable and efficient process for acquiring new customers is a must. Investors want to make sure that they will not be throwing their money down the drain. Going into a pitch with potential investors you need to understand your revenue model and go-to-market strategy like the back of your hand. Make sure your GTM strategy slide is easily digestible and can be easily understood without added context. One of the key metrics that investors will want to understand is your costs to acquire a new customer. (Learn more about CAC here). It is important to demonstrate to your investors that your customer acquisition costs are less than your customer lifetime value. This will help showcase your path to profitability. Ablorde Ashigbi is the Founder and CEO of 4Degrees. Earlier this year, Ablorde wrapped up a round of financing for 4Degrees. We went ahead and asked Ablorde what tips he has for founders looking to showcase their CAC in a pitch deck. His response: Don’t present CAC without a corresponding view of LTV Don’t present a blended CAC (including both organic and paid – only include conversions that came from paid channels) For earlier stage companies, payback period equally (maybe more) important than pure LTV / CAC When it comes to presenting your GTM strategy and customer acquisition costs it all comes down to simplicity. An investor should be able to take a look at your slide and know exactly how your business functions. The CAC slide from Vessel below is a great example. Pitch Deck Slide 7: The Market The seventh pitch deck slide should show what the market looks like. This includes your competitor landscape. Guy suggests that “the more the better” for this slide. If comparing yourself to competitors be sure to prepare for questions and conversation. You shouldn’t be afraid to mention your competition in a pitch deck. If there are already players in the space, it proves that there’s a need to fill. Addressing your competition directly and sharing your competitive advantages is a way to assert confidence in investors that you truly understand the market. Too often, though, pitch decks include a competitor slide, but don’t address how the startup will win against those competitors. A Gartner Magic Quadrant alone doesn’t get the job done—you need to convince investors that your company can be bigger and better than those that already exist in the market. The competitive landscape from Airbnb’s original pitch deck is a great (and dated) example. Pitch Deck Slide 8: The Team The eighth pitch deck slide should be a highlight of your management team. Include a brief profile of your company’s managers and any other associated stakeholders. This can include your investors, board members, and advisors. Related Resource: Crafting the Perfect SaaS Board Deck: Templates, Guidelines, and Best Practices The team slide is included in almost every pitch deck example and outline, and for good reason—investors consistently say the team is one of the top criteria they look at when making an investment decision. What often goes unmentioned, though, is how to structure the team slide so that it’s actually effective. A few headshots with names and titles underneath isn’t going to cut it. A good team slide not only covers the who, but the why, as in “why is this a team I should believe in?” That means an effective team slide includes some context. Things like relevant experience in the market, previous startup exits, and key accomplishments are all worth including. If you have impressive advisors, include them, too. If an investor is deciding whether to fund you based on your team, you want to make the best argument for your team that you can. An example of a great team slide is this one from Square. It’s a little dated now, but it does a good job providing some context for why the Square team was worth investing in, features logos to boost credibility, and includes advisors as well. Pitch Deck Slide 9: Financial Projections & Key Metrics The ninth pitch deck slide should contain your financial projections and key metrics. The key to building a business is generating revenue and having a financial plan to effectively scale and grow. Use a top-down, not bottoms-up, projection to wow your investors. A visual pitch deck design will also help here by using charts to make your projections easy-to-understand. To learn more about financial modeling and projections check out our guide here. Related Resource: Important Startup Financials to Win Investors If the founding team doesn’t take the top spot of what an investor care about, it usually goes to financials and metrics. And while investors want the full picture of your startup’s financial metrics before they invest, the pitch deck should really only include the highlights. What investors want to see in financials is evidence of traction. What that means for your pitch deck is you should include a splash of metrics that are easy to digest and tell a good story. A few key metrics in a big, bold typeface beats a more thorough selection of metrics that are hard to parse. This example from Moz’s Series B Round shows the impact of highly readable traction metrics that tell a good story: Pitch Deck Slide 10: Timeline The last pitch deck slide should be an overall timeline of your business. Where have you been in the past? What are the major accomplishments you’ve achieved so far? Where is your business headed and will the person you are pitching fit into this timeline? It is important to clearly showcase how you will deploy an investor’s capital to hit milestones and goals over the coming months, quarters, and/or years. Front does a great job of showing where Front can be with the capital they need to grow into new markets. Download our free pitch deck template here or below: Related Resource: Pitch Deck Design Cost Breakdown + Options Pitch Deck Examples There are countless websites that share popular pitch deck examples from companies like LinkedIn, AirBnb, and Facebook. To help you put together the perfect pitch deck, we’ve laid out pitch deck examples from our favorite companies and the best pitch decks of 2018. You can find a library for pitch deck examples using this link. LinkedIn Pitch Deck One of our favorite pitch deck examples, the LinkedIn pitch deck is one of the original pitch decks that companies still look to today. While design and details have certainly changed since the 2004 LinkedIn pitch deck there are still relevant lessons and trends that have stood the test of time. One of the most interesting aspects of the LinkedIn pitch deck is their ability to turn it into a compelling story. Keep in mind, at the time of this pitch deck, LinkedIn had zero revenue, were not leaders of a “hot market,” and had little to show for hypergrowth. Reid was aware that investors would have hesitations with LinkedIn’s lack of revenue so he steered immediately into their plan to generate revenue. Instead of immediately jumping into their product, LinkedIn’s first slide is their 3 strategies for generating revenue. Now, it would be ill advised for a consumer facing company to show multiple revenue streams with no conviction in a single product. Luckily for LinkedIn, they launched all 3 products and were an exception. Regardless, Reid does a good job of addressing any push back that he’ll eventually see from investors for their lack of revenue. One of the most interesting aspects of the LinkedIn pitch deck is their plain to become “Professional People Search 2.0.” LinkedIn’s main argument and reasoning for deserving venture capital, is the fact that the way people do professional research was inadequate and the market was ready for a new way to conduct professional research. Ideally, the investors believed that professional people search was in need of a revamp. The next step in LinkedIn’s story is to show investors examples of the “1.0” to “2.0” jump in other companies Reid then offers examples of other markets and verticals that have been lifted going from “1.0” to “2.0.” Using analogies Reid was able to paint a picture of how LinkedIn can radically change the market just as his presented examples, Google, PayPal, and eBay, had done in the past. The LinkedIn pitch deck is a great example of how you can still build a compelling story with a lack of revenue and hypergrowth. Facebook Pitch Deck Another classic pitch deck example is Facebook’s pitch deck from 2004. The Facebook pitch deck comes from about the same time as the LinkedIn pitch deck as above. While it originally was not a pitch deck, rather a media kit, the original Facebook pitch deck has interesting examples that are worth mentioning. It is also fun to see how much Facebook has transformed from their original pitch deck to now. The original Facebook pitch deck has a laser focus on the numbers. Covering everything from their own product to market data, Mark Zuckerberg uses data to tell the Facebook growth story. Facebook drills the stickiness and engagement with their product throughout the pitch and how Facebook can be a powerful advertising platform. While it may not tell as compelling a story as the LinkedIn pitch deck, the Facebook pitch deck is an example of a company using their growth metrics as the driving force of their pitch. Pitch Deck Template by Guy Kawasaki Guy Kawasaki is a marketing specialist. He worked for Apple in the 1980s and is responsible for marketing the original Macintosh computer line in 1984. Guy is infamous for coining the term evangelist in marketing. He might be most famous for his simple pitch deck template and the 10/20/20 rule of Powerpoint and pitch decks. Guy Kawasaki was one of the earliest Apple employees and was largely responsible for marketing the original Macintosh. The pitch deck template by Guy Kawasaki has almost become a staple in the startup world. Simple, yet effective, the pitch deck template by guy kawasaki is a great starting point for any pitch. The pitch deck template is based off of a rule that Guy calls the 10/20/30 rule: 10 – A pitch should have 10 slides. 20 – A pitch should last no longer than 20 minutes. 30 – A pitch should contain no font smaller than 30 point font. The presentation template by Guy Kawasaki embodies the idea that “less is more.” By having only 10 slides, you are forced to focus on the things that are absolutely necessary. A 20 minute pitch, allows time for discussion and is a reasonable amount of time for everyone involved to stay focused. 30 point font, makes sure that you and your audience are in sync. The pitch deck template by Guy Kawasaki is a great starting point for any point. Airbnb Pitch Deck Airbnb is one of the most infamous stories from Silicon Valley. From their radically different idea to their scrappy early stages the Airbnb story is filled with plenty of tips and stories for startups. The original Airbnb pitch deck has turned to one of the most popular pitch deck examples for companies to turn to. AirBed&Breakfast at the time of the Airbnb pitch deck, Airbnb is now on the path to an IPO with a value north of $30B. We’ve laid out a few of our favorite slides and ideas from the Airbnb pitch deck. One of the first things that jumps out from the Airbnb pitch deck is on the first slide. The description, “Book rooms with locals, rather than hotels.” is straightforward and easy-to-understand. Airbnb clearly lays out what they do in the first 10 seconds of their presentation. From here, Airbnb uses a good combination of market data and the problems that their users face to create a compelling story. The Airbnb pitch deck also does a good job of clearly stating how they generate revenue; “we take a 10% commission on each transaction.” A common, yet well done, slide from the Airbnb pitch deck is the “Competition” slide. They use a common 2-axis diagram to show where they stand amongst their competition. Just like everything else in the Airbnb pitch deck, the competition slide is easy to understand and you get an immediate grasp where Airbnb stands. Airbnb went on to raise $600k with the pitch deck. Their identity has obviously changed since their original pitch deck but the lessons and practices still stand today. We hope the slides laid out from the Airbnb pitch deck will help as you gear up for your venture raise. While every business differs, the Guy Kawasaki pitch deck template is a great place to start. Lay out your pitch using his style and see what you think. From here you can tailor it to your businesses’ needs. Once you’ve got your pitch deck in place, it is time to kick off your fundraise. Uber Pitch Deck Starting as a daring idea, to raising $25B in venture capital, to being publicly traded with a $60B+ market cap, Uber is arguably the most famous VC backed company today. Just like any successful company, Uber was once a tiny startup doing their best to raise capital for their business. Uber’s fundraising journey started in 2009 with a small $200,000 seed round. Since then, their original pitch deck has almost turned into a folklore. An almost ludicrous idea at the time has turned into everyday vocabulary across the globe. Even the founders of Uber had a limited understanding of how truly large their business could be back then. For example, their “UberCab” concept slide presents a black car type experience. At the time, the only way to book an Uber was via SMS. How the times have changed! One are that really sticks out is the total addressable market that Uber originally modeled. At the time, Uber shared that their original target market was $4.2B. In 2019, they almost tripled their original estimated market opportunity in revenue ($14B+). Although they were a niche service at the time and have expanded globally and horizontally in the market it is still shocking to look back at the opportunity they originally presented and how they’ve managed to dramatically change the market. Related Resource: Check out our free guide and downloadable template, Our Favorite Seed Round Pitch Deck Template (and Why It Works) Best Pitch Deck of the Past Year The pitch deck examples above are great starting point but it is also good to get a look at more recent pitch deck. We have found the Front App pitch deck to be our favorite startup pitch deck of the past year. The pitch deck was used to raise Front’s Series C round. Front has certainly experienced hypergrowth — they’ve raised their Series A, B, and C since 2016. All of which were more than $10M. Luckily for other founders, Mathilde Collin, the CEO of Front, has made all of their pitch decks available to the public. While some founders may not be able to directly compare numbers to their Series C deck there are still a number of important takeaways. The Mission From the get-go of Mathilde’s pitch deck it is clear that Front is a mission driven company. The first 5 slides add a personal touch from Mathilde and clearly demonstrates that she, and her team, care deeply about the problem. This sets the stage for the story and kicks off a compelling pitch. The Opportunity Slide 6 shows just how huge the opportunity is. The market data is straightforward and jumps off the page. It clearly demonstrates that there is a huge market there that Front’s product can penetrate and become a successful exit for an investor. The Metrics & Data The metrics and data slide is one of the most impressive in the pitch deck. While it may be to difficult to compare to the actual data it is a powerful narrative for the pitch. Mathilde knows exactly where Front is world class and focuses on the data to portray why an investor should back their business. Simple and powerful. Pitching your company is equal parts storytelling, data, and passion. To best pitch your company you need to personally understand why and how you are going to tackle a product, market, or problem. The next step is to truly understand what an investor looks for in an investment and how you can fit into their vision. Putting together a pitch deck is only the start of a successful fundraise. You need to find the right investors, manage conversations, and distribute your pitch deck. To get started with your next fundraise check out our investor database to help you find your investors. Related Resource: Best Practices for Creating a Top-Notch Investment Presentation Looking for best practices for sharing your pitch deck? Check out our template for sharing your pitch deck here.

You’ve just gotten through an exhausting fundraise, congratulations are in order, and now you have an unsigned Series A term sheet in your hand. What’s next? It’s often assumed that you will know what you’re looking at when handed a Series A term sheet, but if you’re a first-time founder, that usually isn’t the case. To help you navigate your Series A term sheet we’ve briefly summarized common fields and terms and what you should be looking for under each one. The fields below are largely based off of Y-Combinators post and Series A Term Sheet template, “A Standard and Clean Series A Term Sheet.” As a note, this is not legal advise and we suggest consulting with your lawyer while reviewing your term sheet. Liquidation Preferences Liquidation preference is simply the order in which stakeholders are paid out in case of a company liquidation (e.g. company sale). Liquidation preference is important to your investors because it gives some security (well, as much security as there is at the Series A) to the risk of their investment. If you see more than 1x, which means the investor would get back more than they first invested, that should raise a red flag. To learn more about liquidation preferences check out this article, “Liquidation Preference: Everything You Need to Know.” Dividends In the eyes of an early stage investor, dividends are not a main point of focus. As Brad Feld puts it, “For early stage investments, dividends generally do not provide “venture returns” – they are simply modest juice in a deal.” Dividends will typically be from 5-15% depending on the investor. Series A investors are looking to generate huge returns so a mere 5-15% on an investment is simply a little added “juice.” There are 2 types of dividends; cumulative and non-cumulative. YC warns against cumulative dividends; “the investor compounds its liquidation preference every year by X%, which increases the economic hurdle that has to be cleared before founders and employees see any value.” Conversion to Common Stock Common practice will automatically convert preferred stock into common stock in the case of an IPO or acquisition. Generally, Series A investors will have the right to convert their preferred stock to common stock at any time. As Brad Feld puts it, “This allows the buyer of preferred stock to convert to common stock should he determine on a liquidation that he is better off getting paid on a pro rata common basis rather than accepting the liquidation preference and participating amount.” Voting Rights On a Series A term sheet, the voting rights simply states the voting rights of the investor. Generally, your Series A investors will likely receive the same number of votes as the number of common shares they could convert to at any given time. In the Y Combinator example, as with most term sheets, this section can include some technical jargon that is not easy to understand. The most important vetoes that a Series A investor usually receives is the veto of financing and the veto of a sale of the company. Board Structure One of the more important sections when navigating your Series A term sheet is the board structure. Ultimately, the board structure designates who has control of the board and the company. How your Series A investors want to structure the board should be a sign of how they perceive you and your company.  The most “founder-friendly” structure is 2-1. A scenario in which 2 seats are given to the common majority (e.g. the founders who control a majority of the common stock) and 1 given to the investors. This allows founders to maintain control of their company. On the flip side, there is a 2-2-1 structure (2 founders, 2 investors, 1 outside member). In this scenario, it is possible for the founders to lose control of the company. While a common structure, be sure that the board structure is in line with conversations while fundraising. As Jason Kwon of YC puts it, “So when an investor says that they’re committed to partnering with you for the long-term – or that they’re betting everything on you – but then tells you something else with the terms that they insist on, believe the terms.” Drag Along As defined by the Morgan Lewis law firm, “Drag along is the right to obligate other stockholders to sell their securities along with securities sold by the investor.” Drag along rights give investors confidence that founders and the common majority will not block the sale of a company. While there is no way around drag along rights, some people will suggest that founders negotiate for a higher “trigger point” (e.g. ⅔ votes as opposed to 51%). You can learn more about drag along clauses in this post, Demystifying the VC term sheet: Drag-along provisions. While there are countless other aspects and negotiations tactics when navigating your Series A term sheet, we’ve found the ones above to be most difficult to understand and offer an opportunity to negotiate. Always be sure to consult with your lawyer before signing your term sheet. Ready to start your Series A fundraise? Check out Visible to nurture your potential investors through your fundraise.

It’s never been easier to get started on the pitch deck for your startup. There is no shortage of pitch deck examples online, and pitch deck best practices are ubiquitous as well. Despite a wealth of available knowledge on the subject, creating a pitch deck is still challenging work. A great pitch deck is concise, but thorough, informative, but not boring, simply designed, but with personality. It’s little wonder creating them causes so much stress. At Visible, we spent a good 20 hours iterating on our most recent pitch deck, and we’re still not sure we have it “right.” No matter what outline or template you use, there are a few slides that you should pay extra attention to. These are the slides that can make or break your pitch deck, so take the time to make sure they’re right. Check out the slides below: The Cover Slide This one feels obvious, but so many startups get it wrong that it’s worth calling out. In this list of 30 “legendary” pitch decks, maybe ¼ of them get the cover slide right. The most important thing to remember when making your cover slide is this is often your first impression with the investors you’re pitching. These are investors who have seen a lot of pitches, so getting their interest and attention quickly is important. Your cover slide is your best shot at doing that. So what makes a great cover slide? Just a few important elements: Sharp design. If there’s a slide to fuss over, design-wise, it’s this one. Remember, you’re making a first impression here. Good design is key. Your logo. Obviously. What you do (or tagline). This is the element that is most often omitted, but it’s critical. You want to provide context right away, orienting the listener to what your business is all about. Don’t get cute here—the more straightforward, the better. Contact info. This is especially important when you’re sending the deck via email before or after the pitch. You want the names of the people who are pitching, some direct contact info (probably email) and a place online where the investor can learn more about you, whether that’s your home page or a social media profile. As I mentioned, a lot of startups get this slide wrong. A good example is the cover slide from SteadyBudget, which is now Shape.io. The Team Slide The team slide is included in almost every pitch deck example and outline, and for good reason—investors consistently say the team is one of the top criteria they look at when making an investment decision. What often goes unmentioned, though, is how to structure the team slide so that it’s actually effective. A few headshots with names and titles underneath isn’t going to cut it. A good team slide not only covers the who, but the why, as in “why is this a team I should believe in?” That means an effective team slide includes some context. Things like relevant experience in the market, previous startup exits, and key accomplishments are all worth including. If you have impressive advisors, include them, too. If an investor is deciding whether to fund you based on your team, you want to make the best argument for your team that you can. An example of a great team slide is this one from Square. It’s a little dated now, but it does a good job providing some context for why the Square team was worth investing in, features logos to boost credibility, and includes advisors as well. The Metrics Splash If the founding team doesn’t take the top spot of what an investor care about, it usually goes to financials and metrics. And while investors want the full picture of your startup’s financial metrics before they invest, the pitch deck should really only include the highlights. What investors want to see in financials is evidence of traction. What that means for your pitch deck is you should include a splash of metrics that are easy to digest and tell a good story. A few key metrics in a big, bold typeface beats a more thorough selection of metrics that are hard to parse. This example from Moz’s Series B Round shows the impact of highly readable traction metrics that tell a good story: The Competition You shouldn’t be afraid to mention your competition in a pitch deck. If there are already players in the space, it proves that there’s a need to fill. Addressing your competition directly gives you credibility and demonstrates that you’re familiar with the market. Too often, though, pitch decks include a competitor slide, but don’t address how the startup will win against those competitors. A Gartner Magic Quadrant alone doesn’t get the job done—you need to convince investors that your company can be bigger and better than those that already exist in the market. Mint did this well in one of their early decks by not only including a competitor breakdown, but also sections for competitive advantages and defensibility: As difficult as it can be to get your pitch deck to a place you’re happy with, if you focus on doing these key slides well, you’ll be firmly on the path to having a deck you can present with confidence. For more startup tips and advice, make sure you’re subscribed to The Founder’s Forward, our weekly email that helps you grow your startup.

Point Nine Capital is one of the most—if not the most—sought-after early stage SaaS venture firm in Europe. With a portfolio that includes the likes of Zendesk, Front, and Algolia, the Point Nine team receives countless decks and pitches every day. Part of the reason they receive so many pitches is Point Nine Capital hosts a contact form on their website that allows visitors to begin the pitch process. We’ve scoured their blog to gather what we believe are best practices when filling out the Point Nine Capital pitch form. The Point Nine Capital Basics This is a pretty straightforward section with a few questions about the founder and firmographics. A couple of key questions: Which category/categories does your startup fall into? Point Nine is mostly known for investing in SaaS. However, they’re also interested in “internet startups” specifically marketplaces, AI, and crypto. If you fall outside of these categories, it may make sense to look to other investors. When did you launch? While your specific launch date does not necessarily correlate to what stage you’re at, Point Nine’s goal is to be the first institutional investor a company takes on. They consider this the “0.9 stage” or when you’re “too big for private investors, too small for most VCs – many startups find it hard to raise capital, and that’s when we’d like to get involved.” How much funding are you planning to raise? From the FAQ section of the Point Nine website, they generally invest from a few hundred thousand to 2 million Euros/USD. Point Nine generally has co-investors so if you’re looking raise much more than $3.5M, it may make sense to look elsewhere. To learn more about what Point Nine Capital looks for in terms of general company information check out A Sneak Peak Into Point Nine’s Investment Thesis. The Point Nine Capital Pitch Deck Point Nine has shared plenty of information for crafting and sharing the perfect pitch deck. It is their first filter when sorting through potential investments, and it can make or break your pitch. There is no formula for a perfect pitch deck, but it should always answer this question for a potential investor: “is this company likely to become far more valuable in the future?” According to Michael Wolfe—who is an advisor to Point Nine—a solid pitch deck will consist of the following: Summary – Orient the audience on what you’re doing, what stage, how much money you’re raising, etc. The problem you solve, and who has that problem – Pitch the problem, not the solution. Your Solution – Highlight your product. Show how and why your customers use your product. Customer Traction – Traction metrics and customer stories. The Market – Explain your Total Addressable Market Competitive Landscape – Talk about current market, future market, and your differentiators. Business Model – Talk about your revenue model, pricing, customer acquisition plan, etc. Team – Quick summary of your team and backgrounds. The Plan – Key milestones coming in the next 12-24 months. The Round – How much you’re raising, other investors, etc. If you’re interested in learning more about putting together your pitch deck, check out these posts from the team at Point Nine: A Simple Pitch Deck [Template] How to bulletproof your fundraising deck Why we politely ask for a deck first The Point Nine Capital Financials & Key Metrics Point Nine will ask for a set of your KPIs in the form as well. Don’t fret! They’ve shared content and templates for what they’re looking for. Christoph Janz put together a SaaS example of what they are looking for in this post. The team also put together a marketplace metrics template in this post. The metrics in the templates above can be fairly granular, so a lite version should do the trick. If you’re unsure about the state of your metrics, the team at Point Nine has also put together 6 SaaS metric frameworks to help benchmark against your peers: Revenue Growth: the T2D3 framework – The triple, triple, double, double, double framework. What your ARR should be growing at after every year. Revenue Growth Efficiency: SaaS Quick Ratio – Measures a company’s ability to grow it’s MRR in spite of churn. The LTV / CAC Ratio – How much revenue a customer generates as opposed to how much it cost to acquire them. Churn Benchmark – Benchmarks for SaaS company in different markets and stages. The 40% Rule – The idea that your growth % to profit % should be equal to or greater than 40%. Product Related Metrics – Find a “north star” unique to your business. While great financial metrics are important, they are not compulsory at the early stage for the Point Nine team. Clement Vouillon, Senior Research Analyst at Point Nine, put it this way: “we’re still investing in pre-PMF startups with barely no revenue, what will be important is that you have a huge potential, some early sign of interest from the users (great retention for example, even with a couple of B2B early adopters), or an outstanding team (with a trackrecord).” We hope these tips will help with your Point Nine Capital pitch. Ready to take your fundraising and investor relations to the next level? Check out the Founders Forward Blog to learn more about engaging and attracting investors.

Rewind to 2009, when a small company called UberCab is pitching the idea of a “next generation black cab service” to seed investors. Operating in just 2 markets (NYC & SF), offering an SMS system to hail a ride, and estimating a $4B market size, UberCab envisioned themselves as the black car leader for professionals in American cities. Fast forward to 2019, Uber operates in over 60 countries, has expanded into food delivery, added coverage outside urban area, become a rental car alternative, and their total addressable market is rapidly approaching $300B (with some estimates surpassing $1T). Investors go back and forth about the importance of TAM, as it is often inaccurate and is constantly changing. David Skok sums it up like this: “TAM’s role in a pitch deck is to convince investors that the company is chasing an opportunity big enough to achieve venture-scale returns with the right execution.” So what lessons can we learn from Uber, whose total addressable market has multipled by almost 50x over the last 10 years? Top-Down vs. Bottom-Up There are 2 distinct ways we generally see companies use to model their total addressable market: top-down and bottom-up. David Skok, Founder of Matrix Partners, defines them simply: Top-Down – calculated using industry research and reports. Bottom-Up – calculated using data from early selling efforts. David, an investor himself, tends to favor a bottom-up approach as opposed to a top-down one when evaluating potential investments. The reason being that a top-down approach relies on self-reported data from private companies, which can often be misleading, inaccurate or interpreted incorrectly. A bottom-up approach, however, uses firsthand data and knowledge of your own company and reduces the risk of the data being wrong or taken out of context. With this being said, for a pre-revenue product or project a top-down approach is often the most feasible option. A top-down approach is comparatively easy since the only parameters it really requires is the total market value for your area and the market share you expect to receive whereas a bottom-up approach requires firsthand data. As you may have already guessed, Uber estimated their market size at $4B by using a top-down approach. By using existing market data, Uber dramatically undersized what the “cab and car services” market looked like, and what it would look like in the future. Using a bottom-up approach, Uber could have used their data set from their first market, San Francisco, which would have shown that the overall market was expanding, as current users were taking more rides in Ubers than they ever had in cabs. Related Resource: Total Addressable Market vs Serviceable Addressable Market Related resource: Bottom-Up Market Sizing: What It Is and How to Do It Related resource: Service Obtainable Market: What It Is and Why It Matters for Your Startup Don’t Assume the Future Will Look Like the Past As mentioned, one of the issues with a top-down approach is the assumption that the market will look the same in the future as it does today. Using historical market data does not include the expansion you would eventually see from new price points, convenience, and increased usability. Uber’s initial model for their total addressable market did not account for the changes a disruptive product (AKA theirs) would have to the entire market. Sizing the market for a disruptor based on an incumbent's market is like sizing the car industry off how many horses there were in 1910. — Aaron Levie (@levie) June 8, 2014 Bill Gurley, General Partner at Benchmark and defender of Uber’s valuation, has deeply studied Uber’s market and its ongoing expansion. When discussing Uber’s total addressable market and valuation Bill said, “Uber’s ease of use and simplicity have led many of its users to greatly increase the number of times they use an alternative car service. Some customers now use it as a second car alternative. As such, the company is meaningfully expanding the market for black car services, which is in turn a huge boon to the suppliers that share in the economic expansion.” A “Wedge” Into the Bigger Market With a sole focus on black car and professional services, Uber’s initial market size was just a small segment of their business today. UberCab was current-day Uber’s “wedge” into a much larger opportunity. Determining a total addressable market for your current offering and segment is a must, but don’t be afraid to paint a picture of the adjacent markets and where you envision your company headed in the future. As Paul Graham, Founder of Y Combinator, puts it, “Your target market has to be big, and it also has to be capturable by you. But the market doesn’t have to be big yet, nor do you necessarily have to be in it yet. Indeed, it’s often better to start in a small market that will either turn into a big one or from which you can move into a big one.” At the end of the day, investors view TAM as a picture of how big your business can be. Correctly modeling the market is vital to proving that your business should be venture-backed. Check out our TAM Template If you need a little help painting a picture of the market your solution could address, try using our TAM template! It has everything you need to start modeling the market your business can capture. Related resource: What Is TAM and How Can You Expand It To Grow Your Business?

When an investor tells you they’d like to fund your company, it may feel like you’ve reached the finish line. The hard work and time you’ve put in to fundraising is finally paying off, and soon enough you’ll have the resources you need to grow your business. Not so fast. As any good salesperson will tell you, there’s a big difference between “I’d like to close” and actually closing. From getting partner buy-in to completing due diligence, there’s a lot to think about when closing a new investor. If you know this, and are properly prepared, you can reduce the time it takes to get your check, plus save yourself a lot of headache. Here are a few things you can do to make the process smooth. Be prepared OK, so this is cheating a bit. This part actually happens before an investor tells you they want to fund your company. This is the prep work you do before going in to formal pitch meetings to make sure you can respond quickly when a potential investor wants more information. Christoph Janz provides a great overview of how to do this kind of preparation in “6 things to pre-empt 90% of due diligence.” Most of the guidance here is around preparing the metrics that investors will want to see. Having all of this data at the ready can speed up the closing process dramatically. Janz encourages startup leaders to create a dashboard for investors that is clean, comprehensible, and uses the right terms. If you need assistance with that, I happen to know of a product that can help. Understand the process With preparation out of the way, we come back to the moment of investor interest. Once the investor says they want to fund you, it’s time to ask some questions. If you’ve done sales in the past, you should know what this looks like, because the questions are very similar to those you’d ask at the end of a good sales call: “Who else needs to be involved?” – As David Teten points out, you may only meet with one partner at a fund, but that doesn’t mean they’re the only one you have to persuade. Understanding the internal approval process will help you set your own expectations, and help you XXX “What will you need from me?” – This is where your preparation comes in handy. If you’ve done it correctly, you’ll have most of what the investor asks for ready to go. You can even send an FAQ doc and metrics dashboard right after the meeting, which will demonstrate your transparency and preparedness. Then you can gather any additional data while the investor has some internal conversations. “What’s the timeline?” – Again, you’re establishing expectations here. Not only does asking for a timeline allow you to plan accordingly, but it also injects a little accountability on the investor’s part. If they give you a time frame to complete the process, you can (politely) hold them to it. “What could go wrong?” – It’s a scary question, but it’s one you should ask. If you know what could stand in the way of securing funding, you’ll be able to work to prevent it. Do your part If you’ve done your prep work and asked the right questions, the closing process should be relatively straightforward. Bumps in the road do happen, though, and you should be ready to adjust accordingly. The key is good communication. That means responding quickly to new questions that come up, being as transparent as you can reasonably be, and being professionally persistent with follow-up. Establishing a timeline early in the process gives you something to reference back to later. Any updates or changes on your side should be communicated proactively as well. Above all, remember that this closing process is the beginning of a relationship—a relationship that is very important to the future of your business. By starting the relationship off with good communication and the right expectations, not only will you shorten the time it takes to get your funding, but you’ll also be setting yourself up for a successful and productive future with you new investor.

What is Venture Capital? Venture capital is oftentimes a glorified funding option in Silicon Valley and the startup world. In short, it is a funding option that allows VC funds to buy equity in a startup. In turn, a startup is giving up a percentage of its ownership with the hopes of growing its valuation and creating a successful exit for everyone on the cap table. As put by the team at Investopedia, “Venture capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.” To better understand the topic, find out more about the types of venture capital funding, when it’s used, potential benefits and pitfalls, the origins, and what it’s like to work for a venture-backed business. Related resource: How to Get Into Venture Capital: A Beginner’s Guide Who is Involved in Venture Capital? To better understand venture capital, you need to understand the people and players involved. For a quick rundown check out the definitions below: VC Fund — As put by the team at Investopedia, “Venture capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.” General Partner — As put by the team at AngelList, “The general partner of a venture fund raises and allocates investor capital and supports the founders of the companies they invest in.” Limited Partners — As put by the team at VC Lab, “Limited Partners (LPs) are investors in your fund that provide capital. The most common types of LPs are high net worth individuals, pension funds, family offices, sovereign funds and insurance companies – just to name a few.” Let’s start with the entrepreneur or startup founder. If a founder is looking for capital for their business they might look to venture capital. As we mentioned above, venture capital is an equity funding option for startups. VC firms and funds invest in many companies (and the best ones are able to raise multiple funds). At the end of the day they are looking to create outsized returns for their investors. So who are their investors? Limited partners. LPs have limited control over the management of the VC fund. However, it is important to understand the LP <> GP/VC fund relationship to understand a VC fund’s motives. Limited partners are generally large investment firms that are investing across many asset groups — many of them public markets. As investing in VC funds is typically a small % of their overall portfolio, it is important for VC funds to generate returns in line or greater than the public assets in their portfolio. Because of this, VC funds will turn to founders and startups with the potential to create massive returns. Related Resource: Understanding Power Law Curves to Better Your Chances of Raising Venture Capital How Venture Capital Firms Work To best understand how a VC fund works you need to understand where they get their capital from and how they make money themselves. As we wrote in our Ultimate Guide to Fundraising, “In simplest terms, VCs go through a consistent life cycle that goes something like this: raise capital from LPs, generate returns through risky venture investments, generate returns in 10-12 years, and do it again.” At the start of a VCs lifecycle, they raise capital from limited partners (LPs). LPs are generally institutional investors (pension funds, endowment funds, family offices, etc.) that use venture capital funds to diversify their investments. From here, a VC deploys the capital they’ve raised from LPs into startups and other investments with the goal of generating returns for their LPs. Venture capital funds have traditionally been a very risky investment (with a huge upside) so LPs will generally only put a small percentage of their capital into venture funds. As Scott Kupor, Managing Partner at Andreessen Horowitz, mentioned in his book, Secrets of Sand Hill Road, “If you invested in the median returning VC firm, you would have tied up your money for a long time and have generated worse results than the same investment in Nasdaq or S&P 500.” 10-12 years after raising a fund, VCs are expected to generate returns for their LPs. If a fund manages to generate meaningful returns for their LPs they will raise another round and repeat the cycle. In fact, VC funds follow a power law curve — a small % of funds, generate a large % of returns. Internally, VC funds also follow a power-law curve — meaning a small % of their startup investments create a large % of their returns for LPs. This means that VC funds are in search of startups that have the opportunity to generate massive returns and “return the fund” to their LPs. As we wrote in our post on power-law curves, “This means that a small % of VC funds take home a large % of venture returns. VCs are constantly working to make their way into the “winning” part of the curve so they can continue to attract capital from limited partners. How does a VC fund become a “winner?” The best VC funds portfolio returns also follow a power-law curve. A small % of a VC fund’s investments will yield the majority of its returns. What does all of this mean for a founder?” Only a small percentage of funds create large returns, which means a majority fail. If a VC fund fails it means that its investments are also failing — or failing to generate the huge returns they need. Related resource: Understanding the Advantages and Disadvantages of Venture Capital for Startups Private Equity vs. Venture Capital Venture capital is technically a form of private equity. However, venture capital focuses on all equity and smaller investments that reward high-risk, high-reward scenarios. On the flip side, private equity firms are generally geared towards later stage companies that have a proven track record. Related Resource: Private Equity vs Venture Capital: Critical Differences Angel Investors vs. Venture Capitalists An angel investor is generally a wealthy individual who is looking to invest spare cash in an alternative investment. Unlike a VC, angel investors are not professionals nor do they have limited partners investing in them. Angel investors are typically more hands-off and can be a great source for introductions to other investors, customers, and others. Related Resource: How to Find Investors Types of Venture Capital Typical explanations of the types of venture capital divide it into three main groups, based on the business stage that needs funding. This list provides a brief explanation of these venture capital types and the various business stages that they may apply to: Related Reading: A Quick Overview on VC Fund Structure Early-stage This might include seed financing, Series A funding, etc. which is usually just a small amount of capital that will help the founders qualify for other loans. True startup financing provides enough capital to finish a service’s or product’s development. In contrast, startups might also get first-stage financing after they have finished development and need more funds to begin operating as full-scale business. For example, Crunchbase and newsletters are full of new VC deals being completed every day. You can check out Uber’s timeline of early-stage funding rounds here. Expansion This kind of venture capital helps smaller companies expand significantly. For instance, a thriving restaurant may decide it’s time to open more locations in nearby communities. Sometimes, it also comes in the form of a bridge loan for businesses that want to offer an IPO. For example, if you take a look at Uber’s timeline of investments you’ll notice they start raising massive rounds via private equity around 2015 as they gear up for an IPO. Acquisition Sometimes called buyout financing, this type of funding may help acquire other businesses or sometimes, just parts of them. For instance, some groups may use acquisition financing to buy into a particular product or concept, rather than using it for buying the entire company. Pros and Cons of Venture Funding for Startups and Small Businesses Pros of Venture Funding Venture funding comes with a number of advantages. One of the beauties of venture capital is the fact that a founder has to invest no capital of their own so they can grow at a rapid rate. No Personal Capital One of the biggest advantages of raising venture capital is that you do not have to use any of your personal capital. You can grow your company and valuation while deploying others’ capital. However, this does come with high expectations and responsibility. Investor Support As VC funds continue to innovate, the support they provide startups has continued to evolve. VC funds will help founders with anything from determining go-to-market motions to mental health to hiring & fundraising. Extensive Network The startup & VC world is a tightknit community. Many VC funds and their partners have extensive networks of other funds, founders, potential hires, and customers. Enhanced Growth VC funds allow companies to deploy millions of dollars in capital and grow at a quicker rate than they would with alternative venture funding options. Cons of Venture Funding Of course, on the flip side there are some disadvantages. While venture capital offers the opportunity to grow rapidly, it also has some downsides when it comes to ownership. Increased Dilution Raising venture capital means you are selling equity in your company. Because of this, founders will own a smaller percentage of their company. Convoluted Decision-Making Because of their diminished ownership, founders can potentially lose their ability to make decisions solely based on their needs and have to take into consideration the needs of their investors and partners. Long-Winded Time Commitment Fundraising can be an incredibly time-consuming and difficult process for many startup founders. It can take away a founder’s time from focusing on building or selling a product. If you’ve determined that venture capital may not be the best option for you there are always alternatives. Over the last few years, there has been an explosion of funding options that are founder-friendly. Check out some population options here. The Process of Getting Funded by a Venture Capital Firm At Visible we like to compare a venture capital fundraise to a B2B sales funnel. You are adding potential investors to the top of your funnel, taking meetings and nurturing them in the middle, and closing them, and onboarding them to your cap table at the bottom. Below are 6 high-level steps. If you’re interested in a more in-depth look check out our Ultimate Guide to Fundraising. Step 1: Determine if VC is Right for Your Business The first step to getting funded by a venture capital firm is to understand if venture capital is right for your business. This means that you believe you can grow at a rapid clip and generate massive returns for a VC fund to return to their LPs. Before setting out to build a list of investors, we suggest picturing what your ideal investor looks like and building out a list from there. Over the course of a fundraise, we recommend building a list of 50+ investors. It is important to keep this in mind when building a list and founding routes for introductions. Learn more about why 50-100 investors in our post here. Step 2: Prepare Your Deck, Docs, and Metrics If you believe you have what it takes to raise venture capital you need to start putting the pieces in place to get started. Going into a fundraise, you should have docs (pitch deck, financials, cap table, etc.) and your core metrics ready to go. Learn more about preparing your pitch deck and other documents here. Step 3: Find Investors Once you have your documents in place it is time to start finding investors for your business. It is important to make sure that you find investors that are right for your business. The average VC + founder relationship is 8-10 years so it is important to make sure you are starting a relationship with the right funds and person. Learn more about the ideal investor persona here. Step 4: Pitch Investors and Take Meetings Once you start reaching out to investors (cold outreach or warm introductions) you’ll start sitting meetings and have the opportunities to pitch investors. Check out our guide for meeting with and pitching investors here. If you find an investor who is ready to fund your business, awesome! You’ll move on to the following steps. For a more in-depth look at the next steps, check out our blog post here. Step 5: Due Diligence After a pitch, if an investor decides they want to move forward with an investment they will begin due diligence. You can expect an investor to audit your financials, survey your employees and customers, and deeper study the market. Great VCs will offer a checklist to help set expectations during the due diligence process. Over the course of due diligence, you will likely need to share a data room. Learn more about how you can build a data room with Visible below: Related Resource: What Should be in a Startup’s Data Room? Step 6: The Term Sheet If you make it past due diligence, you will be presented with a term sheet. If the terms look good, you are set! Learn more about navigating your term sheet here. Origins of Venture Capital In one way or another, forms of venture capital have probably financed innovations since people latched onto the idea of bartering. For instance, a plucky inventor may have come up with a better idea for a grindstone but lacked the resources to create it on his own. Another villager may have liked the idea, so he exchanged stone and labor for part ownership in the new and better-milled grain producer. Still, for much of the history of venture capital, investors favored loans over equity. In the past, investors lacked ways to gain good information about all the details of a business. Also, until fairly recently, the concept of limited liability did not exist as it does now. Investors feared that they may offer money to a company in exchange for part ownership. In exchange, they might get unpleasantly surprised by massive debts that the original founders had already piled up. As part-owners, they would also face partial responsibility for these loans. The concept of limited liability helped relieve some of these concerns and encourage more equity funding. It took until after WWII for the United States to develop a true private equity system. An investment of $70,000 in DEC in 1957 gained credit as one of the early success stories after that initial funding grew to $35 million by the IPO in 1968. The Great Recession changed the nature of venture capitalists to some degree. Most lately, venture capital groups have focused more upon offering other value, besides just funding, to the small businesses or startups they want to help fund. As mentioned above, part of the deal may include business expertise, facilities, and other helpful assets beyond money. Thus, many venture capitalists look for startups or small businesses that they understand how to fix or help, beyond those that just need investments. Working for a Venture-Backed Company How is working for a venture-backed company different from working within an established corporation? As we noted in our guide to Startup Culture, working for a startup can offer employees many of the same benefits that investing in one provides venture capital providers. Of course, employees may not initially enjoy the large salaries and perks that a large and established corporation can provide. A few perks of working at a venture-backed company over a large corporation: Ownership — the ability to own projects and individual metrics that move the company forward. Collaboration — have the opportunity to work cross-functionally with other teams and individuals Growth — quickly advance and grow your skills as the company grows. Because the company is small, employees may need to wear multiple hats, and some employees enjoy the challenge and chance to explore various facets of their company. In lieu of the highest salaries or best retirement plan, some startups also offer flexible schedules and other soft benefits that might also appeal to some very good employees. Working for a venture-backed company offers some challenges over taking a job with an established firm; however, the right startup or small business can also promise great rewards. Find out if VC is right for your company with Visible Understanding how venture capital works is an important step to determining if venture capital is right for your business. If you believe venture capital is right for your business, let us help. Find investors using Visible Connect, our free investor database, to kick off your fundraise.

Raising a Seed round is an incredible accomplishment. For many startups, it’s also the start of a long journey. As more companies get funded at the Seed stage, the competition for Series A capital is growing. In fact, if you are lucky enough to raise a Seed round, your chance of raising a second round is roughly 48%. Outside of the essentials, like finding product-market fit, scaling revenue, and building a repeatable customer acquisition process, there are plenty of other important things to consider as you get ready to raise a Series A. We’ve laid out 3 of them below. Tracking Metrics & Financial Planning David Cummings, investor and company founder, has found that most Seed stage founders don’t track enough metrics on a weekly basis. Having a grasp of key financials and metrics will become vital when courting potential investors past the Seed stage. David suggest starting with the 9 metrics below: Cash on hand Weekly burn rate Monthly recurring revenue New customers Lost customers Marketing qualified leads Sales demos Active sales opportunities Customer net promoter score (NPS) To make things easier, we’ve turned those 9 metrics into a Google Sheet template you can access here. Building the Team Building a strong team is arguably just as important as your initial product and customer acquisition process, as it’s often a key factor investors look at when deciding to invest. As Mark Suster, Founder of Upfront Ventures, puts it, “about 70% of my investment decision of an early-stage company is the team. My rationale is simple: everything goes wrong and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.” Having a small team that covers every major function of a business allows Seed stage companies to iterate quickly while staying capital efficient. As the team continues to grow, the fingerprints of these original team members will be all over the company culture. Not only does a strong team increase your likelihood of raising capital, the early days of hiring are a blueprint for your company culture and structure as you grow. Engaging Outside Stakeholders Seed stage founders are pulled in every conceivable direction. On top of building a product, building a team, and creating a repeatable sales process, founders at the Seed stage must also manage their outside stakeholders—both initial investors and the ones they hope to bring on board. As Ari Newman, Partner at Techstars, says, “Financing is not a dot, it is a line and it is part of your job as a founder and a business leader to keep the capital coming in.” Engaging potential investors can often draw you away from your day-to-day tasks, so it is important to have a clear process in place, just as you would with a marketing or sales lead. Courting potential investors can’t be a founder’s full time job, so adding process and structure will help protect your time. For founders who are ready to fundraise, we built a Fundraise Tracking Tool, which helps ensure you can track your prospective investors as simply as possible. Once you have them organized, sending a quick email update every month or so will pay dividends as you get deeper in the fundraising process. The move from Seed to Series A isn’t an easy one. It requires founders, and the teams behind them, to level up quickly. Paying attention to the above items will help ensure you and your team are set up for fundraising success. Ready to start nurturing potential investors as you ramp up for a Series A fundraise? Start a Visible trial to send quick and beautiful investor updates here.

Leveraging your existing network and investors is a great way to kick off a new fundraise. Below is a quick template to share with your current investors announcing your fundraise and asking for introduction to other prospective investors.

“How should I prepare for an investor pitch?” This is a question we hear a lot, both from first-time entrepreneurs and from founders who have raised before. There is no shortage of advice available on how to prep for a pitch meeting. Here’s the problem: if you’re asking that question at the pitch stage, you’re already too late. Most of the time, your first meeting with an investor isn’t a pitch. Instead, it’s a coffee, or a cocktail, or an introduction at an event. Often, it’s not a meeting at all—it’s an email conversation. You know the saying, “you only get chance to make a first impression?” This is especially true for investors. While there’s an awful lot of emphasis put on preparing for a pitch, an investor is going to form opinions about you based on your first interaction, well before the pitch takes place. Here are 5 questions you should answer before that first interaction to help make sure your first impression is a good one. What do they invest in? This is an easy one. You need to make sure the business you’re pitching is in line with the type of business the investor likes to invest in. If an investor only funds B2B SaaS products, don’t try to pitch her on your mobile game company. Investors often like to get involved in industries and markets they understand, which is why most investor portfolio companies share a common thread. Make sure you understand what that thread is for every investor you talk to. How do they invest? This question comes with several straightforward sub-questions. What is their typical check size? Do they like to lead rounds, or simply participate? How hands-on do they like to be? Knowing an investor’s MO for the practical details of an investment will help you plan your raise and ensure you’re not wasting each other’s time. You can start to figure this out by doing a little digging on Crunchbase, reading some press releases, and asking around. What is their background? Even if you’re talking to a large VC, you need to understand the individual(s) you’ll be working with. What about their background or experience suggests they could add value to your business? Have they worked with a particular audience or vertical that lines up with someone your business helps? Did you go to the same college? Investors want to know that you’re not looking to get funded by anyone with a checkbook. Being able to make personal connections, or speak to why you want them involved, will help you catch their interest and start building a relationship. What do they care about? Answering this question will do two things. First, it’ll help you determine whether or not a particular investor will be a good fit for your company. We believe you should do due diligence on every investor you bring on board, and this is a good early step toward that goal. Second, it will help you know what to emphasize about your company that will catch their interest. Different investors focus on different things. While some may care about the founding team or the long-term vision, others are more concerned with revenue growth or the total addressable market. Browsing an investor’s public channels, especially things like Twitter, Medium, Quora, and interviews, is a great place to start. What do you want? This is probably the most important question to answer before meeting an investor: what is it you want from them? Even if an investor is interested in your company, they need something to respond to. It’s best to not only have a clear ask in mind, but to also understand what alternative options they might offer (and know which of those options would be acceptable to you). If you can answer each of these questions before you meet with an investor, you’ll not only make a good first impression, but you’ll put yourself in a much better position to get the outcome you want. Research thousands of investors with Visible Connect:

You can look at adding an investor to your company in one of two ways; simply a source of capital, or a partner to help you grow your business. As Sangram Vajre, Founder of Terminus, puts it, “Finding a VC firm is almost like finding a co-founder. Any due diligence that you would do to add a co-founder you should do when adding a VC partner.” If you opt to find a VC that you can count on to add value outside of capital, it is your job as a founder to ensure you’re adding the proper partner. Due diligence is a part of the funding process that all founders are expected to complete. You can flip this process on its head by asking the same of your potential investors. Related resource: Startup Due Diligence: What Every Founder Needs to Prepare For While it does not need to be a formal process, you can follow the investor due diligence checklist below to confirm you can rely on your new investors as a business partner: Tell them what you’re up to. Be transparent. The key to a strong relationship with any business partner starts with open and honest communication. To get things started on the right foot, you’ll want to be transparent as possible with potential investors that you are performing due diligence. As an added bonus, if they’re helpful and open to the idea, that is probably a good sign of future communication, transparency, and help you’ll receive. A quick Google search. As most research goes, a quick Google search is a great place to start. Check out their LinkedIn, Twitter, Crunchbase, and other social profiles. Ideally, most of this research would be done before you’ve emailed a potential investor, but here are a couple of simple things to keep in mind: Location – Where are you located? Do you need local investors? Or maybe you are looking for connections and networks in strategic geographies. Industry Focus – What type of company are you? Where should your future investors/partners be focused? e.g. If you’re a B2B SaaS company don’t waste your time with marketplace-focused investors. Mark Suster suggest that it is best to prioritize investors with companies in your space. Stage Focus – What size check/round are you raising? e.g. If you’re raising a $1M seed round avoid a firm What is their financial status? One of the less obvious steps when evaluating a potential investor is finding where their funds are coming from. While most funds are made up from larger institutions like pension funds, endowments, family offices, corporations, etc. it is never a bad idea to look into the venture fund’s limited partners. Don’t be surprised to find VCs that keep their LPs names under wraps but if they are open and willing to share this information that can be a good indicator of an open relationship. Talk to other founders in their portfolio. Arguably the most important step in performing due diligence on your investors is talking with other founders in their portfolio. Ask the other founders what it has been like to work the investor, where they’ve brought the most value, how they’ve handled disagreements, etc. Investors will likely give you a list of contacts to reach out to but don’t be afraid to reach out to other founders outside of their references. If you have any investors already in your network ask them about the reputation of your new investor or any experiences they’ve had in the past. Related Resource: Startup Fundraising Checklist Do their values & culture match? As a founder, you own the values of your business. It is your duty to keep your ethics and moral framework in tact as you continue to add partners. As Brock Benefiel, author of Flyover Startups, put it, “Pitching investors is a trust exercise all of its own. You’re almost always sharing proprietary information in an investment deck and almost never securing a NDA to prevent potential VC vultures from flying away with your secrets. If you’re willing to easily hand over precious data points and secret product information, you’ve earned the right to demand investors take your code of ethics seriously.” At the end of the day, your investors goal is to generate returns. By using a quick due diligence checklist it can be an easy way to ensure both parties will get the most value from your new relationship. Are you ready to get your fundraising process started? Sign up for a free Visible trial to start emailing and nurturing potential investors.

Throughout the fundraising process countless documents and data points are being shared. Different investors will have different preferences. Below, we share our favorite posts for sharing documents, decks, and data while fundraising Our Favorite Posts for Sharing Documents, Decks, and Data What Should You Send a VC Before Your Meeting? — Mark Suster Mark Suster, Managing Director at Upfront Ventures, offers his take on what founders should send before, during, and after a meeting with investors. 6 Things Founders Should Expect During Venture Due Diligence — Alex Iskold Alex Iskold, Managing Partner at 2048 Ventures, shares 6 things that investors will expect during the due diligence process and how you should properly share them over. 16 Startups Metrics — Andreessen Horowitz The team at Andresseen Horowitz explain what 16 metrics they find to be most valuable from their portfolio and what they mean for investors. The Startup Metrics Potential Investors Want to See On the Founders Forward Blog we share the general metrics potential investors will look into during a fundraise. Well they may vary when it comes to industry investors will often want to see growth, a growing market, and strong unit economics. How to Make a Compelling Pitch Deck — Jean de la Rochebrochard Jean de la Rochebrochard, Partner at Kima Ventures, studies successful pitch decks and lays out the keys to creating and sharing a compelling pitch deck.