General Assembly Class: Insiders Guide to Seed Stage Pitching
1. To all who attended Mon night at GA: Thanks! Hope you enjoyed it and gained something.
Feedback welcome. Know any great start-up or founders? I would love to hear about it.
If you send me an email, I will put you on my list for occasional updates. Follow me on LinkedIn
and/or Twitter for updates, etc. (Page 16 of this deck has my details) .Cheers, -TW
The Seed Stage Pitch:
Mastering the Art and the Science
Insights on successful pitching from an active angel investor
and fellow entrepreneur
General Assembly Seminar
Tom Wisniewski
RosePaul Investments
Monday, April 15th, 2013
2. Agenda
I. Kick-off and Introduction
II. Pitching to Prospective Investors
III. Additional Q&A, Feedback and Beverages
September 2011 1
confidential
3. I. Kick-Off and Introduction
Seminar Rationale: Why are we hear?
Whatâs the Problem?
The odds are against you as an entrepreneur pitching investors: the "1 in 100 get
fundedâ ratio is a reality. Raising seed-stage money is tough.
Poor communication is perhaps the most important driver of the dreaded investor
"pass", the "ding", the un-returned email.
Having experienced (and delivered!) a lot of *bad* pitches, I have become a
"student" of the pitch and of effective communication generally.
Entrepreneurs make a lot of avoidable mistakes and miss opportunities.
Pitching is more than a good 10-page PowerPoint.
There is *no* shortage of advice on how to pitch, but it is often conflicting and
overwhelming. (WTF????)
What would help?
Understand the basics.
Review some examples the good and the bad.
Understand the rationale, the "whyâ
Study. Practice. Pitch. Repeat.
Everyone can improve their pitch. Channel some energy and become a "student" of
the pitching
September 2011 2
confidential
4. What would I like you to walk away with?
Better understanding of pitching.
A set of specific insights that will *change* your pitch.
A âto-doâ list: starting point(s), actions, things to try.
A set of recommended resources to consult and learn more
from.
A few new relationships with others in the NYC start-
up/fundraising ecosystem: fellow entrepreneurs, investors, etc.
Answers to specific questions about pitching that you might
have.
September 2011 3
confidential
5. Tom Wisniewski: My background
Born in NYC; grew-up in Montclair, NJ
Physics and Philosophy major undergrad
(Clark University); MBA at Tuck School
(Dartmouth)
1st Job: Programmer at Morgan Stanley then
moved to Investment Banking
After B-school: joined a start-up management consulting firm Mitchell Madison
Group; focus on Strategy/Operations/IT for financial services, tech, outsourcing,
private equity/VC clients (1993 to 2000)
Walker Digital: helped set-up and run an early âinternet incubatorâ (2000)
Independent Advisor / Turn-arounds: Advised VC and PE Firms on portfolio
company strategy and new investments; joined the management team of two
companies
Currently:
⢠Early stage investor and advisor to start-ups
⢠Investor and advisor to VC and PE funds
⢠Member and director at New York Angels
Recent Investments: LiveLook (Saas, live collaboration, co-browsing); Movio
(Digital âRedBoxâ ); Bizodo (Saas, paperwork automation); Wanderu (âKayakâ for
Ground Transportation), Social Starts (seed fund for start-ups); Brooklyn Bridge
Ventures (Charlie OâDonnell); Entrepreneurs Roundtable Accelerator (ERA)
September 2011 4
confidential
6. So .what questions do you have about Pitching?
Jen How detailed financials ?
Olga: How to pitch before reves and product
Ranjan: How much focus on team vs. ???
George: Whatâs more effective call or email?
Alex: How should a deck be?
Maury: How not to get screwed?
Deekron: Exit scenarios?
September 2011 5
confidential
7. II. Pitching to Prospective Investors
September 2011 6
confidential
8. Communication is Critical Why?
âFinding Diamonds in the Roughâ problem. There is no shortage of supply:
lots and lots of ideas, pitches, people, etc.
⢠The problem for investors is finding the âdiamondsâ.
The âfirst minuteâ problem. If you loose someoneâs interest in the âfirst
minuteâ, you usually loose them.
⢠âFirst minuteâ = âfirst minuteâ sometimes first 30 seconds!
⢠âFirst minuteâ = a conversation, a meeting, anything
⢠I need to quickly figure out whether I should âspendâ more time/effort with you,
or move on to something else.
The â0 to 60â problem. Potential investors (or potential employees, customers,
etc.) usually start out knowing nothing about you or your venture.
⢠Getting someone âfrom 0 to 60 mphâ is very challenging: too much to say,
donât know where to start.
A Pitch is a âSaleâ. You not just trying to âdescribeâ, you are âsellingâ. Easy to
tell people what you are doing; harder to get them to âbuyâ.
⢠You are selling your âproductâ to prospective âcustomersâ. Product = your
company and the opportunity it presents.
⢠You are interviewing for a new job. Product = you and your team.
September 2011 7
confidential
9. Principles of Communication: A Starting Point
To start, lets use a simple framework: Audience, Messages, Storyline, Goals, Situation.
Audience. Who is the audience? Who are you selling to? If you donât
understand someone's âperspectiveâ you will be ineffective
⢠For example: âthey have 6 Saas investments vs. they canât spell Saasâ
⢠People generally understand things by association (to things *they* know).
Messages. What points you are making? What is the single key thought you are
trying to impart with each page?
⢠âthe market is huge and growingâ is a message; a chart, some stats, some
explanation is what makes up the page
Storyline. What is the narrative story you are building with the collection of
messages? Does the story flow well and get to your conclusions?
Goals. What is the goal of this specific meeting?
⢠Unlikely it is getting a âcheckâ. Getting to the next step in the process.
Situation. What the format of the pitch? What are the constraints?
⢠2 minute elevator pitch vs. 10 minute Power Point pitch vs. email attachment
September 2011 8
confidential
10. The Communication Pyramid
Level of Detail in
Level of Detail in a Different
Document Documents
The Executive 1 page summary
Summary
First Page of Each 10 âpage deck
âChapterâ
Each Chapter 20 âpage deck
Each Chapter with 20 page deck, +++
all the Back-up
September 2011 9
confidential
11. âGoodâ Pitch Deck
From âTriple Playâ of VC Presentations by Adapted from â10 Slides to an Awesome
Mark Suster (former entrepreneur, now VC) Pitchâ by Dave McClure, 500 Start-Ups
Slide 1 â Team Bio 1. Elevator Pitch
Slide 2 â 50k foot view of your company 2. The Problem
Slide 3 â Problem Definition 3. Your Solution (Demo Here!)
Slide 4 â How do you solve the problem? 4. Market Size
Demo Web Version and 5. Business Model ($)
a Demo Video Example 6. Proprietary Tech
Slide 5 â Market Sizing 7. Competition
Slide 5 warning: (Market Sizing Pitfalls) 8. Marketing Plan
Slide 6 â Competition 9. Team / Hires
Slide 7 â Customer Adoption / Traction 10. Money / Milestones
Slide 8 â Team
Slide 9 â Financial projections
Slide 10 â Use of Proceeds
Slide 11 â Fund raising process / Next steps
Appendix â Back-up slides
How to deal with the dreaded question of
valuation?
http://www.bothsidesofthetable.com/pitching-a-vc/ http://www.slideshare.net/dmc500h
ats/how-to-pitch-a-vc-sept-2010
September 2011 10
confidential
12. Examples of âGoodâ Pitches
http://bitly.com/bundles/royrod/2
September 2011 11
confidential
13. Common âFormsâ of Pitch Communication. What are they? Which should I use?
âDocumentâ Simplistic Description Common Situation/ Use
1-pager â1 pager Exec Summary, Word ⢠Email attachment or handout
docâ ⢠Online platforms e.g. Gust, AngelList
Email Brief âTeaser paragraph of text / bulletsâ ⢠âIn the intro emailâ (w/ attachments)
Business Plan â10-40 page Word docâ ⢠Detailed discussions (similar use)
⢠Stand-alone, due diligence
Pitch Deck â10 page PowerPoint ⢠â15 minute stand-up presentationâ
presentationâ ⢠Email attachement
Long-Form Pitch â20-40 page version of 10 pager; ⢠â60-90 minute follow-up meeting with
Deck PowerPoint presentationâ smaller groupâ
Elevator Pitch âNo document, just you talking for ⢠Your quick intro after you meet
60 secondsâ someone in person
âVideoâ Pitch â10 minute video of your deck/ ⢠Email attachment
demo w/ you voiceâ ⢠Online platforms e.g. Gust, AngelList
Due Diligence Docs âAll the detailed spreadsheets, ⢠For detailed discussions with
data, etc. that back-up your pitchâ interested investors, usually post-
e.g. Financial Projections, Sales term-sheet
Funnel, Legal Docs ⢠Online platforms e.g. Gust, AngelList
The Good News:
⢠you donât need to have all of them (maybe ever, certainly 1 or 2 to start is fine)
⢠much of the content, messages, storylines can be shared and reused
September 2011 Preparing thoughtful docs
⢠refines your thinking and your venture. 12
confidential
14. Key Success Factors and Take-Awayâs
Find Fit. Does this investor have âfitâ? Do they invest in ventures like
mine?
......if not, then move on. (or at least prioritize accordingly)
Prepare! Donât be lazy; invest some time.
⢠Steve Jobs: 30 hours to develop, 30 hours of practice 30 minutes of
presentation.
⢠For example : âAudienceâ. What have they invested in? Recently?
What can you find out about their background? Interests? Hot
buttons?
- How? Duh .Google: Blogs, Quora, YouTube, CrunchBase; talk
to people they know, better talk to those they have invested in.
Pitch, Get Feedback, Revise. Repeat. No venture idea was built in
a vacuum. The ONLY way to develop business ideas is to share them,
solicit feedback, make adjustments, develop/refine/add and ..DO IT
AGAIN!
⢠1 part âstudyingâ pitching, 1 part âdoingâ pitching, 10 parts repeating
both this is becoming a âstudentâ
September 2011 13
confidential
15. What would I like you to walk away with?
Better understanding of pitching.
A set of specific insights that will *change* your pitch.
A âto-doâ list: starting point(s), actions, things to try.
A set of recommended resources to consult and learn more
from.
A few new relationships with others in the NYC start-
up/fundraising ecosystem: fellow entrepreneurs, investors, etc.
Answers to specific questions about pitching that you might
have.
September 2011 14
confidential
16. III. Additional Q&A, Feedback and Beverages
Feedback on this class:
What did you like most about this seminar?
What could be added and improved to make it better?
What other topics would you like to see a seminar conducted on ?
September 2011 15
confidential
17. Thanks!
Thomas Wisniewski
Contact Info
Email: twisniewski@newyorkangels.com
LinkedIn: http://www.linkedin.com/in/thomaswis
Twitter: @thomaswis
This presentation: http://www.slideshare.net/Thomaswis/
New York Angels www.newyorkangels.com
New York Angels Educational Meetup: http://www.meetup.com/NY-Angels/
September 2011 16
confidential
19. II. Pitching to Prospective Investors
Sources of Investment: Seed Fundraising, Angels and VCâs
Earlier Stage âSeedâ Later Stage
âYouâ Friends and
aka Bootstrapped Angel Investment Venture Capital
Family
âSeedâ VC âTraditional Series Aâ VC
Round Size $: ⢠$10âs of K ⢠$100âs of K ⢠$500K to ⢠$5M-$15M
to $100K to $1M+ $1.5M
Investment Size $: $5K â $10âs of K ⢠$25K â $75K ⢠$250K-$750K ⢠$3M â $5M
Valuation (Pre- ⢠< $1 M ⢠$1 â 5 M ⢠$5-10 M ⢠$10 â 25 M
Mon):
Stage (Pre-Round): ⢠An idea, initial/rough ⢠Detailed b-plan, ⢠Significant variation among firms
⢠Expected to b-plan ⢠Key founders (bus & tech) full-time but . Angel req. +:
have: ⢠Initial founders, key ⢠Prototype/alpha done and tested, - Anchor clients on board, revenue
advisors ⢠Some piloting (paying?) growth (B2B),
⢠Path to ??? customers, some revenues?, - Growing base of users, with strong
⢠All legal documentation in place, usage trends (B2C)
board of directors - ..Growth potential! Credible
⢠Path to break-even or next funding path to $100M Rev
⢠Donât Expect: ⢠$ Rev, Customers, ⢠Income (e.g. cash flow positive); ⢠Income (e.g. cash flow positive)
Minimum Viable all key management ; completely
Product (MVP); full developed business model (e.g.
legal documentation understand it will change)
Who/what are ⢠People you already ⢠Experienced early stage ⢠Firm with multiple professionals that
they? know, that trust investors (individuals or a group) raises, invests and manages
you, and (maybe) ⢠Accredited Investors. individual funds (other peopleâs $)
understand your ⢠Angel investing is not their âjobâ; ⢠Working F/T (this is their job )
venture may not be F/T endeavor ⢠E.g.: Greycroft, RRE, Union Square
September 2011
⢠E.g.: NY Angels, GoldenSeeds
18
confidential
20. Given this landscape, how do I get to the pitch?
Who are the ârightâ investors? Where is there a âfitâ?
⢠Reality Check. âpeople invest in things that they understand and have experience withâ
- Target find Fit: Find investors that come from industries, sectors, business models
etc. that are same/similar to your venture and your customers
How to âgetâ a pitch meeting?
⢠Connect. The hard part.
- Avoid âcold-callsâ; look for âwarm introductionsâ
- Networking. Who do you know that knows them?
- Find them at an event. (Email sucks!)
Really you should be thinking How do I build a relationship first?
⢠Pitching by its very nature can be awkward. âThis guy wants something from me.â
⢠Most investors mean-well, and would like to help but are busy
Solution: Build a relationship before you need to pitch. OK, How?
⢠Give, donât Ask: what can you do for them?
⢠âAsk for advice, not moneyâ
⢠Debate / Discuss a topic, Ask opinion about X.
⢠Find ways to âshowâ rather than âtellâ:
September 2011 19
confidential
21. Who are these âAngelsâ? What do they look like?
Experienced, successful entrepreneurs: frequently multiple exits
⢠Some from âtech-start-upsâ some from other businesses
⢠Usually some link to
Successful âcorporateâ business people: CEO or CxO-types
Older: most are in the 40-60 age group. But there are also notable angels
in their 20âs and 30âs e.g. newly minted start-up millionaires
3 â 10+ Angel Investments
~10% of investible capital in Angel Investments
Differ *widely* in: Industry/Functional Experience, Investment Expience,
Interests, Target Sectors/Stage, Investment $, Risk Tolerance, personal
doâs/donâts and hot buttons.
Lists? Not many. All are partial. AngelList? Gust? Other?
September 2011 20
confidential
22. NY Angels Profile
www.newyorkangels.com
Member Profile: ~80 investor/members; several early-stage funds; Member
backgrounds are generally representative of the tech / entrepreneurs / industries in NYC:
software, e-commerce, ad-tech, finance, media
Sector Focus: Internet, e-commerce, new-media, software; B2C and B2B. Mostly NYC
Area.
Stage. Mostly early stage (with some customers/revs), some seed stage (pre-revenue)
Valuations/ Investment Size: NYA pre-money valuations tend to range from $1M â 4M;
investments tend to range from $250K to $1M+;
⢠For larger rounds, NYA often leads the deal and helps find the rest of the capital by
sharing/syndicating the deal with other Angel Groups
Group Structure / Investment Decisions. NYA core structure is as a group of individual
investors. Individual investors âopt inâ to deals and make their own investment decisions.
⢠Typical member invests $25-50K in a deal.
⢠In addition to the core âopt-inâ model, NYA has just closed a small seed fund that will
operate in parallel (using a âdemocratic modelâ for investment decisions)
History/Background. NYA has invested $45M+ in 70+ companies.
⢠We are very active in the NYC entrepreneurial / early-stage ecosystem
September 2011 21
confidential
23. Variations on the Theme: Other Players
âSuper Angelâ (vs. Angels, Angel Groups). Sophisticated angel investor with a large portfolio
of early stage investments (30? 50?) and that is investing frequently (10 + per year). E.g. David
Rose, Fabrice Grinda
Microfund or Micro VC Fund. Small VC fund ($1-10 M) often run by a single person typically
making âangelâ size investments in early stage companies.
Seed Fund. VC fund focused on âseedâ (aka Angel) stage investments: often pre-revenue,
pre-product. Some VCâs that typically invest in âSeries Aâ rounds will reserve a portion of their
fund for seed investments: e.g. $250 â 750K investments at $1-5 Million valuations
Incubator/Accelerator. Entity that provides non-monetary support/services (in addition to $âs)
to early stage ventures. Typical support/services can include: space, IT infrastructure, shared
admin service, advice/feedback, introductions/networking. Public vs. private, independent vs.
captive. Examples: TechStars, ER Accelerator, DreamIT, Y-Combinator
Strategic Partner/Investor. Some operating companies will invest in ventures. Typically it is
in an industry/ sector / product-space similar to theirs (sometime with an eye toward potential
acquisition in the future)
Crowd Funding Platforms. Currently this is financing via donation or âpre-saleâ of products.
Equity financing under JOBS Act is TBD. Not obvious this will be a good match for most Tech
AngelList. Similar to an angel group, but without centralized control. More of a open
âmarketplaceâ of individual investors and ventures to facilitate funding.
Gust. Software platform that most angel groups utilize (and many small VCâs) to run their
investment process and connect angel groups together to share deals.
September 2011 22
confidential
24. Additional Thoughts ..
Lots of start-up advice out there. Lots about the art of fundraising.
⢠Huge volume of blogs, articles, Quora-posts, etc.
⢠Well .thatâs good, right? Yes.
⢠But why doesnât it help?
- Overwhelming
- Conflicting
- Not specific
- Not enough context
- Itâs just advice, ideas, ..not interactive, not experience.
⢠Need to understand the âwhyâ behind it all and adapt it to your venture, your situation.
Beware of simple answers, absolutes. As you are reading and listening to all these
opinions, data sources
⢠For any âfactâ âruleâ âtruthâ if you donât understand how it is both true/false, you donât
really understand the point.
- Under what circumstances is this ârule for fundraisingâ âtrueâ? Where does it apply
well With whom?
- How and when is it not true (Or less true)?
September 2011 23
confidential