Advice for startups on hacking the venture capital process combined with results of an entrepreneur survey about fundraising in Europe - from a partner at Accel

1. 1
HackVC.

2. Hustlers.
Drew Houston and Arash Ferdowsi's
apartment in 2007
Mike Cannon-Brookes and Scott Farquhar’s
first office, based out of the local Kinko’s
Sachin Bansal and Binny Bansal in 2008 at
their first office, which was also the warehouse
Ilkka Paananen sitting at his cardboard
desk in 2010
Mark Zuckerberg’s dorm room in 2005 where
the first versions of Facebook were built
Girish Mathrubootham in FreshDesk’s
first office where rent was $160 per
month
Cloudera founding team in their first
office in 2009
Stewart Butterfield working out of Tiny
Speck’s first office in 2010

4. @fdestin

5. The Hustle
Pan-European Network Vertical Focus Coverage
Cross Border FinTech
Next-Gen Infrastructure & Security
Mobile Marketplaces
Strong Companies in Leading Geos
Strategic Relationships with European Teams
Mind Share Within Europe
Shared Global CRM
8,000+ Tracked companies
Calls with founders
Meetings
2,000+
1,000+
21 3

6. Dealfow = Lifeblood. Mostly outbound.
• Portfolio companies act
as local “Accel
Ambassadors”
• Organization focused on
uncovering opportunities
early
• Methods: AppAnnie,
Mattermark, systematic
press coverage (new
products releases,
awards, HN etc)
• Strong local presence:
hosted over 500
entrepreneurs across 10
events in 9 cities over the
last year

7. Always Looking For the Next Great Company
Companies Tracked
in Global Accel
Database
Calls &
Meetings
Investments Since
2013
8,000
16,000
24,000
32,000
2011 2012 2013 2014
0
4,500
9,000
2011 2012 2013 2014
79 (0.3%)
Actual VC Slide with
Real Data !!

8. Reality check
You are trying to get the attention of people who have 8 - 12
meetings per day and may not remember your name
At any time you are competing with:
- 10+ other projects inside a fund and
- 100+ startups in the market at large
Efficient time management is the #1 skill required
to survive as a venture capitalist
8

9. 9

10. 1: Completely Disagree
10: Completely Agree
Survey Results
97 responses
Bias towards early stage
Over 50% found the process of raising VC
confusing, opaque and frustrating
10

11. How many investors did you meet ?
28% met less than 5 Investors
59% met less than 10 Investors
How long did it take ?
66% spent more than 3 mo
26% spent more than 6 mo
11

12. Star Investments
Recent activity
Board Load
Cultural Fit
“It was clear to me which partner I should approach at a given firm”
And yet it’s … ALL …
about the RIGHT partner
1: Completely Disagree
10: Completely Agree
12

13. Number of Accel-funded
startups where contact
came from cold email
1
“I managed to get meetings only through introductions”
Sometimes …
cold emailing works
So what ?
13

14. Intellectually lazy
Pattern recognition
pushed too far
Lesson givers
Know it alls
“In general, the VCs I met displayed a strong grasp of my business”
What an indictment of European VC !
14

15. Invaluable insights
Inspired to excel
Kicked my butt
Some VC's offered advice and insights
that I found very meaningful to my business
Common theme : some VC’s stand out
… in a sea of mediocrity
28%
Burnt
15

16. What characteristics matter most to you in a VC ?
Trustworthy
Entrepreneur Friendly
Quality and Depth of Network
Experienced
Supportive
Track record of success
Risk Taking
Collaborative
Global Platform / Global Reach
Visionary
Hands-On and Engaged
Influential
Analytical
Expert
Thought Leader
Innovative
Emerging, rising star
0 17.5 35 52.5 70
16

17. Process was transparent and fast
Process opacity drives entrepreneurs mad
“Founders don’t care about difficulties, they complain about unkowns”
I got a clear no
17

18. Entrepreneur’s VC turnoffs
Approach Engagement Behavior
Intellectually Lazy
Patronizing
Tell you what to do instead of asking
questions
Know-it-alls
ADD
Do not take time to understand
Lack of risk taking mentality
Focused only on financials
Cold
Unapproachable
Unresponsive
“Radar Play”
“Send young attractive associates at events
playing interested and driving endless follow-ons”
Not responsive
Slow
Unprepared
Checking email !
Playing for time
Hanging around the hoop
Fund competitors
Aggressive on terms
Bait-and-switch
21 3
18
Sin : Arrogance
18

19. Approach
Target
Engage
Close
19

20. Get in(vited)
Do your Research
Don’t
Get the intro
Crunchbase / Angellist / LinkedIn
Investments led
Leverage the junior guys
Map them on LinkedIn
Invite me on LinkedIn
Hassle me on Twitter
Invite me for coffee
Use other naive methods
Get upset if I don’t respond to unsolicited email
Target the individual not the firm
Founders are best
People in your sector are good
Personal friends work well
Multi-target the same person
Get noticed
Blogger press
Product Hunt
Awards are OK
Accelerators are OK
Clients / traction are best (duh!)
Leverage the intro
Short, focused emails / TL;DR
Seduce and intrigue
Generate tension if you are raising
Be persistent
20

21. First call or meeting
In-depth meeting
Engaged process
Done
Partnership presentation
1,000 teams
250 teams
100 teams
20 teams
10 teams
Know your maths * completely anecdotal data I made up
21

22. JohnAccel 2. In-depth meetingDestin Concerned about US
Run a campaign
SteveIndex 1. First MeetingRimer Scheduled 5/30
JohnSequoia 0. Intro MadeBotha Chase 5.27
Mark L.A16Z 1. First MeetingJordan Scheduled 6/12
IntroFund StagePartner Status comment
…
SteveDST Seeking IntroMilner To Do
22

23. 23

24. Don’t ever stop running the business
24

25. Fundraising facts
Fact 2: You are talking to too few investors
Fact 1: Inbound Marketing Wins
25
Fact 3: You are over-estimating your chances of success

26. Be a VC - happy founder
1. Being turned down is the norm
2. You can build (real) relationships
3. You are part of an ecosystem
4. Pay-it-forward
26

27. And remember … everyone starts small
Drew Houston and Arash Ferdowsi's
apartment in 2007
Mike Cannon-Brookes and Scott Farquhar’s
first office, based out of the local Kinko’s
Sachin Bansal and Binny Bansal in 2008 at
their first office, which was also the warehouse
Ilkka Paananen sitting at his cardboard
desk in 2010
Mark Zuckerberg’s dorm room in 2005 where
the first versions of Facebook were built
Girish Mathrubootham in FreshDesk’s
first office where rent was $160 per
month
Cloudera founding team in their first
office in 2009
Stewart Butterfield working out of Tiny
Speck’s first office in 2010
27

29. Some founder pitch advice
Dry run with friends + Train on 2 shitty funds
Know your metrics cold
Your pitch must be perfectly prepared so that
Understand your audience
Know your unit economics cold
Know your risks and be open about them
Be exciting and memorable
Be brave, confident and totally honest
Enjoy yourself - good humour is contagious
You can deviate effectively
You can focus on the audience’s reactions
You can always stay on track
DON’T
Pitch the market
Pitch the competition
Give long answers to questions
Get sidetracked for too long
Fear silence
Get funded (vs. being right)
Get to the next meeting
Create relationship
Detect toxic investors
YOUR OBJECTIVES
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30. Level Up - Hacks
Build intangible value : visible board, visible advisors
Practice concerted pitching
Give anyone an excuse to say no
Give overly punchy price guidance
Miss any short term numbers
Hide bad news
Badmouth the competition
Disclose widely that you are
fundraising
Disclose who you are talking to
Treat bad offers seriously
Ever take money from assholes
Engineer regular, personalized progress points
Pace news flow (e.g. new customer wins)
Engineer tension in the process (at the right time)
Work to (credible) deadlines
Frame the market yourself & reframe questions
Prepare the data ahead of time (e.g. cohorts)
Practice data rationing
Volunteer diligence contacts
DON’T
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