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The Helpful VC
1. The Helpful Purple
Polka Dot VC
How to Position Your Unique โValue-Addedโ Superpowers
for Better Branding, Marketing, Fundraising & Dealflow
Dave McClure
Dec 2018
2. Dave McClure: Nerd, Hillbilly VC
Geek, Engineer, Marketing, Blogger, Entrepreneur, Angel Investor, VC
โ Born in WV (โ66): Hillbilly & WVU Mountaineer football fan
โ Johns Hopkins (โ88): Applied Mathematics / Engineering, CS
โ Silicon Valley (โ89): Programmer & SQL Databases, Intel / MSFT
โ Founder/CEO Aslan Computing (โ92-โ99), Internet + Ecom Consulting (small exit)
โ Director Marketing @ PayPal (โ01-โ04), Simply Hired (โ05-โ06)
โ Angel Investor/Advisor (โ04-โ09): Mint, Slideshare, Mashery, Twilio, WePay
โ Founders Fund (โ08-โ10): Lyft, Credit Karma, Twilio ($TWLO), SendGrid ($SEND)
โ 500 Startups (โ10-โ17): $400M / 2000 companies / 50 countries / 10 Unicorns
3. How You Help -> Brand + Competitive Positioning
YOU
(THE AWESOME VC)
โ What you can do (well)
โ What you do better / different
โ What you promote / promise
(your brand value)
TARGET
PORTFOLIO
COMPANIES
โ What they want
โ What they need
โ What makes a difference
COMPETING
INVESTORS
โ What they say they can/will do
โ What they actually can/will do (well)
โ What they do that really matters
4. Investment Thesis
โ What Kind of VC do you want to be?
โ Stage, Geography, Industry Vertical
โ Fund Size, Check size, Follow-on
โ Lead rounds? Board seats?
โ Why You? Are you sure you can do this? (3X / 20%)
โ 1) can you raise money?
โ 2) can you get dealflow?
โ 3) can you help companies? how?
Q: Are there competitors with a similar thesis? Why are you different / better?
Why will great companies come to *you* instead of other competitors?
5. VC Dealflow Funnel
โ Thesis: what/how you plan to invest
โ Brand: use your value-add to attract companies
โ Marketing: activities that generate dealflow
โ Evaluation: filter dealflow *before* taking mtgs
โ Meetings: in-person evaluation & DD Qs
โ Deal Memo: document deals you want to do & why
โ Negotiation: specify terms and make / close offer
โ Investment: wire the money!
โ โฆ
โ โฆ (then wait 7-15 years) ...
โ โฆ
โ OMG UNICORNS!
BRAND + MARKETING
DEALFLOW
EVALUATION
MEETING
DEAL MEMO
TERM SHEET
INVEST!
THESIS โVALUE-ADDโ
UNICORNS!
(hopefully)
6. Branding & Marketing: How to Generate Dealflow
โ Brand: whatโs your name / logo / soundbite / unique value proposition?
โ Whatโs the story youโre going to tell the market?
โ Superpower: what makes you special / why are you different?
โ Is there something you can do that will make companies come to you?
โ Marketing: activities / communications to LPs, founders, press, etc
โ Content: writing/blogging, speaking, training
โ Services: are there services you can provide to startups to generate interest?
โ Founders: where do the founders you want to invest in hangout? FIND THEM!
โ Networking: who do you need to know in the industry? VCs? Scientists? Partners?
โ PR strategy: who can help generate news about you / your firm / your strategy?
โ Events & Conferences: should you speak / attend industry events? Should you run events?
โ Online Platforms / Other Investors
7. Help Framework: Why, Who, When, What, How?
โ Why Help Companies?
โ Just help them win! (goodwill)
โ Help them with something youโre good at
โ Find out how they are doing (metrics)
โ Build your reputation -> better dealflow
โ Earn right to participate in future rounds
โ Who Should You Help? For How Long?
โ Only Winners? Everyone? Even Losers?
โ Until next round? Forever?
โ Until they โwinโ (or FAIL to win...)
โ Board Seats / Advisor seats?
โ Define when / how you will pull the ripcord
โ Define your โHelp Framework.โ
โ What will you do?
โ Who will you help?
โ For how long?
โ Until something happens? Or forever?
โ Tell them what you expect to get back
โ What is Your Unique Help Superpower?
โ Product Development
โ Marketing/Sales
โ People/Recruiting/Hiring
โ Operations/Process
โ Raise More Capital (*not unique)
8. Fundraising: Key Slides in Your Pitch Deck
Core Deck (10 slides)
โ Cover: Name / Brand / Image
โ Thesis: Basic Fund Concept + Goals
โ Team: Bios / Academic / Work Experience
โ Track Record: Prev Portfolio / Top 3 Deals
โ Superpower: Services / Value-Add
โ Competition: Differentiation / SWOT analysis
โ Dealflow: Marketing / How to Get Deals
โ Selection: Criteria / DD / Process
โ Fund Model: [spreadsheet]
โ Capital: AUM / Current LPs / Fundraising
Appendix Slides
โ Investment Thesis / More Details
โ Winners / Case Studies (1 slide per win)
โ Team Bios (1 slide per GP)
โ Advisors / Mentor Network profiles
โ Examples of dealflow-generating activity
โ Sample Deal Memo
โ Fund Terms / Legal
* emphasize items in blue if you have โhotโ
thesis, pedigree, experience, track record
* emphasize items in red if you donโt
9. EXAMPLE: Wingnut Investment Fund
Wingnut Ventures ($20M seed fund)
โ Stage: seed investments + some follow-on at Series A/B
โ Vertical: internet-connected hardware/software devices
โ Geo: US-centric (mostly US tech metros, some non-US)
โ Allocation: 40 seed checks @ ~$250K + 10 Series A/B @ ~$1M
โ Lifecycle: 10 yr fund + 2 x 1yr extensions; 5 yr initial investment period
โ Reserves/Recycle: 50% 1st checks + 50% follow-on; recycle up to 120%
โ Fees/Carry: 2% avg mgmt fees, 20% carry (after 1X returned)
โ Team: 1-2 partners + 1-2 associates + 0-1 admin
10. Limited Partner Profiles/Issues
Types of LPs
โ Institutional
โ Pension Funds
โ Foundations / Endowments
โ Financial / Insurance Companies / Banks
โ Corporates
โ Government / Community
โ Private
โ HNW Individuals (โHigh Net Worthโ)
โ Family offices (SFO, MFO)
โ FFF (Friends, Family, Fools)
โ You, Your Dog, Your Cat.
Issues for Potential LPs
โ Asset Allocation
โ Equities, Bonds, Cash, Real Estate, โAlternativesโ
โ Alternatives = Hedge Fudns, PE, VC, etc
โ Time-horizon / Liquidity needs (short vs. long)
โ Investing Motivations
โ Pure Economic Returns (perception vs reality)
โ Strategic (innovation/IP, M&A, people, product)
โ Access to Dealflow (industry vertical focus?)
โ Economic Development (Jobs, Ecosystem)
โ Marketing/PR (โItโs cool to invest in VC/techโ)
โ Have they invested in VC funds before?
โ Have they invested in startups before?
โ Interest in Emerging Managers / Early-Stage?