1. The Helpful Purple
Polka Dot VC
How to Position Your Unique “Value-Added” 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
● Born in WV (‘66): Hillbilly & WVU Mountaineer football fan
● Johns Hopkins (‘88): Applied Mathematics / Engineering, CS
● Silicon Valley (‘89): Programmer & SQL Databases, Intel / MSFT
● Founder/CEO Aslan Computing (‘92-‘99), Internet + Ecom Consulting (small exit)
● Director Marketing @ PayPal (‘01-‘04), Simply Hired (‘05-‘06)
● Angel Investor/Advisor (‘04-‘09): Mint, Slideshare, Mashery, Twilio, WePay
● Founders Fund (‘08-‘10): Lyft, Credit Karma, Twilio ($TWLO), SendGrid ($SEND)
● 500 Startups (‘10-‘17): $400M / 2000 companies / 50 countries / 10 Unicorns
3. How You Help -> Brand + Competitive Positioning
YOU
(THE AWESOME VC)
● What you can do (well)
● What you do better / different
● What you promote / promise
(your brand value)
TARGET
PORTFOLIO
COMPANIES
● What they want
● What they need
● What makes a difference
COMPETING
INVESTORS
● What they say they can/will do
● What they actually can/will do (well)
● What they do that really matters
4. Investment Thesis
● What Kind of VC do you want to be?
○ Stage, Geography, Industry Vertical
○ Fund Size, Check size, Follow-on
○ Lead rounds? Board seats?
● Why You? Are you sure you can do this? (3X / 20%)
○ 1) can you raise money?
○ 2) can you get dealflow?
○ 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
● Thesis: what/how you plan to invest
● Brand: use your value-add to attract companies
● Marketing: activities that generate dealflow
● Evaluation: filter dealflow *before* taking mtgs
● Meetings: in-person evaluation & DD Qs
● Deal Memo: document deals you want to do & why
● Negotiation: specify terms and make / close offer
● Investment: wire the money!
● …
● … (then wait 7-15 years) ...
● …
● OMG UNICORNS!
BRAND + MARKETING
DEALFLOW
EVALUATION
MEETING
DEAL MEMO
TERM SHEET
INVEST!
THESIS “VALUE-ADD”
UNICORNS!
(hopefully)
6. Branding & Marketing: How to Generate Dealflow
● Brand: what’s your name / logo / soundbite / unique value proposition?
○ What’s the story you’re going to tell the market?
● Superpower: what makes you special / why are you different?
○ Is there something you can do that will make companies come to you?
● Marketing: activities / communications to LPs, founders, press, etc
○ Content: writing/blogging, speaking, training
○ Services: are there services you can provide to startups to generate interest?
○ Founders: where do the founders you want to invest in hangout? FIND THEM!
○ Networking: who do you need to know in the industry? VCs? Scientists? Partners?
○ PR strategy: who can help generate news about you / your firm / your strategy?
○ Events & Conferences: should you speak / attend industry events? Should you run events?
○ Online Platforms / Other Investors
7. Help Framework: Why, Who, When, What, How?
● Why Help Companies?
○ Just help them win! (goodwill)
○ Help them with something you’re good at
○ Find out how they are doing (metrics)
○ Build your reputation -> better dealflow
○ Earn right to participate in future rounds
● Who Should You Help? For How Long?
○ Only Winners? Everyone? Even Losers?
○ Until next round? Forever?
○ Until they “win” (or FAIL to win...)
○ Board Seats / Advisor seats?
○ Define when / how you will pull the ripcord
● Define your “Help Framework.”
○ What will you do?
○ Who will you help?
○ For how long?
○ Until something happens? Or forever?
○ Tell them what you expect to get back
● What is Your Unique Help Superpower?
○ Product Development
○ Marketing/Sales
○ People/Recruiting/Hiring
○ Operations/Process
○ Raise More Capital (*not unique)
8. Fundraising: Key Slides in Your Pitch Deck
Core Deck (10 slides)
● Cover: Name / Brand / Image
● Thesis: Basic Fund Concept + Goals
● Team: Bios / Academic / Work Experience
● Track Record: Prev Portfolio / Top 3 Deals
● Superpower: Services / Value-Add
● Competition: Differentiation / SWOT analysis
● Dealflow: Marketing / How to Get Deals
● Selection: Criteria / DD / Process
● Fund Model: [spreadsheet]
● Capital: AUM / Current LPs / Fundraising
Appendix Slides
● Investment Thesis / More Details
● Winners / Case Studies (1 slide per win)
● Team Bios (1 slide per GP)
● Advisors / Mentor Network profiles
● Examples of dealflow-generating activity
● Sample Deal Memo
● Fund Terms / Legal
* emphasize items in blue if you have “hot”
thesis, pedigree, experience, track record
* emphasize items in red if you don’t
9. EXAMPLE: Wingnut Investment Fund
Wingnut Ventures ($20M seed fund)
● Stage: seed investments + some follow-on at Series A/B
● Vertical: internet-connected hardware/software devices
● Geo: US-centric (mostly US tech metros, some non-US)
● Allocation: 40 seed checks @ ~$250K + 10 Series A/B @ ~$1M
● Lifecycle: 10 yr fund + 2 x 1yr extensions; 5 yr initial investment period
● Reserves/Recycle: 50% 1st checks + 50% follow-on; recycle up to 120%
● Fees/Carry: 2% avg mgmt fees, 20% carry (after 1X returned)
● Team: 1-2 partners + 1-2 associates + 0-1 admin
10. Limited Partner Profiles/Issues
Types of LPs
● Institutional
○ Pension Funds
○ Foundations / Endowments
○ Financial / Insurance Companies / Banks
○ Corporates
○ Government / Community
● Private
○ HNW Individuals (“High Net Worth”)
○ Family offices (SFO, MFO)
○ FFF (Friends, Family, Fools)
○ You, Your Dog, Your Cat.
Issues for Potential LPs
● Asset Allocation
○ Equities, Bonds, Cash, Real Estate, “Alternatives”
○ Alternatives = Hedge Fudns, PE, VC, etc
● Time-horizon / Liquidity needs (short vs. long)
● Investing Motivations
○ Pure Economic Returns (perception vs reality)
○ Strategic (innovation/IP, M&A, people, product)
○ Access to Dealflow (industry vertical focus?)
○ Economic Development (Jobs, Ecosystem)
○ Marketing/PR (“It’s cool to invest in VC/tech”)
● Have they invested in VC funds before?
● Have they invested in startups before?
● Interest in Emerging Managers / Early-Stage?
