"Venture Capital 101 - I'm a VC, Who Are You?" walks you through the essentials of venture capital, early stage funding alternatives, and the difference between good and bad VC to an audience new to fundraising. I first gave this talk to Interactive Communication students at Berghs School of Communications in Stockholm, Sweden, March 2013. March 2016: Updated version to reflect the changes and trends in venture capital markets incl. additional pitch advice, recommended reading, and founder resources.

1. I’m A VC -
Who Are
You?
Venture Capital 101
@paulamarttila

2. VENTURE CAPITAL - HUH?
Business Model, Investment Stages And
Criteria, Value Proposition
EARLY STAGE FUNDING
Angel Funding, Seed Funding, Accelerators,
Equity Crowdfunding
THE DATING GAME
i.e. How To Get Married, The Good vs Bad VC,
Due Diligence, The Pitch
Agenda
@paulamarttila

3. Invest Other People’s $$$ ( = LPs = Limited Partners, e.g. Pension
Funds, Schools)
Bet On Few Home Runs:10% Of Investments Expected To Drive Fund’s
Entire Returns (Average 10-20X ROI per Investment)
Average Investment Fund Life Time: 8 -10 Years => Raise New Funds
To Invest With. Trend: Fund Life Times Are Getting Shorter.
Invest During A Company’s Different Growth Stages: Seed, Series A, B,
C, D... => IPO / M&A
Defined Investment Stages Or Stage Agnostic VC
Defined Investment Thesis Or Follow Current Tech Trends
Herd Mentality And FOMO On A Deal: “We’re in if other big names are.”
Venture Capital - Huh?
@paulamarttila

4. Venture Capital Continued:
Firm Structure: Partner = Funding Decisions / Board Seats, Associate =
Deal Sourcing / Due Diligence
Often Co-Invest In Syndicates, As Lead Investor Or Follower. Lead
Investor Sets The Investment Terms. Tip: Have Lead Investor When
Fundraising.
Equity Stakes And Company Valuation Vary Depending On Stage &
Growth Trajectory
Expected Time To ROI: 5-8 Years
YES: High Growth Markets NO: Lifestyle, Consulting Businesses
Additional Value Propositions: Hiring, Network, Follow-On Funding,
Platform Offering Incl. Back Office Expertise, e.g. http://
firstround.com/
@paulamarttila

5. Early
Stage
Funding
@paulamarttila

6. “I Have An Idea”
Minimum Viable
Product (MVP)
With Early Traction
(Without Previous Track Record)
- Bootstrapping
- FFF: F(riends) F(amily) F(ools)
- Accelerator Programs, Corporate Accelerator Programs
- Equity Crowdfunding
- Angel Investors & Early Stage VC
@paulamarttila

7. PRO: Market Validation
CON: No Lead Investor
E.g. FundedByMe, Seedrs
Obs! Make Sure VC Compatible Terms
- Primary Task: Function As Filter For Investor Deal Flow
- Offering: Visibility, Mentoring, Network, Validation (Follow-on Funding)
- Individual Terms, Transparency Is Key. Talk To Alumni Companies!
- E.g. TechStars (6% / $20K + $100K Convertible Note Option), Seedcamp (7% / €75K)
- Corporate Accelerators Differ By Having Varying Offerings And Program Formats
- Check: Track Record, Mentor List, If Program Format Follows Best Practise
@paulamarttila
Accelerator Programs
Equity Crowdfunding

8. - Invest Private $$$. Usually Co-invest With Small Ticket Sizes
- Preferably On AngelList And Well Connected. E.g. AngelList
Syndicates
- Primary Function: Smart $, i.e. Add Entrepreneurial Value. Help
Raise Follow-on Funding
- Terms & Equity Stake Must Support Follow-on Funding Terms
- Rarely Follow-on Invest, But Can Do So With Discounted Price
- Primary Function: Secure Funds To Validate
Product/Market Fit, Approx. With 12-18 Months
Runway
- Often Co-invest, Don’t Usually Follow-on
Invest
Early Stage VCs
Angel Investors
@paulamarttila

9. What Do Investors
Look For?
@paulamarttila

10. #1 Stellar Team
@paulamarttila
“Do you have the
right Team/Market fit,
i.e. are you the right
team to execute?”
“Do you want to
change the world,
or just cash out?”

11. #2 Great Product With Traction
@paulamarttila

12. @paulamarttila

13. Copyright: @gapingvoid. Go buy his art!
“Startups’
biggest
hurdle is to
overcome
indifference”
@paulamarttila

14. #3 Growth Markets
Unit Economics
& Scale!
@paulamarttila

15. The Dating Game
@paulamarttila

16. “I usually know
within 3 min
if I want to fund you,
within 10 min
if I want to fund your
business.”-
@paulamarttila
Fred Destin, Accel Partners

17. Storytelling
Introductions
Create
Relationships
@paulamarttila
Required:

18. “After 10X on
The Tonight Show
people start to recognize
you as someone who
might have been on TV,
but they have no idea
who the hell you are.”-
Steve Martin
@paulamarttila

19. “Ask For $,
You Get Advice -
Ask For Advice,
You Get $” -
Jason Nazar, Docstoc
@paulamarttila
Great way to build trust
and relationships.

20. Don’t Fall
For Vanity
Metrics
Keep Good
Investors Updated
Show
Progress
Startup
To-do List
@paulamarttila

21. You’re being tracked:
Stick to your
story and metrics!
@paulamarttila
“Our CRM allows us to
instantly see the number of
employees, social traction,
and progress in multiple
distribution channels before
speaking to a company,
allowing us to be much more
proactive in our approach.”
James Wise, Balderton Capital

22. The Good
vs
Bad VC @paulamarttila

23. @paulamarttila

24. Tests & Uses Services
Gets Fast To NO
Not Your “Best” Buddy
Available
Helps Execute by Challenging You
Doesn’t Micromanage: Founder Calls The Shots
Doesn’t Get Sour During Hard Times
The Good VC
#MUSTLISTEN how a
good VC works and
resonates. Fred Destin:
http://techcrunch.com/
2016/01/18/accels-fred-
destin-on-why-startups-
fail-and-founders-get-fired/
@paulamarttila

25. @paulamarttila

26. The Bad VC
The banker
The name dropper
The dude on 20
boards
The guy with a yacht
club membership
The generalist
The celebrity
The ‘non seed’ VC
The outsider
The penniless VC
The opaque VC
The blabbermouth
Douchebags List by @Startupcfo:
Only Lead To:
Never-ending
Follow Up
Meetings
Asshat Moves
@paulamarttila

27. When an investor
suggests ways
to become more
viral, I’m like...
@paulamarttila

28. http://runningastartup.tumblr.com/post/22383987097/when-an-investor-suggests-ways-to-become-more-viral
@paulamarttila

29. Due Diligence
Goes both ways. Things To Check Regarding Investors:
- Relevant to your business and market
- Investor portfolio for competitors, synergies
- Capital left to invest in current fund
- Track record of the firm and partners
- Transparency in communications and terms
- Talk to portfolio companies!
@paulamarttila

30. The Pitch or
"The Killer SaaS Pitch"
#1 Alignment
- Do your homework and select investors that are likely to be aligned with your product and vision.
- See slides 23 - 29.
#2 Be prepared
- Pitch practise in the wild makes you perfect, and helps fine-tune your message. Not only practise your pitch,
but have answers to every possible question asked. Do your due diligence, slide 29.
#3 Ask for Advice (not money)
- One of the keys to building trust and relationships See slides 17-20.
#4 Backdoor
- Find a trusted source to make an introduction, or find an original way to catch an investor’s attention.
- Don’t send cold emails, see:
https://paulamarttila.wordpress.com/2015/11/24/the-long-dark-road-of-fundraising-without-introductions/
#5 Wow
- Make yourself memorable: Find the element in your product and story, that emotionally connects with your audience.
by Philippe Botteri, Accel Partners
https://www.youtube.com/watch?v=cD8s8S1ELhU
https://medium.com/@pbotteri/killersaaspitch-in-10-words-part-1-87d9525dbd82#.uahgx4xp0
@paulamarttila

31. The Pitch or
"The Killer SaaS Pitch"
#6 Passion
- WHY are you doing this? Good VCs are attracted to passion, excitement, tenacity, resilience, and resourcefulness.
#7 Story
- Make it personal and relatable in order to be memorable and trustworthy. Investors need to believe and trust your story.
#8 Engine
- Know your sales and marketing model! Do you have a working growth model, i.e. will the investment fuel growth?
#9 Numbers
Know your metrics! (See slide 21) The 8 Cs of SaaS: Customer Monthly Recurring Revenue (CMRR);
CustomerAcquisition Cost (CAC); Churn; Customer Lifetime Value (CLTV); Cash, Cohorts, Concentration of Customer
Revenues, Country Breakdown of customers and revenues to determine scalability.
#10 Listen
- Prepare questions in order to get to know an investor and the value it can provide in the long term.
#Bonus, especially for SaaS companies: Up your game by telling investors you’ll be spending a week in Silicon Valley.
Investors live and breath FOMO (slide 3) and are likely to respond quicker.
REMEMBER - IT ALL COMES DOWN TO BUILDING TRUST AND RELATIONSHIPS!
by Philippe Botteri, Accel Partners
https://www.youtube.com/watch?v=cD8s8S1ELhU
https://medium.com/@pbotteri/killersaaspitch-in-10-words-part-2-f2e21c84dad4#.mj7o2ze5c
@paulamarttila

32. Recommended Reading & Resources
STEALTH MODE #mustread
http://blog.asmartbear.com/stealth-mode.html
VENTURE CAPITAL
http://www.paulgraham.com/startupfunding.html
http://blog.eladgil.com/2011/03/how-funding-rounds-differ-seed-series.html
https://medium.com/@jp_wise/the-funding-round-is-dead-a7d453c35c23#.1luy44cxx
http://www.startupcfo.ca/2013/02/venture-math-101/
http://www.startupcfo.ca/2013/01/who-not-to-take-money-from/
http://www.davidgcohen.com/2013/03/07/vc-asshat-move-1/
http://www.forbes.com/sites/tomiogeron/2013/03/10/vinod-khosla-to-entrepreneurs-venture-capitalists-are-not-your-
friends/
http://www.whiteboardmag.com/how-crowdfunding-nearly-killed-my-company-the-smarchive-story/
FUNDRAISING HACKS
http://techcrunch.com/2016/01/18/accels-fred-destin-on-why-startups-fail-and-founders-get-fired/
http://www.slideshare.net/fdestin/fundraising-hacks-pioneers-festival-2015-fred-destin
http://freddestin.com/2010/05/lift10-workshop-on-hacking-venture-capital.html
video: http://video.seedcamp.com/video/865437/mini-seedcamp-berlin-2010
https://paulamarttila.wordpress.com/2015/11/24/the-long-dark-road-of-fundraising-without-introductions/
DUE DILIGENCE
http://berlinvc.com/2013/02/12/due-diligence-should-go-both-ways-vc-check-list-for-entrepreneurs/
DILUTION CALCULATOR
http://seedcamp.com/resources/model-equity-calculator-for-founders-with-option-pool-expansion/
FOUNDER & ACCELERATOR RESOURCES
https://medium.com/@dalynewspaper/european-startup-resource-page-1cffd6626edb#.2buzcz70x
https://angel.co/
https://angel.co/syndicates
http://venturehacks.com/archives
https://www.f6s.com/
http://gan.co/
THE PITCH
Philippe Botteri, Accel Partners:
https://www.youtube.com/watch?v=cD8s8S1ELhU
#Goodreads
http://freddestin.com/
http://www.feld.com/
http://www.startupcfo.ca
http://www.avc.com/
http://500hats.com/
http://bhorowitz.com/
http://www.forentrepreneurs.com/
http://www.bothsidesofthetable.com/
https://medium.com/@jp_wise @paulamarttila

33. R E M E M B E R ,
S TA RT U P S
A R E H A R D
@paulamarttila

34. @paulamarttila
http://paulamarttila.com
paula.marttila@gmail.com
https://twitter.com/paulamarttila
http://www.linkedin.com/in/paulamarttila
Thank
You

35. I M A G E C R E D I T S
@paulamarttila
http://www.gapingvoidart.com/images/nobody-cares_1.gif (Nobody cares)
http://www.flickr.com/photos/chicagogeek/5169397357/ (Good-bye Eyeball)
http://www.flickr.com/photos/queen_of_subtle/4967953011/sizes/l/ (World's biggest hockey stick)
http://www.flickr.com/photos/cuppojoe_trips/594428407/ (Friends)
http://www.flickr.com/photos/torley/3674050796/ (You're Awesome)
http://img2.etsystatic.com/000/0/5244945/il_570xN.211353614.jpg (My problem)
http://www.flickr.com/photos/paulamarttila/ (Hamilton Fans)
http://www.flickr.com/photos/stuckincustoms/744069261/ (Wild horses)
http://www.flickr.com/photos/paulamarttila/4580592781 (Ducks)
http://www.flickr.com/photos/clemsonunivlibrary/7976193460 (Call me maybe)
http://www.flickr.com/photos/70938871@N05/6420020339 (Bs free)
http://www.flickr.com/photos/adulau/5136491272/ (Yes - ¥€$)
http://www.flickr.com/photos/danielygo/5242603576/ (Good Advice for Hard Times)
http://www.imdb.com/title/tt0139654/?ref_=nv_sr_1 (Training Day)
http://www.stevemartin.com/ (Born Standing Up)