Fundraising Hacks - Pioneers Festival 2015 by Fred Destin at Accel Partners

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@fdestin

The HustlePan-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+

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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

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

1: Completely Disagree 10: Completely Agree

Survey Results97 responsesBias towards early stage

Over 50% found the process of raising VC confusing, opaque and frustrating

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 mo26% spent more than 6 mo

Star Investments

Recent activity

Board Load

Cultural Fit

“It was clear to me which partner I should approach at a given firm”

All about the right partner

1: Completely Disagree 10: Completely Agree

Number of Accel-funded startups where contact came from cold email

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“I managed to get meetings only through introductions”

Sometimes … cold emailing works

So what ?

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 !

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

What characteristics matter most to you in a VC ?

TrustworthyEntrepreneur Friendly

Quality and Depth of NetworkExperienced

SupportiveTrack record of success

Risk TakingCollaborative

Global Platform / Global ReachVisionary

Hands-On and EngagedInfluentialAnalytical

ExpertThought Leader

InnovativeEmerging, rising star

0 17.5 35 52.5 70

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

Entrepreneur’s VC turnoffs

Approach Engagement Behavior

Intellectually Lazy

PatronizingTell you what to do instead of asking

questions

Know-it-alls

ADDDo not take time to understand

Lack of risk taking mentalityFocused only on financials

ARROGANT

Cold

Unapproachable

Unresponsive

“Radar Play”

Send young attractive associates at events playing interested and driving endless follow-ons

ARROGANT

Not responsiveSlow

Unprepared

Checking email !

Playing for time Hanging around the hoop

Fund competitors

Aggressive on terms Bait-and-switch

ARROGANT

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Now What ?

“Overall, I've met with pretty nice people. Most of them are lazy/dumb as f*ck and spend too much time in networking events/conference, drinking champagne, living off their management fees, but they’re friendly :) So the worst that happened was probably agreeing to countless meetings where VC's would just squeeze market info, without real appetite.”

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ApproachTarget

EngageClose

Get in

Do your Research

Don’t

Get the introCrunchbase / Angellist / LinkedInInvestments led

Leverage the junior guys Map them on LinkedIn

Invite me on LinkedInHassle me on TwitterInvite me for coffeeUse other naive methodsGet upset if I don’t respond to unsolicited email

Target the individual not the firmFounders are bestPeople in your sector are goodPersonal friends work wellMulti-target the same person

Get noticed Blogger pressProduct HuntAwards are OKAccelerators are OKClients / traction are best (duh!)

Leverage the introShort, focused emails / TL;DRSeduce and intrigueGenerate tension if you are raisingBe persistent

Fundraising facts

Fact 2: You are talking to too few investors

Fact 1: Inbound Marketing Wins

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Fact 3: You are over-estimating your chances of success

First call or meetingTurndown 75%

In-depth meeting

Engaged process

Turndown 50%

Turndown 75%

Turndown 50%

Turndown 50%

Partnership presentation

Term-sheet presented and deal done

1,000 teams

250 teams

125 teams

30 teams

15 teams

Illustrative Funnel

John Accel 2. In-depth meetingDestin Concerned about US

Fundraising is a campaign

Steve Index 1. First MeetingRimer Scheduled 5/30

John Sequoia 0. Intro MadeBotha Chase 5.27

Mark L. A16Z 1. First MeetingJordan Scheduled 6/12

Intro Fund StagePartner Status comment

…

SteveDST Seeking IntroLindfors To Do

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 coldKnow your risks and be open about them

Be exciting and memorableBe brave, confident and totally honestEnjoy yourself - good humour is contagious

You can deviate effectivelyYou can focus on the audience’s reactionsYou can always stay on track

DON’T

Pitch the marketPitch the competitionGive long answers to questionsGet sidetracked for too long Fear silence

Get funded (vs. being right)Get to the next meetingCreate relationshipDetect toxic investors

YOUR OBJECTIVES

Level Up - Hacks

Build intangible value : visible board, visible advisorsPractice concerted pitching

Give anyone an excuse to say noGive overly punchy price guidanceMiss any short term numbersHide bad newsBadmouth the competition

Disclose widely that you are fundraisingDisclose who you are talking to

Treat bad offers seriouslyEver 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 questionsPrepare the data ahead of time (e.g. cohorts)Practice data rationingVolunteer diligence contacts

DON’T

Don’t ever stop running the business

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

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

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Reach for The Stars