Fundraising Tips & Tricks
Emad Hasan
COO & CoFounder,
Retina
COO & CoFounder,
Retina
2019-09-10
About this presentation
This was presented to MBA students at the UCLA Anderson accelarator in fall of 2019. These are my personal opinions about Do’s and Don’ts of fundraising based on my team’s experience of raising a $5M seed round for Retina.
Retina is a startup based out of Santa Monica. We help B2C businesses compute customer lifetime value at the individual customer level.
About Me
- Education: Penn State (BSEE), RPI (MSEE), UCLA (MBA)
- Engineering Life: Sikorsky Helicopters, Boeing
- Data Science Life: Booz Allen (Sr. Consultant), PayPal (Analytics Product Manager), Facebook (Head of Marketing Ops), Xpertly (Founder), Retina (Founder)
Agenda
- When to fundraise
- Build a process
- Getting to VC first touch
- The first VC conversation
- Demo, Pitch & pitch deck
- The Due Diligence
- Resources
When to fundraise
Do not fundraise when you do not have the right cofounders
- At the minium have a CTO and CEO spending 100% of their time on the idea
Do not fundraise if you have not built and tested MVP and don’t have any numbers to share for traction
Do not fundraise If your market opporunity is not super large/compelling
Do fundraising when you have one to two years of personal runway
Do fundraising when you know something about the world (some secret insight) that no one else does
Do fundraising when you absolutely need the money to execute fast (product development, production, marketing)
Do know your goals when chatting with VC: Get a term sheet or follow on terms
Do have your legal team set up your entity and cap table in advance
How to connect with VCS
Do not cold email VCs directly
Do not send them your pitch deck
Do not pitch to VCs who have invested in competitors without first bringing this up
Do connect and build relationships with other founders who have fundraised
Do ask founder friends for introductions when they believe in you
Do build a process for managing VCs through the process
Process Before You Get Started Put a Process in Place
(User Trello or some other free tool)
- Investor List (Start with Signal)
- Introduction
- Initial Conversation
- Ready to Pitch
- Pitched
- Explicitly Interested
- Term Sheet
What Should be On VC Card
- Firm Name
- POC
- What they Specialize in
- What portfolio companies are interesting
- Fund Size
- When Did They Last Raise
- Do They Lead
- What Round
What Criteria You Should Look For
- Success with companies of your type
- Knowledge of sales cycles
- Funds early stage companies and works with newish founders
- Sees long term partnership rather than transactional
- Focused on growing the pie vs taking bigger portion of the pie
- Access to possible clients and talent
The first VC conversation
Do not bring up the pitch deck in the first meeting, think of it as a meta-pitch session
Do use this meeting to set up a time for a demo to the VC firm where all/most partners are invited
Do not try to use flattery to win over the VCs
Do talk to VCs from their point of view
- Ask them about their fund (thesis & size)
- When it was raised, how much of the fund is left to invest
- Have they made any investments in your space they can talk about
- What kind of check do they write
- Do they ever lead or like to follow
- How are their LPs and what are their expectations
Do not ask VCs for money
Do ask VCs for advice and connections to potential clients and experts
Do structure and keep control of the conversation
Do keep the first conversation to less than 30 minutes. If more time is needed, set up a follow-up time.
Do ask them if you can be of help
Do think about two values you can provide to VCs that helps you stay in touch
- Introductions to talent for their portfolio companies
- Potential intros to deals (however, be careful about this. You may lose credibility if these are bad intros)
Do keep in mind that every word you say builds or diminishes your credibility
Demo, Pitch & pitch deck
Do not worry about the pitch deck more than the (demo + team + market opportunity)
Do not show up late and unprepared
Do have a usable demo ready
Do follow Guy Kawasaki’s 30-20-10 rule
Do follow Guy’s guide for pitch slides
Do not spend more than 4 minutes on slides before getting to the demo
Do spend a lot of time showing the demo
Do not try to have a detailed financial model in the deck
Do leave time for Q&A
Do share details of the round
- How much you are raising
- What kind of dilution you are confortable with and why
- How many term sheets commits you already have