Presentation on pitching and fundraising for tech start-ups, Presented at General Assembly in NYC. Thomas Wisneiwski, New York Angels

1. To all who attended the
SMTM Session 2 on
Thursday @GA:
• Thanks! Hope you
enjoyed it and gained
something. Feedback
welcome.
• This document lives
online at
www.slideshare.com/th
omaswis
“Show Me the $$$$!”…Session 2: Pitching
***The next class I will
teach at GA is: SMTM 3:
Insiders View of Angel
Investing (11/19/2013)
http://bit.ly/1h1uFb7 ***
•
Email me at
Thomas@rosepaul.co
m. Connect with me on
LinkedIn/Twitter for
updates, etc. (Page 23
of this deck has my
details)
….Cheers, -TW
Learn from VC’s, Angels and Entrepreneurs:
What do INVESTORS love (and Hate!) to see in a Pitch?
General Assembly / RosePaul Investments Event
Tom Wisniewski
RosePaul Investments
Thursday, October 24th, 2013

2. Agenda
I. Kick-off and Introductions
II. Some Context and Background: Seed-Stage Fundraising
III. Guest Speaker Q&A: Investor Perspective
•
BREAK: Networking and Beverages
IV. Best Practices: Pitching and Communication
V. Guest Speaker Q&A: Founder Perspective
•
WRAP-UP: Networking and Beverages
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3. I. Kick-off and Introductions
a Start-Up of Sorts: …. this class and the SMTM series.

Started out with a 1 hour class and 10 students @GA 2 years ago:
• Angels and Angel Groups.

It experienced: “Product/Market Fit” “Growth” “Product Scope Creep” “Several
Pivots”

“Show Me the Money” series
• Simple formula:
1 part focused, actionable content
2 parts speakers, opinions and discussion
1 part networking
• Hate attending LAME classes and events

SMTM Session 1: Accelerators (July 2013)

SMTM Session 2: Pitching (Today!)

SMTM Session 3: Angel Investing (November: Tues, 11/19)

SMTM Session 4: [TBD Topic] (December: Tues, 12/17)
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4. Seminar Rationale: Why are we here?
What is the PROBLEM?
 The "1 in 100 get funded” ratio = REALITY.
• -----> Raising seed-stage money = TOUGH.
 Poor communication ----DRIVES----> the “DING“
 Feedback = LIES?!?
 Pitching = 10-page PowerPoint.
 *NO* shortage of pitch advice! = conflicting = WTF???
CHALLENGING
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5. However, we can change the ODDS.
Pitching = Learned ART (and Science)
So….. what helps?
 Understand the basics of “Good Communication”
 Leverage other experience: Sales, Interviewing, Dating
 Review examples the good and the bad.
 Understand the rationale, the "why”
 Study. Practice. Pitch. Repeat.
Everyone can improve their pitch. Channel some energy and
become a "student" of the pitching
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6. Having received (and delivered!) a lot of good and BAD presentations, I have become
a student of the Pitch myself…
Tom Wisniewski: My background

Born in NYC; grew-up in Montclair, NJ

Physics and Philosophy major undergrad
(Clark University); MBA at Tuck School
(Dartmouth)


1st Job: Programmer at Morgan Stanley then
moved to Investment Banking
After B-school: joined a start-up management consulting firm Mitchell Madison
Group; focus on Strategy/Operations/IT for financial services, tech, outsourcing,
private equity/VC clients (1993 to 2000)

Walker Digital: helped set-up and run an early “internet incubator” (2000)

Independent Advisor / Turn-arounds: Advised VC and PE Firms on portfolio
company strategy and new investments; joined the management team of two
companies

Currently:
• Early stage investor and advisor to start-ups
• Investor and advisor to VC and PE funds
• Member and director at New York Angels
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7. Additional Introductions
 Pedro Torres Picon, Founder, Quotidian Ventures
 Jacob Brody, Partner, MESA+ Ventures
 Peter Sullivan, Founder/CEO of JackPocket
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8. What would I like you to walk away with?
 Better understanding of pitching.
 A set of specific insights that will *change* your pitch.
 A “to-do” list: starting point(s), actions, things to try.
 A set of recommended resources to consult and learn more
from.
 A few new relationships with others in the NYC startup/fundraising ecosystem: fellow entrepreneurs, investors, etc.
 Answers to specific questions about pitching that you might
have.
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9. So….what questions do you have about Pitching?
 xxx
8
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10. II. Some Context and Background:
Seed-Stage Fundraising
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11. Context: Common Sources of Fundraising Capital
Earlier Stage
“You”
aka Bootstrapped
Later Stage
“Seed”
Friends and
Family
Angel Investment
Venture Capital
“Seed” VC
“Traditional Series A” VC
Round Size $:
• $10’s of K
to $100K
• $100’s of K
to $1M+
• $500K to
$1.5M
• $5M-$15M
Investment Size $:
$5K – $10’s of K
• $25K – $75K
• $250K-$750K
• $3M – $5M
Valuation (PreMon):
• < $1 M
• $1 – 5 M
• $5-10 M
• $10 – 25 M
Who/what are
they?
• People you already
know, that trust
you, and (maybe)
understand your
venture
• Experienced early stage
investors (individuals or a group)
• Accredited Investors.
• Angel investing is not their “job”;
may not be F/T endeavor
• E.g.: NY Angels, GoldenSeeds
• Firm with multiple professionals that
raises, invests and manages
individual funds (other people’s $)
• Working F/T (this is their job…)
• E.g.: Greycroft, RRE, Union Square
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12. Some Context: “VC” Business Process and the “100 : 1” Ratio
Fundraising
Deal Sourcing
and Evaluation
Deal Structuring
and Execution
Portfolio
Management
“Final Due
Diligence
and Legal”
The “Universe” of
Companies
“Screening”
100 : 10
“Evaluation
(and Due
Diligence)”
10 : 3
3:1
“Portfolio”
10’s of
Companies
1000’s : the “100”
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13. III. Guest Speaker Q&A: Investor Perspective
 Personal background and story?
 Firm background?
 Investment focus?
• Stage, investment size, sectors, etc.?
• Minimum threshold? (e.g. company generally needs to have xxx ?)
 Some recent investments?
 What do you like to see in a pitch?
 What are some “Red Flags”?
 Common mistakes generally?
 What are your “turn-ons” with start-ups and pitches in particular?
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14. Tom Wisniewski: Investor Profile

Direct “Angel” Investor in Companies
• $25K-250K investments; Typical valuations: $1-5 Million,
• Typical Stage: at least some “product” done, some customer/sales traction
• Sector focus: Opportunistic generally within internet/software space;
- fair amount of Saas B2B, and consumer “marketplace” models, ecommerce enablers.
- NOT (or not much?): hardware, heathcare/pharma, cleantech
• NYC based: 50% investments in NYC area companies; total of ~80% NE overall (e.g
Boston, DC), 20% West Coast.
• Examples:
- Sociocast (social/behavioral big data analytics)
- LiveLook (Saas, live collaboration sales/service platform)
- Anvato (Ad insertion to live video streaming via proprietary machine vision)
- Moveline (Uber for the moving industry)
- Bizodo (Saas, paperwork automation; “Adobe 2.0” internet document sharing)
- Movio (Digital “RedBox”; content delivery via “last 100 ft” of wifi internet)
- HeTexted (Relationship advice forum generating content, media opportunities)
- Wanderu (Kayak for ground transportation)
- DealFlicks (a “Priceline” or “Hotel.com” for movie theater tickets)
- iCharts (tool that enables engaging, sharable, embedible chart content)

Investor in Funds
• In addition to direct investments in start-ups, invest in VC and PE funds.
• Examples:
- Social Starts (Seed fund for start-ups leveraging the Social Web)
- Brooklyn Bridge Ventures (Charlie O’Donnell’s fund)
- Entrepreneurs Roundtable Accelerator (ERA Fund)
- Greycroft Partners (Venture Fund)
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15. III. Best Practices: Pitching and Communication
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16. Communication is Critical…Why?
 “Finding Diamonds in the Rough” problem. There is no shortage of
supply: lots and lots of ideas, pitches, people, etc.
• The problem for investors is finding the “diamonds”.
 The “first minute” problem. If you loose someone’s interest in the “first
minute”, you usually loose them.
• “First minute” = “first minute”…sometimes first 30 seconds!
• “First minute” = a conversation, a meeting, anything
• I need to quickly figure out whether I should “spend” more time/effort with
you, or move on to something else.
 The “0 to 60” problem. Potential investors (or potential employees,
customers, etc.) usually start out knowing nothing about you or your venture.
• Getting someone “from 0 to 60 mph” is very challenging: too much to say,
don’t know where to start.
 A Pitch is a “Sale”. You not just trying to “describe”, you are “selling”. Easy
to tell people what you are doing; harder to get them to ‘buy”.
• You are selling your “product” to prospective “customers”. Product = your
company and the opportunity it presents.
• You are interviewing for a “new job”. You and your team = great fit for…
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17. Principles of Communication: A Starting Point
To start, lets use a simple framework: Audience, Messages, Storyline, Goals, Situation.
 Audience. Who is the audience? Who are you selling to? …If you don’t
understand someone's “perspective” you will be ineffective
• For example: “they have 6 Saas investments vs. they can’t spell Saas”
• People generally understand things by association (to things *they* know).
 Messages. What points you are making? What is the single key thought you
are trying to impart with each page?
• “the market is huge and growing” is a message; a chart, some stats, some
explanation is what makes up the page
 Storyline. What is the narrative story you are building with the collection of
messages? Does the story flow well and get to your conclusions?
 Goals. What is the goal of this specific meeting?
• Unlikely it is getting a “check”. Getting to the next step in the process.
 Situation. What the format of the pitch? What are the constraints?
• 2 minute elevator pitch vs. 10 minute Power Point pitch vs. email
attachment
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18. The Communication Pyramid
Level of Detail in a
Document
Level of Detail in
Different
Documents
The Executive
Summary
1 page summary
First Page of Each
“Chapter”
10 –page deck
Each Chapter
20 –page deck
Each Chapter with
all the Back-up
20 page deck, +++
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19. “Good” Pitch Deck
From “Triple Play” of VC Presentations by
Mark Suster (former entrepreneur, now VC)
















Slide 1 – Team Bio
Slide 2 – 50k foot view of your company
Slide 3 – Problem Definition
Slide 4 – How do you solve the problem?
Demo Web Version and
a Demo Video Example
Slide 5 – Market Sizing
Slide 5 warning: (Market Sizing Pitfalls)
Slide 6 – Competition
Slide 7 – Customer Adoption / Traction
Slide 8 – Team
Slide 9 – Financial projections
Slide 10 – Use of Proceeds
Slide 11 – Fund raising process / Next steps
Appendix – Back-up slides
How to deal with the dreaded question of
valuation?
http://www.bothsidesofthetable.com/pitching-a-vc/
Adapted from “10 Slides to an Awesome
Pitch” by Dave McClure, 500 Start-Ups
1. Elevator Pitch
2. The Problem
3. Your Solution (Demo Here!)
4. Market Size
5. Business Model ($)
6. Proprietary Tech
7. Competition
8. Marketing Plan
9. Team / Hires
10. Money / Milestones
http://www.slideshare.net/dmc500h
ats/how-to-pitch-a-vc-sept-2010
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20. V. Guest Speaker Q&A: Founder Perspective

Peter Sullivan Founder CEO of JackPocket
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21. Key Success Factors and Take-Away’s
 Find Fit. Does this investor have “fit”? Do they invest in ventures like
mine?
......if not, then move on. (or at least prioritize accordingly)
 Prepare! Don’t be lazy; invest some time.
• Steve Jobs: 30 hours to develop, 30 hours of practice…30 minutes of
presentation.
• For example : “Audience”. What have they invested in? Recently?
What can you find out about their background? Interests? Hot
buttons?
- How? Duh….Google: Blogs, Quora, YouTube, CrunchBase; talk
to people they know, better…talk to those they have invested in.
 Pitch, Get Feedback, Revise. Repeat. No venture idea was built in
a vacuum. The ONLY way to develop business ideas is to share them,
solicit feedback, make adjustments, develop/refine/add and…..DO IT
AGAIN!
• 1 part “studying” pitching, 1 part “doing” pitching, 10 parts repeating
both……this is becoming a “student”
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22. What would I like you to walk away with?
 Better understanding of pitching.
 A set of specific insights that will *change* your pitch.
 A “to-do” list: starting point(s), actions, things to try.
 A set of recommended resources to consult and learn more
from.
 A few new relationships with others in the NYC startup/fundraising ecosystem: fellow entrepreneurs, investors, etc.
 Answers to specific questions about pitching that you might
have.
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23. SMTM coming up……Join us:
 SMTM Session 3:
•Angel Investing (November: Tues, 11/19)
“Curious about Angel Investing? Love to be a fly on the wall
to see how it really works?”
-
Who are these Angel Investors? Why do it?
Where do you find them? Why would you want to?
What are Angel Groups? How/why do the work?
What about AngelList, “Soper Angels” and Angel Funds?
How do Angel Investors differ?
What does the Angel Investment process look like?
 SMTM Session 4:
•[TBD Topic] (December: Tues, 12/17)
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24. Thanks!
Thomas Wisniewski
Contact Info
Email: thomas@rosepaul.com
LinkedIn: http://www.linkedin.com/in/thomaswis
Twitter: @thomaswis
This presentation: http://www.slideshare.net/Thomaswis/
New York Angels www.newyorkangels.com
New York Angels Educational Meetup: http://www.meetup.com/NY-Angels/
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25. Additional Slides
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26. II. Pitching to Prospective Investors
Sources of Investment: Seed Fundraising, Angels and VC’s
Earlier Stage
“You”
aka Bootstrapped
Later Stage
“Seed”
Friends and
Family
Angel Investment
Venture Capital
“Seed” VC
“Traditional Series A” VC
Round Size $:
• $10’s of K
to $100K
• $100’s of K
to $1M+
• $500K to
$1.5M
• $5M-$15M
Investment Size $:
$5K – $10’s of K
• $25K – $75K
• $250K-$750K
• $3M – $5M
Valuation (PreMon):
Stage (Pre-Round):
• Expected to
have:
• < $1 M
• $1 – 5 M
• $5-10 M
• $10 – 25 M
• An idea, initial/rough
b-plan
• Initial founders, key
advisors
• Path to ???
•
•
•
•
Detailed b-plan,
Key founders (bus & tech) full-time
Prototype/alpha done and tested,
Some piloting (paying?)
customers, some revenues?,
• All legal documentation in place,
board of directors
• Path to break-even or next funding
• Significant variation among firms
but…. Angel req. +:
- Anchor clients on board, revenue
growth (B2B),
- Growing base of users, with strong
usage trends (B2C)
- …..Growth potential! Credible
path to $100M Rev
• Don’t Expect:
• $ Rev, Customers,
Minimum Viable
Product (MVP); full
legal documentation
• Income (e.g. cash flow positive);
all key management ; completely
developed business model (e.g.
understand it will change)
• Income (e.g. cash flow positive)
Who/what are
they?
• People you already
know, that trust
you, and (maybe)
understand your
venture
• Experienced early stage
investors (individuals or a group)
• Accredited Investors.
• Angel investing is not their “job”;
may not be F/T endeavor
• E.g.: NY Angels, GoldenSeeds
• Firm with multiple professionals that
raises, invests and manages
individual funds (other people’s $)
• Working F/T (this is their job…)
• E.g.: Greycroft, RRE, Union Square
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25

27. Given this landscape, how do I get to the pitch?


Who are the “right” investors? Where is there a “fit”?
• Reality Check. “people invest in things that they understand and have experience with”
- Target find Fit: Find investors that come from industries, sectors, business models
etc. that are same/similar to your venture and your customers
How to “get” a pitch meeting?
• Connect. The hard part.
- Avoid “cold-calls”; look for “warm introductions”
- Networking. Who do you know that knows them?
- Find them at an event. (Email sucks!)
 Really you should be thinking…How do I build a relationship first?
• Pitching by its very nature can be awkward. “This guy wants something from me.”
• Most investors mean-well, and would like to help…but are busy
 Solution: Build a relationship before you need to pitch. OK, How?
• Give, don’t Ask: what can you do for them?
• “Ask for advice, not money”
• Debate / Discuss a topic, Ask opinion about X.
• Find ways to “show” rather than “tell”:
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28. Common “Forms” of Pitch Communication. What are they? Which should I use?
“Document”
Simplistic Description
Common Situation/ Use
1-pager
“1 pager Exec Summary, Word
doc”
•
•
Email attachment or handout
Online platforms e.g. Gust, AngelList
Email Brief
“Teaser paragraph of text / bullets”
•
“In the intro email” (w/ attachments)
Business Plan
“10-40 page Word doc”
•
•
Detailed discussions (similar use)
Stand-alone, due diligence
Pitch Deck
“10 page PowerPoint
presentation”
•
•
“15 minute stand-up presentation”
Email attachement
Long-Form Pitch
Deck
“20-40 page version of 10 pager;
PowerPoint presentation”
•
“60-90 minute follow-up meeting with
smaller group”
Elevator Pitch
“No document, just you talking for
60 seconds”
•
Your quick intro after you meet
someone in person
“Video” Pitch
“10 minute video of your deck/
demo w/ you voice”
•
•
Email attachment
Online platforms e.g. Gust, AngelList
Due Diligence Docs
“All the detailed spreadsheets,
data, etc. that back-up your pitch”
e.g. Financial Projections, Sales
Funnel, Legal Docs
•
For detailed discussions with
interested investors, usually postterm-sheet
Online platforms e.g. Gust, AngelList
•
The Good News:
• you don’t need to have all of them (maybe ever, certainly 1 or 2 to start is fine)
• much of the content, messages, storylines can be shared and reused
• Preparing thoughtful docs ……refines your thinking and your venture.
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27

29. Who are these “Angels”? What do they look like?
 Experienced, successful entrepreneurs: frequently multiple exits
• Some from “tech-start-ups” some from other businesses
• Usually some link to
 Successful “corporate” business people: CEO or CxO-types
 Older: most are in the 40-60 age group. But there are also notable angels
in their 20’s and 30’s e.g. newly minted start-up millionaires
 3 – 10+ Angel Investments
 ~10% of investible capital in Angel Investments
 Differ *widely* in: Industry/Functional Experience, Investment Expience,
Interests, Target Sectors/Stage, Investment $, Risk Tolerance, personal
do’s/don’ts and hot buttons.
 Lists? Not many. All are partial. AngelList? Gust? Other?
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30. NY Angels Profile
www.newyorkangels.com

Member Profile: ~80 investor/members; several early-stage funds; Member
backgrounds are generally representative of the tech / entrepreneurs / industries in NYC:
software, e-commerce, ad-tech, finance, media

Sector Focus: Internet, e-commerce, new-media, software; B2C and B2B. Mostly NYC
Area.

Stage. Mostly early stage (with some customers/revs), some seed stage (pre-revenue)

Valuations/ Investment Size: NYA pre-money valuations tend to range from $1M – 4M;
investments tend to range from $250K to $1M+;
• For larger rounds, NYA often leads the deal and helps find the rest of the capital by
sharing/syndicating the deal with other Angel Groups

Group Structure / Investment Decisions. NYA core structure is as a group of individual
investors. Individual investors “opt in” to deals and make their own investment decisions.
• Typical member invests $25-50K in a deal.
• In addition to the core “opt-in” model, NYA has just closed a small seed fund that will
operate in parallel (using a “democratic model” for investment decisions)

History/Background. NYA has invested $45M+ in 70+ companies.
• We are very active in the NYC entrepreneurial / early-stage ecosystem
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31. Variations on the Theme: Other Players

“Super Angel” (vs. Angels, Angel Groups). Sophisticated angel investor with a large portfolio
of early stage investments (30? 50?) and that is investing frequently (10 + per year). E.g. David
Rose, Fabrice Grinda

Microfund or Micro VC Fund. Small VC fund ($1-10 M) often run by a single person typically
making “angel” size investments in early stage companies.

Seed Fund. VC fund focused on “seed” (aka Angel) stage investments: often pre-revenue,
pre-product. Some VC’s that typically invest in “Series A” rounds will reserve a portion of their
fund for seed investments: e.g. $250 – 750K investments at $1-5 Million valuations

Incubator/Accelerator. Entity that provides non-monetary support/services (in addition to $’s)
to early stage ventures. Typical support/services can include: space, IT infrastructure, shared
admin service, advice/feedback, introductions/networking. Public vs. private, independent vs.
captive. Examples: TechStars, ER Accelerator, DreamIT, Y-Combinator

Strategic Partner/Investor. Some operating companies will invest in ventures. Typically it is
in an industry/ sector / product-space similar to theirs (sometime with an eye toward potential
acquisition in the future)

Crowd Funding Platforms. Currently this is financing via donation or “pre-sale” of products.
Equity financing under JOBS Act is TBD. Not obvious this will be a good match for most Tech

AngelList. Similar to an angel group, but without centralized control. More of a open
“marketplace” of individual investors and ventures to facilitate funding.

Gust. Software platform that most angel groups utilize (and many small VC’s) to run their
investment process and connect angel groups together to share deals.
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32. Additional Thoughts…..

Lots of start-up advice out there. Lots about the art of fundraising.
• Huge volume of blogs, articles, Quora-posts, etc.
• Well…….that’s good, right? Yes.
• But why doesn’t it help?
- Overwhelming
- Conflicting
- Not specific
- Not enough context
- It’s just advice, ideas, …..not interactive, not experience.
• Need to understand the “why” behind it all and adapt it to your venture, your situation.

Beware of simple answers, absolutes. As you are reading and listening to all these
opinions, data sources
• For any “fact” “rule” “truth”… if you don’t understand how it is both true/false, you don’t
really understand the point.
- Under what circumstances is this “rule for fundraising” “true”? Where does it apply
well With whom?
- How and when is it not true (Or less true)?
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