Pitching Masterclass - 2023 Edition: The definitive guide to startup funding (FREE SAMPLE)

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Pitching Masterclass 2023 Edition

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1. Who am I 2. Funding Basics 3. How to fi nd investors 4. How to contact investors 5. The Funding Game 6. Startup Financing Sources 7. What investors are looking for 8. The Three Pitches:   8A. High-Concept Pitch, 8B. Elevator Pitch, 8C. Pitch Deck 9. Addendum: Know Your Metrics - The Basics 10.Addendum: Pitching Tricks BONUS: Airbnb’s fi rst Pitch Deck (went on to raise over $6B to date) THE   CONTENTS

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  FULL VERSION   pitchingmasterclass.com FREE SAMPLE

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SOME   HAPPY MASTERCLASS CUSTOMERS

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vidarandersen.com VIDAR ANDERSEN • Startup Founder • Educator • Corporate   Innovation   Whisperer MEET YOUR TEACHER

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PEOPLE I PITCHED IN PERSON

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PLACES I HAVE BEEN FEATURED & RECOGNIZED

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CO-FOUNDER THE RHINELAND PITCH   GERMANY’S LARGEST PITCHING EVENT - FOUNDED 2013

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I HAVE TRAINED OVER 3.000 STARTUPS   HOW TO   PITCH

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SOME   HAPPY MASTERCLASS CUSTOMERS

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FIRST THING FIRST

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ARE YOU A   NEW COMPANY OR A STARTUP?

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REALITY CHECK:   IF YOUR COMPANY CAN GET A   BANK LOAN   YOU ARE NOT A STARTUP

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BOTH AWESOME BUT DIFFERENT

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FINANCING EXECUTION   SCALABILITY   DIFFERENT

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THIS IS FOR PRE-SEED, SEED, TO   SERIES-A STAGE STARTUPS

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IF YOU ARE A NEW COMPANY WRITE A BUSINESS PLAN

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THAT IS YOUR VEHICLE TO GET A BUSINES LOAN

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IF YOU ARE A STARTUP THIS IS FOR YOU

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THE   BASICS

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An investment   is the next step a ft er fi rst having done some interesting sh!t on your own. Not the fi rst step…

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…unless your name happens to be Zuckerberg, Jobs,   or Musk   - aka you’ve   done sh!t before.

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Investors   do not exist to give permission to start anything or to make gold out of crap ideas nor sh!tty teams.

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source: steveblank.com SHOULD I RAISE MONEY NOW?

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REALITY TODAY

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WARNING

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REALITY CHECK: STARTUP PITCH COMPETITIONS ARE SUCCESS THEATRE BULLSH!T

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STARTUP   VANITY THEATRE

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TRUE   NORTH

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REVENUE   GROWTH EXIT

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BUT… WHERE ELSE ARE YOU GOING TO GET THE TRAINING

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PRO TIP: NEVER MISTAKE COMPETITIONS FOR PITCHING INVESTORS

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HOW TO FIND INVESTORS

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OTHER FOUNDERS   Reach out and ask about their experience with their investor, possibility of a warm intro of you to them.     ANGEL LIST Look for startups in your vertical and fi nd out who’s investing in it (and see above).     CRUNCHBASE   PitchBook, CB Insights, and your local / national listings, e.g. Deutsche Startups (and see all above).   LINKEDIN   Beware that people w/ “investor” in title o ft en aren’t and that “cold calls” usually won’t fl y, so better get a warm intro.   EVENTS   Local demo-days, LAUNCH, SxSW, WebSummit, etc where investors are out to meet new founders in-person already.  

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HOW TO CONTACT INVESTORS

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“There’s a virtual line   of thousands of startups wanting to get a meeting   with an investor, so a warm intro helps you bump to the top of the list” — VENTURE HACKS

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ABOUT NDAs

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FORGET   NDAs

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Investors see thousands of di ff erent pitches (many similar to yours) a year and won’t sign anything that will make them legally liable for any information your share - they will think you’re a n00b if you ask them to sign an NDA - so don’t

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WARM INTRO From other founders From other investors From Domain Experts 3 2 1

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Pick up the phone and call everyone you know,   who knows investors well, and will listen to you.     Email everyone. Ask! Call in all your favours to get the attention of middlemen, someone who can give you   a warm introduction: “Can you suggest just one person we should be talking to? We’ll fi nd our own way to him or her,   we won’t use your name.”   — VENTURE HACKS

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COLD CALL One-Line Ping Lead with Traction Done the Research 3 2 1

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ONE LINE PING   Reach out per mail, LinkedIn, or Angel List with your High Concept Pitch and ask if you can keep them updated on traction / signi fi cant milestones as a one-liner say once a month - if yes, build a relationship over time     LEAD WITH TRACTION If you already have interesting traction, you might want to do a cold call leading with your traction numbers and bluntly asking if they’ll take your deck and a meeting     DONE THE RESEARCH   You might be sh!it out of luck, not connected, alone on a virtual island - then do your research about who would be your ideal investor, reach out to them and explain the hell out of why they are right to invest

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REALITY CHECK: COMPETITION   IN THE PAST VS TODAY

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PAST

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IVY LEAGUE   You were where and what you graduated     SPECIAL CONNECTIONS See above and below     FROM RELATIVE WEALTH   No money in pocket already, no startup   - much less investor capital available   MOSTLY HARDWARE   Di ff erent costs to set up startup   - a lot of $$$ needed

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TODAY

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ANY IDIOT   Hardly anybody cares if you’ve graduated     NO SPECIAL CONNECTIONS Almost everybody’s got the Internet   to connect and build a network     FROM NEAR ZERO WEALTH   No money in pocket, much less of a barrier   - never been more risk capital available MOSTLY SOFTWARE   Di ff erent costs to set up startup   - close to zero costs

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REALITY CHECK: CAPITAL AVAILABLE VS COMPETITION TODAY

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COMPETITION CAPITAL

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WARNING

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REALITY CHECK:   THE   INVESTOR IS NOT YOUR FRIEND

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REALITY CHECK: INVESTORS ARE   COMMODITIES YOU ARE   THE PRIZE

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THE FUNDING GAME

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YOU LEAD

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INVESTORS FOLLOW

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STAY IN THE DRIVER’S SEAT

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THIS IS A   NUMBERS   GAME

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“I did eighty pitches to di ff erent venture capital fi rms. Eighty.     All of them failed.” — Tony Fadell, iPod/iPhone/Nest

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SHOP AROUND

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ANYTHING NOT YES IS NO

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MOVE ON TO THE NEXT ONE

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DO NOT   MARRY THE FIRST YES

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LEVERAGE THAT YES

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PLAY INVESTOR AGAINST INVESTOR

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MAKE THEM FEAR MISSING OUT ON YOUR ROUND

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FOMO FTW

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AND   THEN…

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BOOM

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PARTY   TIME

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CLOSE YOUR   ROUND

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AT A VALUATION YOU CAN LIVE WITH

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ON YOUR TERMS

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BUILD YOUR DREAM

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DECK SENT   EVERYBODY KNOWS   Once you’ve sent a pitch deck to an investor, you should assume any and all investors know you’re raising the round - the investment world is a small one - and don’t be surprised if your pitch deck ends up somewhere you didn’t intend it to. REALITY CHECK:

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DECK SENT   CLOCK RUNNING   Once you’ve sent a pitch deck to an investor, the round is uno ff i cially running - you’ve now got ca. 3 months to close, a ft er which it is going to become exponentially harder (investors wondering why you haven’t closed yet and thus getting cold feet). REALITY CHECK:

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STARTUP FINANCING SOURCES

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SELF- FUNDING YOUR OWN   SAVINGS

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FFF FRIENDS FOOLS FAMILY   NOT EQUITY, NOT LOAN

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GRANTS PUBLIC & PRIVATE

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ACCELERATORS *The real kind that gives you money (10-500K) - in exchange for a small piece of your equity (0-10%) - as a lump sum payment up front,   not in rates, not for services, not depending on milestones.

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BUSINESS ANGELS INDIVIDUAL INVESTORS

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VENTURE CAPITAL / VC INSTITUTIONAL INVESTORS

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CORPORATE   VC / CVC CORPORATE INVESTORS

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STRATEGIC PARTNER A COMPANY   OR A CVC

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CROWD FUNDING & CROWD FINANCING

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CROWD FUNDING No equity changes hands, also known as “pre-sales”, depending on the platform you get to keep all the money (minus their rake) raised - even if you don’t reach your funding goal     CROWD FINANCING   Equity funding through a large pool of smaller cheques from average people (unsophisticated investors) represented by (hopefully) a single point of contact and contract for you, terms may vary (wildly)

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BOOT- STRAPPING FINANCING   THROUGH   REVENUE

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FINANCING FOR STARTUPS •Self-funding (Your savings or trust fund) •Friends, Fools, Family (Not a loan, no equity - usually) •Grants (Public & private) •Accelerators (That provide funding) •Business Angels (Well-todo individual or syndicate of such) •Venture Capital (VC) •Corporate VC (CVC) •Strategic Partners (Usually a corporate or CVC) •Crowd Funding (Pre-sales) & Crowd Financing (Equity, pooled) •Bootstrapping (Funding through revenue - Crazy idea, right?)

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VENTURE CAPITALIST / VC VS BUSINESS   ANGEL

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VENTURE CAPITALIST / VC   Glori fi ed funds manager, invests other people’s money, gets paid if you die or not (2 & 20), 1 of 10 bets must pay o ff - you’re just a number, can write much larger cheques than Angels, but must see +10x returns potential, most o ft en in later rounds because of this - investment thesis more risk averse, must be able to purchase signi fi cant stake for it to play out, doesn’t like to co-invest (won’t admit it), usually does follow-on.

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BUSINESS ANGEL   Individual investor investing own money - o ft en exited founders - and because it hurts losing own money, their bets must be spread into more baskets and into smaller cheques than VCs, Angels must be in early round to get enough equity for their smaller cheques, may not need to see potential 10x return, may or may not co-invest, may or may not follow-on (o ft en not).

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ANGEL SYNDICATE   A group of individual investors investing their own money but pooled together in a single investment, can write larger checks than individual Angel, invests in early rounds, may also co-invest with lead VC investor(s), may or may not do follow-on

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THAT’S THE DIFFERENCE EVERYTHING ELSE IS NOISE

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WHAT   INVESTORS   ARE LOOKING   FOR

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TTT

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TEAM   Compelling persuasive people   TRACTION Exciting results so far   TREASURE   Something special here  

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WHAT FOUNDERS PITCH

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WHAT WE PITCH Problem / Need, Solution, Market Size, Goto Market, Team, Competition, Financials, Ask,   BLAH, BLAH, BLAH…

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WHAT INVESTORS HEAR

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WHAT THE VC HEARS 1. Can f*u money be made here?   - Is the problem or market size f*ing huge? 2. Are these the right people   who can make me f*u money?   - Right obsession, mindset, & skillset? 3. Will these people be able to raise money from other investors if I don’t say yes?   - Do I fear missing out on this round?

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“Most VCs are looking for extreme outliers, and when evaluating your startup, they’re asking themselves if this business is one of the 15 businesses that year that will get to $100MM in revenue.” — Marc Andreessen, a16n

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TL;DR THE ONE SINGLE TAKE-AWAY

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TL;DR   What problem / need   are you solving, (for whom), and how are you solving it?

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THE THREE PITCHES

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THE THREE PITCHES High-Concept Pitch Elevator Pitch Pitch Deck 3 2 1

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1. The High-Concept Pitch gets people’s attention, gives them incentive to let you keep talking 2. The Elevator Pitch convinces investors to ask for (and hopefully read) your Deck 3. The Pitch Deck sells investors on taking a meeting 4. A Meeting will lead to a funding decision THE PITCH PROGRESSION

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A high-concept pitch   introduction captures an investor’s attention, a great elevator pitch   gets a meeting, in the meeting you present using your pitch deck.

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THE HIGH   CONCEPT PITCH

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“Summarise the company’s business   on the back of   a business card.” — SEQUOIA CAPITAL

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THE INTRO

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HIGH CONCEPT PITCH - Distills your startup’s vision in a single sentence - Also the “We are the X for Y” pitch - The “ice-breaker” when introducing yourself - A shareable “twitter pitch”     Also the perfect tool for fans, intermediaries, and investors to help spread the word about your startup

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BE BRIEF   One short sentence… BE FAMILIAR   …that a 6 year old can understand DON’T MAKE ME THINK HIGH CONCEPT PITCH

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IF I DON’T UNDERSTAND I WON’T SHARE IT

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PRO TIP:   What problem / need   are you solving, (for whom), and how are you solving it?

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HIGH CONCEPT PITCH EXAMPLES - “Facebook for dogs.” (Dogster) - “Flickr for video.” (YouTube) - “We network networks.” (Cisco) - “The Chrome of media players.” (Songbird) - “Massively Multiplayer Online Learning.” (Grockit) - “The entrepreneurs behind the entrepreneurs.” (Sequoia) - “Create your own social network.” (Ning)

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THE ELEVATOR PITCH

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https://www.wikiwand.com/en/Elevator_pitch HISTORY

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THE INGREDIENTS

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PATTERN   RECOGNITION The 4 topics most   salient to investors

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THE ELEVATOR PITCH Traction Product Team Social Proof 3 2 1 4

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KEEP IT   SHORT

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PRO TIP: DON’T OVERDO IT   The Elevator Pitch should be somewhere between 30 and 60 seconds - max. Practice, practice, practice.

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TRACTION

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TRACTION NUMBERS SPEAK LOUDER THAN WORDS “Traction is a measure of your product’s engagement with its market, a.k.a. product/ market fi t. In order of importance, it is demonstrated through pro fi t, revenue, customers, pilot customers, non-paying users, and veri fi ed hypotheses about customer problems. And their rates of change [over last 6-9m].” - VENTURE HACKS

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PRO TIP: GOT EPIC TRACTION?   Then you’ll most likely be able to raise funding regardless of product, team, or social proof - so lead with that.

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PRODUCT

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PRODUCT NOT YOUR PRODUCT MANUAL “High-level” - from 10k feet description - of the product, where it lives (web/mobile/ cloud/physical/combo, etc), what status it is in (PoC, MVP, Alpha, Beta, Version 4, etc), now is not the time to demo (a ft erwards if asked to do so by the investor)

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TEAM

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TEAM WHY YOU ARE THE RIGHT FOR THIS Highlight past accomplishments of the team (if your team has been successful before, investors may believe it can be successful again, focus on the team’s complimentary skill-sets and why you are the ones that will succeed, and mention yourself last to segue into you telling the story of how you discovered the problem you’re solving

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SOCIAL PROOF

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SOCIAL PROOF PROVE YOU’RE NOT JUST A CRACKPOT TALKING SH!T Investors do not want to be the fi rst to fi nd out that you are full of sh!t. That’s why they’d like you to show that someone else already took a look at your stu ff - Be it in the form of testimonials from paying customers, rave user reviews on social media, publications, patents, domain expert quotes, winning awards - anything that will prove that you have already exposed your solution to the world and the world has already reacted to it.   Any founder can talk about their own sh!t - fewer can show other people talking (positively) about their sh!t.

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PRO TIP: An Elevator Pitch is like a cake recipe - you need to have the right ingredients to make a tasty one, (and in this case it doesn’t really matter in wich order you add them).     To make it your own, you can emphasise the ingredients than makes you special; Got a unique personal connection to the Problem? That’s your main ingredient right there! Add the wrong ingredients,   and it becomes tasteless & forgettable.

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REALITY CHECK: BE QUICK 60 seconds tops (the amount of time at a cocktail party you can talk about yourself before it becomes socially awkward). NEVER FORGET THE 4 INGREDIENTS Add to the 4 only if it adds signi fi cant value (never subtract, still keep the max 60s time).

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ELEVATOR PITCH EXAMPLE PRODUCT   “Ning lets you create your own social network for anything. For free. In 2 minutes. It's as easy as starting a blog. Try it at: https://ning.com THE WHY (Bonus Points)   We built Ning to unlock the great ideas from people all over the world who want to use this amazing medium in their lives.   TRACTION   We have over 115,000 user-created networks, and our page views are growing 10% per week. TEAM + SOCIAL PROOF   We previously raised $44M from Legg Mason and others, including myself. Before Ning, I started Netscape (acquired by AOL for $4.2B) and Opsware (acquired by HP for $1.6B)”

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THE PITCH DECK

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THE   PITCH DECK IS WHAT YOU SEND TO INVESTORS

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THE   PITCH DECK IS WHAT YOU PRESENT IN A MEETING

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SHOULD   BE TWO DIFFERENT VERSIONS

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THE   PITCH DECK IS NOT A BUSINESS PLAN

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IF AN INVESTOR ASKS FOR A BUSINESS PLAN…

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ASK IF THEY MEANT   A PITCH DECK

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IF THEY INSIST ON A BUSINESS PLAN

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RUN   RUN RUN

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PRO TIP: No sophisticated early-stage startup investor worth your time will ever ask you for a “Business Plan”

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DATA   PITCH   VISION PITCH

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VISION

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DATA

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PRO TIP: PRE-LAUNCH = CREATE A VISION PITCH   Sell your vision like no tomorrow   - it’s all you’ve got right now.   POST-LAUNCH = CREATE A DATA PITCH   Be prepared to show all your current metrics   - so help you god if you don’t know them.   or don’t have any

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REALITY CHECK: THE PRE / POST LAUNCH PARADOX     Most times shortly a ft er a spike at launch absolutely nothing happens - that means that at an early stage, you might not have much data, much traction to show an investor. Yes, that means that it sometimes easier to raise money just before launching instead of immediately a ft er launching.

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ALL TEXT   30PT FONTS OR HIGHER PRO TIP:

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3-5 BULLETS   PER SLIDE IDEALLY ALL YOUR TEXT PRO TIP:

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REALITY CHECK: PRAGMATIC REASON   Thou shalt not commit biblical proportions of text on each slide.   SAD REASON   Most investors are (still) older males   - and we don’t see that well.