Fundraising 101: Creating FOMO with VC

Transcript

1. hustlefund.vc Fundraising 101: Creating FOMO with VCs Elizabeth Yin Hustle Fund
2. I’m an early stage investor and former entrepreneur. General Partner at Hustle Fund Former Partner at 500 Startups CEO/co-founder of LaunchBit (acq)
3. 1) “Seed” is three stages - pitch the right investor. PRE-SEED SEED POST-SEED Startup Milestone Typical Raise Sources of Capital Idea / v1 Product Complete Negligible Traction $ 0 - 500K Friends & Family Pre-seed funds Good product Key customers / revenue $ 500K - 2M Angels Some Institutional VC Strong product Scale-Ready $ 1M - 5M Angels Institutional VC Three Stages “Typical” Traction $ 0 - 250K runrate $ 250K - 1M runrate $ 1M+ runrate
4. 2) Create multiple fundraising plans. • What are you raising for? ◦ Right: $500k runrate by June ◦ Wrong: 18 months of runway • Investors want to back growth • Add 2x buffer Image credit: https://www.lemonadeday.org/sites/default/files/inline-images/Dilbert.gif
5. 2) Create multiple fundraising plans (cont.) • Use actual proof of unit economics ◦ Right: $10 acquisition on Facebook ads; 2 month payback ◦ Wrong: I did 200 surveys and people said they might pay $5 Image credit: http://www.cartoonresource.com/archive/business/finance/financial-projections.aspx • Projections are useless ◦ 1 year projections are ok ◦ 5 year projections are crazy
6. 3) It is important to create urgency. • Investors have no incentive to invest today • Fundraising is a full-time job • Your job is to create FOMO https://assets.culturaldistrict.org/culturaldistrict/system/assets/4411/original/main_34501.gif
7. 3) It is important to create urgency (cont). 1. Make a list of investors 2. Network in the Valley 3. Find warm introductions via a. Other portfolio founders b. Your own investors 4. Cold-email in parallel 5. Pack in meetings 6. Close https://learningdm.files.wordpress.com/2013/10/busy-calendar.jpg
8. Questions? elizabeth@hustlefund.vc