Understanding VC Investment

By John Mathews
Category: Entrepreneurship
June 2017

How to pitch to a VC: Market, Management, Model, Momentum

I attended the Lisbon Investment Summit in June and wrote about my experiences here. One of the best sessions was with Boris Golden called “Understand Investment”. These are my notes:

  1. VC’s are seeking to identify high-potential startups, and then support and fund them.
  2. They are looking for something that is innovative and unproven.
  3. A startup is not a company but an organisation searching for a business model,
  4. Whilst executing and discovering a scalable way to grow.
  5. Startups need money for ambitious but credible growth plans.
  6. A typical stake for a VC could be roughly 20%.
  7. VC’s want an exit price of at least 100m, otherwise their business models don’t work out.
  8. $10m can seem a lot for a founder with a 30% stake, but it’s not enough to attract VCs, so aim higher.

How to pitch

  • Identify specific people with real needs
  • Size of market
  • Why now?
  • What is your clear competitive advantage - why can no-one else do this?

Market

  • Find a large and attractive market…

Management

  • Build a smart, skilled and cohesive team
  • With a strong ability to deliver quickly and to learn quickly
  • That is ready to go big whatever it takes
  • With a unique vision and project-fit

Model

  • Valuable and differentiated products
  • Efficient go-to-market and growth channels
  • Profitable monetisation strategy
  • Scalability and defensibility

Momentum

  • Show traction and that you’ve cracked the important problem
  • Show ambitous and credible growth plans
  • With a capital-efficient growth model
  • And a clear strategy to scale and win