Week 19: Transforming our Approach to Pitching and Raising Money

Week 19: Transforming our Approach to Pitching and Raising Money

02-Oct-2018 by Ceylan Ersoy

Week 19 was yet another week where we utilized every single minute. Saying farewell to our office, and welcoming our new one, we are already sure what this new office has in store for us.

Chris Yeh joined us in our office on Tuesday for a presentation revolving around ‘Pitching & Raising Money from SV Investors’. Chris, recently released his new book co-authored by Linkedin co-founder Reid Hoffman: “Blitzscaling: The Lightning Fast Path to Building Massively Valuable Companies”, featuring a foreword from Bill Gates. Among all of this exciting accomplishment, Chris found the time to come into our office to mentor our teams for tips in ideal ways to raise money and pitch. He introduced a counter-intuitive concept: “Maybe you shouldn’t raise money” he said. “Ask yourself, do you really need money? Or do you need to prioritize customers, sales, leasing, factoring, loans, government grants or supplier financings?” According to Chris, it is also essential to build relationships with potential investors in terms of finding them, learning about them or connecting with them, before you raise money.

Chris then proceeded to elaborate on valuation, introducing ways to think about the concept. The general and traditional way to think about it is to invest according to valuation and working to make money in the next round. The alternative way is percentage ownership such as getting a certain percentage of the shares of separate companies to reach your target wealth. For investors, high valuation will almost always be optimal, presenting a tricky trade-off; this might force you to give bigger shares in new investment rounds. Chris also recommended not depending entirely on your VC’s recommendations. If you take their advice and fail, they will ultimately say that you shouldn’t have taken their advice. He then proceeded with an amusing metaphor: “if the cookie jar is already open, take the cookies, but don’t eat them all in one go!”, he said.

The second section of Chris’s presentation was regarding pitches and what follows. Chris elaborated on methods and tips on how to follow up with potential investors, how to get more investors on board, how to raise money without a lead investor and how to evaluate a term sheet. The term sheet will involve the key provisions of valuation, amount of money, their share and participation. The legal document and everything it encompasses is highly critical according to Chris. Silicon Valley investors don’t gain money from bargaining on the terms of the document, but rather from investing in the right company. On the other hand, Wall Street works in the exact opposite way. Chris followed this up with the importance of investors: “Even if I had loads of money, I would still seek investors since every investor brings something new to the table.

The final section of the presentation was on preparing for the next round of investment. Until you reach Series A, its all about storytelling; the next step is about numbers and pitches. Data-driven presentations replace vision-driven presentations in this step. When you are preparing for Series A investment, you need to create a list of VC’s you are interested in connecting with. “Meet up with them for coffee, keep the relationship warm, dynamic, friendly, rather than interest-driven. Chris’s presentation, fused with these kinds of essential tips, added true “valuation” to our week.
On Wednesday, we welcomed Khyati Shah to conduct a session on Startup PR to our teams. Khyati is a corporate and start-up communications expert with more than 10 years of professional experience in marketing and public relations. “Public relations shape the perception of your company primarily via media relations” Khyati started. PR is significant in terms of creating an approachable, honest perception of your company and creating credibility. She continued by sharing Jean Louis-Gassee’s quote: “Advertising is saying you are good. PR is getting someone to say you’re good!.”. PR also supplies additional advantages such as SEO efforts, inbound customer leads, gaining credibility and fame in the industry, finding good employees, introducing the leaders of the company to the market and so forth. The first pillar of PR’s foundations is consistency across PR and marketing to impact brand recognition and perception. The second pillar is communication where the effective value proposition is key. The last pillar is clarity where setting and focusing on your goals will be critical.

Khyati then introduced successful storytelling themes such as news in which you give the press something new to write about and emphasize how you are unique. Another form is topical/trending, which involves creative storytelling, correlations and connections to what’s trending, even if it is outside of your industry. The final form is original research, including your survey data and valuation. According to Khyati, however, PR also comes with some bad news in the contemporary business world. It is tough to get the attention of reporters through traditional pitches, news releases since everyone is competing for the same space created by fewer reporters. To remain competitive in PR and achieve your targets, companies should invest in quality content, Khyati emphasized. There are overlaps in content in social and marketing efforts as well, which introduces a practical advantage. Types of useful content for early-stage startups involve visuals such as explainer videos and info-graphics, research insights like ebooks and white papers, and, finally blogs that focus on educational messaging. Following her general session on PR, Khyati conducted 1:1s with all of our teams, spending over 8 hours in our office.

On Thursday, we had the privilege of welcoming investors from Azerbaijan’s Khazar Ventures, including Mammad Karim. Khazar Ventures aims to fund and support innovative startups in early- seed stage investments through providing their insight in recruiting, business development, marketing, and network extension. We were really pleased to connect with them.

Perhaps one of the most exciting events of the week was attending the event in honor of NEA Ventures’s Ben Narasin. Ben is a seasoned entrepreneur and early-stage investor, focusing on emerging technologies and novel markets such as fin-tech, mobile, and connected devices and digital marketplaces. He seeks out new investments based on one simple necessity: “founders who make me say wow.” We converted a room of an Italian restaurant into a presentation space, allowing each of our teams to present their pitches to Ben. Ben’s feedback was extremely meticulous and insightful, promising that our future collaboration will be truly fruitful.

The final event of the week was the “Startup Finance” session conducted by Tim Taylor, Director of Business Development at Wine.com and Charlie Maxwell, the Chief Technology Officer at Hivemetric. The session involved financial modeling basics, financial budgeting, and projection, best accounting practices, cash flow models, reporting mechanisms. Following the session, Tim and Charlie evaluated our companies’ financial models and discussed the next steps they can take in their finances. This was significantly helpful for our teams’ understanding of their finances.

It is hard to grasp how we succeeded through a week busy to its maximum capacity. Leaving our old office behind together with the great memories, we are excited to see what great novelties and opportunities lie ahead for us in our new office.