July 27, 2011
This post was written by guest blogger Frank Denbow.
General Assembly, an “urban campus” for startups in NYC’s Flatiron neighborhood, put together a full day course in Venture Capital on July 16th in an event called “Assembled Capital.” Through a series of presentations, panels and discussions, event listeners learned from venture capitalists, angel investors, and entrepreneurs about their experiences raising capital or bootstrapping their businesses. Here are a few of the main takeaway points:
1. You need 3 documents
Mark Peter Davis (formerly of DFJ Gotham, now founder of Kohort) gave a talk to kick things off speaking on 10 things you need to know about venture capital. One of the most critical points are the 3 documents you will need when raising funds:
- 1 page executive summary: This is used as bait to draw an investor in; it gives just enough information to pique their interest
- 10-20 slide deck: The deck has a narrative about your team, how you fit into marketplace, and the pain point of your potential customers
- Operating model: This model for operating metrics assumptions around sales, marketing and other aspects; it will goes through operating costs and gives the output you will receive for each item
You can read more of Mark’s thoughts here.
2. Lines, not dots
On the State of Venture Capital panel (and in many of the other talks) the most referenced post was to Mark Suster’s “Invest in Lines, not dots”. Think of looking for investment as a conversation instead of a one time meeting and judgement.
Jordan Cooper also points out that 80% of fundraising is showing confidence you have in what you’re doing, so that the investors are buying, as opposed to you selling your company’s strengths to the investor. In showing this, you project that you are the one who is uniquely able to execute on the vision of the company.
3. Until you have traction, ask for advice, not money
The venture strategy panel featured a few entrepreneurs who have successfully raised venture capital. The best point was made by Vin Vacanti of Yipit, who said that until you have traction, ask for advice, not funding. Some of the “no’s” that he got were from places that he pitched for funding early on when they were not getting traction.
As other panelists also alluded to, you may not get funding from every investor you talk to, but the experience can help you meet other investors and entrepreneurs in your industry.
4. Bootstrapping: sell the dream
“Nobody joins your startup to make more money” said Marc Cenedella, Founder of TheLadders.com, in an impassioned speech on emotion in startups.
In getting others to join your startup, even in a phase when you don’t have much cash on hand, you need to be able to “sell the dream” of the company to potential employees, says Lauren Leto (Bnter, Texts From Last Night). “Things will take longer than you think, and you will likely be poorer than you think,” says San Kim of Easel, but if you can keep costs low and focus on building your vision, you can make it through the tough times.
5. Don’t outsource your community manager
In the early stage of building a startup, it is critical that you fully understand your product. Anthony Casalena from Squarespace told us that he would frequently ask users who stayed with the service why they stayed. The answers were usually surprising. The same went for those who left the service. Make sure that you as the founder are engaged in these conversations. It may seem that you need to get all of these various parts early on, but you want to keep an ear to the ground for customer feedback.
Guest writer Frank Denbow is the founder and developer of Songsicle. He is an entrepreneur working out of New York, who organizes the NYC Startup Weekend and curates the NYC Startup Digest. You can find more of his thoughts on twitter at @FrankDenbow.
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