What’s the best way to navigate the fundraising climate?

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Redefine what success looks like. In order to survive, it is critical to redefine what success is going to look like for you — and your employees, and your investors, and your other stakeholders.

What’s the best way to navigate the fundraising climate?

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Understand whether your current investors are going to get you there. Go to [your] backers and get their commitment that they will see us through (or know that they won’t, because if they won’t, the sooner we know that, the sooner we can go out and do something about this. ) I know many VCs hate to be put on the spot about this, but I think entrepreneurs have the right to ask, and to know.

What’s the best way to do effective business development?

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Operating Partner, DFJ

I learned that negotiation is “the process of finding the maximal intersection of mutual need. ” It sometimes takes extra work and lots of iterative communications to find out what the other person truly wants, but the process creates better, more sustainable deals.

What’s the best way to navigate the fundraising climate?

Sam Altman (President at Y Combinator)
What to do if a bubble is starting – Sam Altman

The only thing that is cheap during a startup bubble is capital. Make sure you have enough money in the bank, and treat this money as the last money you’ll ever raise. Focus on a path to profitability. Resist the urge to ramp up to a crazy burn rate.

Sam Altman (President at Y Combinator)
Valuations – Sam Altman

Definitely don’t start a company just because capital is available. Resist the urge to raise and spend too much money; if capital feels cheap, its psychologically easier to spend.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
When the going gets tough, the tough get going – AVC

The real reason I welcome the tougher environment is that it will make all of us better. We will have to make better decisions. The market won’t bail us out. We will have to earn our returns instead of being handed them. And I’m not just talking about investors. I’m talking about everyone working in tech startups. The going is getting tougher. Time for the tough to get going.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

Understand the broader financing climate. In 2004, investors regained interest in the consumer internet again. Friendster raised a big round in 2003; MySpace started gaining traction. But with so many investors still licking their wounds from the dot-com bust, many focused on proven business models, such as advertising or e-commerce. As a result, we knew that our pitch would need to steer into investors’ biggest concern: the lack of revenue.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Reblogging An Old Post: The Word Bubble – AVC

That doesn’t mean we aren’t investing in this cycle. We are as active as we’ve ever been. But we are investing at this stage of the cycle with our eyes wide open. And I’m writing about it in the hopes that others do the same.

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

The problem is that the number of A rounds hasn’t changed. That amount of Series A capital HAS NOT increased. So, if you have 4x the number of companies with seed funding, that’s 4x the players competing for the same money… making it 4x harder to raise an A round than it was five years ago.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The First Law Of Internet Physics – AVC

I told him that when you are looking at financial manias, the amplitude of the mania is inversely correlated to its duration.
I like to think of these manias as waveforms. When they build slowly they last longer. When they develop overnight, they dissipate quickly as well. This rule also works pretty well for consumer internet services.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
What Has Changed – AVC

the momentum/late stage investors have moved from consumer to enterprise. there is a large pool of money in the venture capital asset class that is opportunistic, momentum driven, and thesis agnostic. the consumer web has matured. we are almost 20 years into the consumer web and we have large platforms that are starting to suck up a lot of the oxygen. google, facebook/instagram, amazon, microsoft, apple, twitter, ebay, yahoo, AOL, craigslist, wor… (read more)

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

For consumer internet properties in 2004, because we had just gone through the dot-com winter, investors’ principal concern was whether or not you could make money.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

In 2013, it [was] whether you can break through the noise. [In 2013], there [were] probably a thousand consumer internet startups founded every quarter — how do you become one of the 1 to 3 that matter in a 7-year timeframe? Those are the kinds of objections you need to steer into at the beginning of your pitch.

Mark Suster (Managing Partner at Upfront Ventures)
What Do LPs Think of the Venture Capital Markets for 2016? | Bothsides of the Table

LPs remain staunch supporters of the venture capital industry, and their investment pace into VC seems likely to hold steady for the next one to two years (barring any unforeseen negative market events). This support will start to meet headwinds in the next three to four years if our industry doesn’t find a way to drive more exits and recycle capital back into the ecosystem. Without some cash distributions, eventually LPs will become stretched. … (read more)

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

[In 2016] As I have pointed out in previous posts, 91% of VCs surveyed believe prices are declining (30% believe substantially) and 77% believe that funding will take longer than it has in the past.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Stop clinging to your (or anyone else’s) valuation: You know what somebody else’s fundraise metrics are to you? Irrelevant. You know what your own last round post was? Irrelevant.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Redefine what success looks like. In order to survive, it is critical to redefine what success is going to look like for you — and your employees, and your investors, and your other stakeholders.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Get to cash-flow positive on the capital you already have.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Understand whether your current investors are going to get you there. Go to [your] backers and get their commitment that they will see us through (or know that they won’t, because if they won’t, the sooner we know that, the sooner we can go out and do something about this. ) I know many VCs hate to be put on the spot about this, but I think entrepreneurs have the right to ask, and to know.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Stop worrying about morale. You know what hurts morale even more than cost- cutting and layoffs? Going out of business.

Jeff Haynie (CEO, co-founder at Appcelerator)
How to prepare for the coming startup storm — welcome to your startup life — Medium

1. Take a hard look at your finances. 2. Take a hard look at your priorities. 3. Take a hard look at your people.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Mobile Downturn – AVC

In tech investing, we get booms when a new cycle emerges and downturns as it matures and consolidation of economics happens (think Microsoft in the late 80s/early 90s). The downturn is always followed by something radical and new that starts on the fringe and becomes mainstream. Timing all of these things is hard. But it is what we have to do.

What’s the best way to do effective business development?

David Jackson (Founder, Seeking Alpha)
How to make bus dev meetings with large companies successful and avoid time-wasters | A Founder’s Notebook

In my experience, the biggest risk of meeting with large companies is that their goal isn’t a partnership, but reconnaissance — to learn about what’s cutting edge in their market. An indicator of this is when a relatively large number of senior execs turn up for the meeting. How can you avoid this? Maybe by asking to meet with the key decision maker alone for the first meeting, and only progressing to a larger group when there’s clear evidence th… (read more)

Hunter Walk (Founder & Partner at Homebrew)
Let’s Meet: How to Prevent Big Companies from Wasting Your Startup’s Time | Hunter Walk

1. Don’t take the meeting unless you know what you want to get out of it. You don’t actually have to meet with BigCo, especially if they won’t tell you what the goal/agenda is, who will be in the room, etc. 2. Make sure the right people are in the room. You want an informed decision maker in the room. If you get stonewalled on this request, ask what data/information can you provide in advance to make it worth this person’s time to attend. 3. Unle… (read more)

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Create clear BD targets – This goes without saying, but it is worth repeating. Without clear targets, a BD team will aimlessly chase deals and in the worst case have a distracting effect on the rest of the organization by creating deals that are not core to the company but take up valuable executive, product, and engineering resources. Ideally, BD targets are a subset of the overall company goals (e.g. grow the user base, expand internationally… (read more)

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

This includes market sizing, market and competitive analysis, and a clear timeline. If you are new to the industry you better start researching yesterday. There is nothing worse than being pitched by someone who did not make the effort to understand your business and the challenges you are facing. Secondly, you need to put a lot of work into figuring out how to approach these partners. Finally, you have to make sure you have all the necessary … (read more)

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Solve problems, help partners reach their goals – This is one of the most critical business development tasks. Partnerships never work when the benefits are one-sided. In addition to helping you reach your own targets, you really have to figure out how your proposal helps the potential partner reach their goals. Again, you would think this is a total no-brainer, but this does not seem to be the case judging by the large amounts of proposals th… (read more)

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Be prepared, research the companies you want to partner with – In addition to a well thought out, mutually beneficial proposal, it is important to research your target partners. To me this is like prepping for an interview. Nothing worse than realizing that the person you are interviewing knows nothing about your company or the issues you are facing but at the same time tells you how “passionate” s/he is about your business.

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Who are the decision-makers, which teams or managers are heavily weighing in, who is responsible for the long-term execution of the partnership etc. This organizational understanding will help you address the right people in the partner organization and help you identify additional contacts you might want to connect or back-channel with.

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

For high-value partnerships, I always try to build a relationship on multiple levels, e.g. between the two day-to-day partnership managers, between the two VP-level managers responsible for those partnership, and ideally also between two or more C-level execs. Having these multi-level relationships gives you more flexibility in dealing with your partners. In certain scenarios bottoms-up approaches might work better and you want to convince the … (read more)

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Always be responsive – A pet peeve of mine. I think it is disrespectful not to respond to companies or people reaching out for various reasons. The only things I usually do not respond to are blatantly obvious sales pitches.

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Don’t rush, don’t annoy – Always remember that you are working in a dynamic start-up while some of the bigger organizations you are trying to partner with have heaps of processes and check-points that decisions have to go through. I remember from my time at two of those large organizations, in my case Deutsche Telekom and Yahoo!, that people in those organizations could get frustrated with impatient partners banging on their doors all the time.

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Can’t close? Regroup, analyze, and adapt if possible – Don’t beat a dead horse. If a deal cannot get done, and there might be many good reasons, regroup and think why the partnership did not make sense for the potential partner.

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Own your partners, not just deals – There is a fundamental difference between Business Development and Partner Management. In many large organizations you have a dedicated BD team that flies in to negotiate and close a deal and then moves on to the next deal with another partner

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Don’t over-commit, internally or externally – With many partnership opportunities, you only have a few potentially only one shot at getting it right, so it is critical that what you commit to towards the partner is actually something that your company can deliver.

Holger Luedorf (SVP Business @ Postmates)
Guest Post: Startup Business Development 101 – AVC

Relay partner feedback back into your own organization – The BD team is usually one of the most outward facing teams in a start-up and as such you will be able to collect a ton of valuable feedback for company.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Operating Partner, DFJ

I learned that negotiation is “the process of finding the maximal intersection of mutual need. ” It sometimes takes extra work and lots of iterative communications to find out what the other person truly wants, but the process creates better, more sustainable deals.