What’s the best way to compensate your advisors?

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.)
Everything you ever wanted to know about advisors, Part 2 – Venture Hacks

What should I pay advisors?
Nothing—get them to pay you. Ask advisors to invest. You get money, save stock, and amplify the advisor’s social proof in the process. But lots of good advisors can’t or won’t invest

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.)
Everything you ever wanted to know about advisors, Part 2 – Venture Hacks

The normal advisor gets 0.1%-0.25% of a company’s post-Series A stock. Normal advisors do something important for the company and aren’t expected to do much beyond that. For example, they introduce the company to a key customer or investor.
Normal advisors are also assembled by naive entrepreneurs who think the mere presence of an advisory board will create social proof and help them raise money. But investors don’t take these mock advisory boar… (read more)

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.)
Everything you ever wanted to know about advisors, Part 2 – Venture Hacks

The super advisor can get as much stock as a board member: 1%-2% of a company’s post-Series A stock. Super advisors help make your company happen. They know all your prospective customers intimately. Or they raise your money for you. Or they bring you a handful of great employees. They can even add more value than an independent board member because they don’t have to deal with corporate governance.
If you find a super advisor, you want to incent… (read more)

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.)
Everything you ever wanted to know about advisors, Part 2 – Venture Hacks

Whether you’re hiring a normal advisor or super advisor:
Advisory shares are usually issued as common stock options.
The options typically vest monthly over 1-2 years with 100% single-trigger acceleration and no cliff. Although the advisor is on a vesting schedule, you should expect them to add most of their value up-front—that’s normal.
Many advisors want options they can exercise immediately—that’s fine.
If your company hasn’t raised a Seri… (read more)

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.)
Everything you ever wanted to know about advisors, Part 2 – Venture Hacks

Angels or seed investors may ask for advisory shares. They might argue that they will be more helpful than the other investors, so they should get advisory shares.
But every investor thinks he will add more value than the other investors. We would like to propose a shareholder’s code of conduct: if you think you’re doing too much, you’re probably just doing your share.
So, how do you decide whether you should give advisory shares to an investo… (read more)

Mike Crill (High-tech CFO since 1995, helped raise over $150MM in angel and venture funding)
How to Divide Equity to Startup Founders, Advisors, and Employees | thinkspace

Directors – 1/2% to 2% option. Vested 36-48 months. No cliff, no cash.
Advisors – 1/10% to 1/2% option. Vested 36-48 months. No cliff, no cash.

FounderDating (Network of talented entrepreneurs with different backgrounds and skill sets all ready to start their next company or project)
| FounderDating

Company Stage
Advisor Experience Idea/pre-launch Seed Series A Series B+
First/second time advisor .2 – .5% .1 – .4% .1 – .25% .1 – .25%
Fairly experienced .2 – .5% .25 – .4% .1 – .3% .1 – .3%
Known Entity .5 – 1% .4 – 1% .2 – .5% .1 – .4%

FounderDating (Network of talented entrepreneurs with different backgrounds and skill sets all ready to start their next company or project)
| FounderDating

Why do I have to give equity, can’t we pay cash?
Advisors, the way we’re defining them, are individuals that are able to give strategic advice based on experience as entrepreneurs, executives and/or deep expertise in a certain area. Your incentives should be aligned around growing the company and equity is the best way to do this. There is nothing wrong with project-based on hourly consultants, but FD:Advisors and this agreement does not serve t… (read more)

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
Should you give advisors equity in your startup? | Calacanis.com

Advisors ask founders to trade “advice” and “work” in exchange for equity. Founders who haven’t raised money yet typically get advisors because, well, they are unable to get investors!
Cynics (typically VCs) say things like, “if you could get investors — who advise for free — why would you get advisors who don’t put any cash at risk? Those people are not earning their equity!”
The cynical folks are right 80% of the time — the advisors don’t earn … (read more)

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
Should you give advisors equity in your startup? | Calacanis.com

Vest the shares the advisor will receive over two years (you won’t need them longer than that).
Typically they get .25 to .50 points in a startup — one point is they are a complete hero.
Put a dollar value on that equity. If you give .50 in a company worth $10m that’s $50,000 — not a ton of money depending on what they do.
Write a letter of agreement for what they will do for that equity. This should be as detailed as possible: e.g., the advis… (read more)

Founders Institute (Operates as an early-stage startup accelerator)
The Founder Institute: Helping Founders to Build Great Companies

Idea Stage Startup Stage Growth Stage
Standard: Monthly Meetings 0.25% 0.20% 0.15%
Strategic: Add Recruiting 0.50% 0.40% 0.30%
Expert: Add Contacts & Projects 1.00% 0.80% 0.60%

Founders Institute (Operates as an early-stage startup accelerator)
The Founder Institute: Helping Founders to Build Great Companies

It is not uncommon for a technology startup to have a 5% pool of equity allocated to a group of strategic advisors or an advisory board.

Steve Hoffman (Cofounder of LavaMind)
How much equity do I give to my Board of Advisors? | Founders Space

I agree the typical range is between 0.01% to 3%, depending on experience and other assets the advisor brings. It also depends on what stage your company is at. 1% of a startup without VC funding is very different from 1% of a later stage startup with VC funding. The % depends in large part on the valuation and prospects of the company.

Steve Hoffman (Cofounder of LavaMind)
How much equity do I give to my Board of Advisors? | Founders Space

Another good idea is to tie additional equity to goals. For example, you could give all your advisors 0.25% to begin with, and if they hit certain goals, like making 5 or more key introductions a month, then after the first year they get an additional 0.25%. This way you motivate your advisors to really perform.

What’s the best way to raise the right amount of money?

Jason Calacanis (Founder & CEO @ Inside.com)
How to select your angel round valuation (aka “the $4m rule”) — Medium

Have coffee with the angel you want most in your startup and ask the following question: “Cyan, can I ask you for a favor?” [they will say yes] “Would you candidly tell me at what valuation you would want to invest in my startup? I really want to hear what you think the number is. Even a range is helpful.” Do this five times and you’ll know what the right number is.

What’s the best way to raise your series A?

Jason Calacanis (Founder & CEO @ Inside.com)
What is the current Series A market like (as of January 2016)? – Quora

In order to close a Series A you need 2-3m in ARR or 1m+ MAU growing at 20% m/o/m. There are too many startups with $100k a month in MRR and too many consumer products with 100-500k MAU and not enough VCs to invest in them.

What’s the best way to raise the right amount of money?

Jason Calacanis (Founder & CEO @ Inside.com)
How to select your angel round valuation (aka “the $4m rule”) — Medium

If you’re raising over one million dollars at over a four-million dollar valuation, investors in Silicon Valley are going to put on their diligence caps and put your business on the examination table and try to make an “educated decision.” If you’re raising under one million dollars at under a four-million dollar valuation, investors in Silicon Valley are going to put you in one bucket of risk I will call the “gut decision.”

What’s the best way to create your pitch deck and demo?

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
How To Demo Your Startup | TechCrunch

Show your product within the first 60 seconds. Most folks start their presentations with information like the size of the market they are tackling. The longer it takes for you to show your product, the worse your product is. The best products take less than five minutes to demo. The better the product the LESS time it takes to demo. If your product demo takes more than five minutes to demo, it probably sucks. Talk about what you’ve done, not what… (read more)

What’s the best way to create your pitch deck and demo?

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
How To Demo Your Startup | TechCrunch

Bullet points of obvious facts show that: a) you don’t have the ability to create a compelling story with data b) you don’t think that much of the person being presented the information

What’s the best way to communicate with potential investors?

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
How To Demo Your Startup | TechCrunch

If you don’t have an answer be honest and say you don’t. The worst thing to do when you don’t have an answer is to b. s. the person. So, feel free to say you don’t know –- folks find it refreshingly humble and honest. There are many ways to say this including: “I’m not really sure, I’m going to have to think about that for a bit and get back to you,” or “I’m not sure to be honest. What do you think?” “I’ve never really considered that. Perhaps y… (read more)

What’s the best way to raise your series A?

Jason Calacanis (Founder & CEO @ Inside.com)
What is the current Series A market like (as of January 2016)? – Quora

In order to close a Series A you need 2-3m in ARR or 1m+ MAU growing at 20% m/o/m. There are too many startups with $100k a month in MRR and too many consumer products with 100-500k MAU and not enough VCs to invest in them.

Patrick Mathieson (Associate @ Toba Capital)
Patrick Mathieson’s answer to What are the metrics necessary for an enterprise SaaS startup to get a meeting with investors for a Series A? – Quora

Month-over-month MRR growth of 10% (15% is better / 20% is great).

Patrick Mathieson (Associate @ Toba Capital)
Patrick Mathieson’s answer to What are the metrics necessary for an enterprise SaaS startup to get a meeting with investors for a Series A? – Quora

A payback period of less than 12 months (9 is better / 6 is great). E.G.: “Our all-in customer acquisition cost averages about $1,000, and the average customer contributes a gross margin of $125 per month, so payback period averages 8 months.”

Ed Sim (Founder and Managing Partner @ Boldstart Ventures)
The 4 Kinds of Series A Rounds in Enterprise — Medium

The 4 kinds of A rounds:
No A round. Sucks. — self explanatory. Vision A round, super hard — raise on the promise and pre-launch, on the vision, huge market with the killer team that can build and scale. sometimes easier to raise on the promise and the expectations of amazing success than after the launch. Metrics A round, easier — killer metrics, repeatable growth and predictable sales model, used to be $80–$100k MRR/$1mm ARR, the bar is raisin… (read more)

Nnamdi Okike (Partner @ 645 Ventures)
Charting A Path From Seed To A Competitive Series A Round | TechCrunch

a top-quartile enterprise-focused VC firm may have a $1 million ARR hurdle for a SaaS deal, or that a top-quartile consumer investor may have a $2 million run-rate revenue hurdle for an e-commerce company. Also for revenue-generating businesses, future growth plans are created that articulate a clear path to becoming a large revenue company with attractive future profit margins.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

E-commerce. This is a dense market, with diminishing margins, and heavy-weight incumbents (see Amazon). Also, VCs are licking their wounds from companies like Fab and Gilt (wasn’t Gilt supposed to IPO for the last 4 years?). $1 million monthly recurring revenue (MRR) is the key metric here.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

Consumer Apps. Another crowded field and the shadow of King Digital looms.
50K daily active users.
25% month-over-month (MoM) user growth.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

SaaS. Jason Lemkin (the SaaStr himself, of Storm Ventures) has noted the following: $50-150K MRR. > 100% YoY growth on MRR or annual run rate (ARR) basis.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

Marketplace. Marketplaces are tricky (trust us, we know) because of the chicken/egg problem with supply and demand (buyers want to see good supply, and good sellers will list where there are buyers). It is understood that liquid marketplaces also take a while to build. $500K-$1 million in monthly gross market volume (GMV). 20-30% MoM growth in GMV. Liquidity: > 10% demand/supply ratio. Transaction velocity: the time it takes to have a transaction… (read more)

Ari Newman (Network Catalyst @ Techstars)
How to Get From Seed to Series A – Techstars

Responses included some of the market-standard metrics like $100K MRR and double digit monthly growth as common targets.

Ari Newman (Network Catalyst @ Techstars)
How to Get From Seed to Series A – Techstars

“Build relationships, not pitches,” was discussed as well. The panel debated whether this was true for seed rounds vs. Series A. The gist of the debate was that many Series A round investment decisions can happen when the investor is in “advice mode” and the light bulb goes off.

Tomasz Tunguz (Partner at Redpoint Ventures)
How Fast Must a SaaS Startup Grow to Raise a Series A?

To satisfy both the revenue and timing conditions, the SaaSCo founders should aim for a 15%+ monthly growth rate.

Anjula Bath (Partner @ Trinity Ventures)
Fundraising – From Seed To Series A by Techstars | Free Listening on SoundCloud

Don’t ever tell anybody you’re raising money. Because the moment you tell them you’re raising money they think you’re selling them and that always works against you. I didn’t tell anybody I was raising money. I went around saying that I had this amazing idea that was getting all this tgraction and I didn’t know what to do and in 24 hours I got two term-sheets from investors.

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

When thinking about timing, remember, a good fundraising process will take between 4 and 8 weeks. Adding in preparation and time to close, you’re talking a few months. Remember this math when you’re thinking about timeline and proof points. Cutting things too close can be dangerous

NextView Ventures (hands-on seed investor, focused on internet-enabled startups)
Winning Strategies Startups Use to Raise Series A [VC Portfolio Data]

The average time between raising seed capital and raising a Series A was 303 days (about 10 months)

Jenny Fielding (Managing Director @ Techstars)
Fundraising – From Seed To Series A by Techstars | Free Listening on SoundCloud

Don’t wait until you need money to start relationships with investors. People think that you start your company, you wait a few months, you raise your round. If you need to raise money in a year or two, you need to start those relationships now.

Lee Hower (General Partner of NextView Ventures)
What Milestones Are Needed to Raise a Series A? – AGILEVC

There’s no magic formula for a successful Series A unfortunately. But these five tenets can help internet / software entrepreneurs increase their prospects. (1) Core team ready to scale (2) Demonstrable market size (3) Repeatable, cost effective customer acquisition (4) Metric momentum (5) Plausible monetization

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Some Thoughts On Seed Investing – AVC

We like seed investments in teams and opportunities where they have built and launched a product already. We don’t like investing in a concept or participating in a round where the uses of the capital will be to build and launch a product. This means the vast majority of seed rounds are not a fit for us. We pass on a lot of seed stage opportunities because it is “too early” for us.

Nnamdi Okike (Partner @ 645 Ventures)
Charting A Path From Seed To A Competitive Series A Round | TechCrunch

Top teams gather evidence to prove that the market is large enough to sustain a multi-hundred-million-dollar exit or potentially a billion-dollar revenue company. These companies typically demonstrate this evidence through a bottoms-up market analysis, starting with evidence achieved by the company and concluding with reasonable scaling assumptions supported by accurate research and trends.

Nnamdi Okike (Partner @ 645 Ventures)
Charting A Path From Seed To A Competitive Series A Round | TechCrunch

The highest-potential seed companies marshal evidence to show that they can be at least No. 1 or No. 2 in the competitive market. This requires having a detailed awareness of competitors, and understanding their strengths and weaknesses. Intel’s Andy Grove famously stated that “Only the paranoid survive.” We find that a healthy level of competitive paranoia also characterizes the seed companies that reach highly competitive Series A rounds.

NextView Ventures (hands-on seed investor, focused on internet-enabled startups)
Winning Strategies Startups Use to Raise Series A [VC Portfolio Data]

There are four strategies to raising a Series A: show audience growth, show revenue growth, show attractive small-scale unit economics, sell a huge vision and an unstoppable promise.

Moisey Uretsky (Co-Founder / Chief Product Officer @
DigitalOcean)

Moisey Uretsky’s answer to How long is the due diligence process with Andreessen Horowitz? – Quora

With that in mind after we had the term sheet signed it was about 30-45 days of due diligence for the close, which is the standard and typical timeline.

Moisey Uretsky (Co-Founder / Chief Product Officer @
DigitalOcean)

Moisey Uretsky’s answer to How long is the due diligence process with Andreessen Horowitz? – Quora

Ensuring that our accounting and projections were on point, having their analysts review the market segment to review the competitors, and then of course dotting all of the legal i’s and t’s around articles of incorporation, employment agreements, and any other legal documents that while standard, are also incredibly important to have in other.

Raju Rishi (General Partner @ RRE Ventures)
When Revenue Isn’t The Answer

Too frequently, entrepreneurs and investors alike believe that the goal of a Seed Round is to get a startup to the Series A. It’s not. Seed Rounds are the only time in the lifecycle of a startup where you are allowed, expected, even encouraged to test your product in search of real product/ market fit.

NextView Ventures (hands-on seed investor, focused on internet-enabled startups)
Winning Strategies Startups Use to Raise Series A [VC Portfolio Data]

The average amount of money [raised in Series A] was 5.2M dollars

What’s the best way to raise the right amount of money?

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

Whenever I’m an entreprenuer and I raise money there’s a set of expectations I’m creating. So if I raise $5M from a VC, the option to exit for $100M or less is no longer available to me as an entreprenuer.

Jason Calacanis (Founder & CEO @ Inside.com)
How to select your angel round valuation (aka “the $4m rule”) — Medium

If you’re raising over one million dollars at over a four-million dollar valuation, investors in Silicon Valley are going to put on their diligence caps and put your business on the examination table and try to make an “educated decision.” If you’re raising under one million dollars at under a four-million dollar valuation, investors in Silicon Valley are going to put you in one bucket of risk I will call the “gut decision.”

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Underestimate how much you want. Though you can focus on different plans when talking to different types of investors, you should on the whole err on the side of underestimating the amount you hope to raise. For example, if you’d like to raise $500k, it’s better to say initially that you’re trying to raise $250k. Then when you reach $150k you’re more than half done. That sends two useful signals to investors: that you’re doing well, and that they… (read more)

Jason Calacanis (Founder & CEO @ Inside.com)
How to select your angel round valuation (aka “the $4m rule”) — Medium

Have coffee with the angel you want most in your startup and ask the following question: “Cyan, can I ask you for a favor?” [they will say yes] “Would you candidly tell me at what valuation you would want to invest in my startup? I really want to hear what you think the number is. Even a range is helpful.” Do this five times and you’ll know what the right number is.

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

I believe that too much money in a startup is not only unnecessary– it’s actually toxic. It causes you to pursue losing strategies for too long to the detriment of winning strategies.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

If you’re so fortunate as to have to think about the upper limit on what you should raise, a good rule of thumb is to multiply the number of people you want to hire times $15k times 18 months. In most startups, nearly all the costs are a function of the number of people, and $15k per month is the conventional total cost (including benefits and even office space) per person. $15k per month is high, so don’t actually spend that much.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Don’t raise too much. Though only a handful of startups have to worry about this, it is possible to raise too much. The dangers of raising too much are subtle but insidious. One is that it will set impossibly high expectations.

David Jackson (Founder, Seeking Alpha)
Why your VCs want you to raise a large round | A Founder’s Notebook

Since the size of a round is always proportionate to its valuation, this means it’s in your VCs’ interests to have you raise a large round. A large round has many advantages — capital can be used as an offensive strategy. But a large round is not always best for the company, the founder or the team. As Rob Go says, “modest sized rounds focus a team and establish discipline”.

Mark Suster (Managing Partner at Upfront Ventures)
What I’ve Learned About Venture Funding | Bothsides of the Table

I believe firmly in capital efficiency in the early days of a startup. It forces innovation. It forces the founder to spend time in front of customers. It forces teams not to expand too quickly.

Mark Suster (Managing Partner at Upfront Ventures)
What I’ve Learned About Venture Funding | Bothsides of the Table

I’ve seen companies who raise the mega round after they’ve truly started to scale and put scale on steroids. I’ve seen the companies that had they not raised the big round would have evaporated. How can it be that over-funding is bad, bad, bad and then the best possible outcome? And what is the inflection point? It’s subjective. I’ve seen directly just how much capital can separate the winners from the losers when raised at the right time.

Bruce Gibney (Former Partner @ Founders Fund)
Peter Thiel’s CS183: Startup – Class 8 Notes Essay

First, you need to raise the right amount of capital. A small company shouldn’t raise 100 million dollars, even if Great Late Stage Fund is very eager to cut you a check. Raising too much can haunt you. Map out your operating expenses for one year, multiply that figure by 1.5, and ask for that, as a first approximation.

Mark Suster (Managing Partner at Upfront Ventures)
Founder Showcase – Mark Suster Keynote on Vimeo

You should try to raise 18-24 months of capital.

Ryan Howard (Founder @ Practice Fusion)
Transcript: Protecting yourself as the founder; Ryan Howard | VatorNews

Don’t get so excited about the valuation that you’re throwing the baby at the bath water. I did this multiple times at Practice Fusion. I had advisors that wanted a huge valuation because as investors, it might make them look really good. Again, my ego got the best of me, but be willing, if you get a $20 million valuation, be willing to go back to that investor or someone else and go, “What if we do 10% off this and I can maintain a little more c… (read more)

Mark Suster (Managing Partner at Upfront Ventures)
What is the Right Burn Rate at a Startup Company? | Bothsides of the Table

I think every time you raise you should seek to raise 18 months cash if you can. I think you start fund raising when you have 9 months left and begin to panic if you get down below 3.

What’s the best way to create your pitch deck and demo?

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

While it’s important to think carefully about your future, don’t think too far into the future. You will change, the world will change, and the competitive landscape will change. It is useful, however, to have a strategic direction supported by confident projections.

Roy Bahat (Head at Bloomberg Beta)
Also, Why Most Demos Confuse

Demoing a product by starting with the home page (or, actually, starting anywhere on the website or in the app) is like a realtor showing you a house starting in the living room… Consider, instead, walking through the front door — having come from somewhere, paid attention to the neighborhood, the cars on the street, the front porch. Start with the first moment a user might learn of your product — maybe it’s an email invite, or a text from a frie… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Traditionally [early] fundraising consists of presenting a slide deck in person to investors. Sequoia describes what such a deck should contain, and since they’re the customer you can take their word for it. (https://www. sequoiacap. com/article/elements-of-enduring-companies/ and https://www. sequoiacap. com/article/writing-a-business-plan/)

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

You’ll also want an executive summary, which should be no more than a page long and describe in the most matter of fact language what you plan to do, why it’s a good idea, and what progress you’ve made so far. The point of the summary is to remind the investor (who may have met many startups that day) what you talked about.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Assume that if you give someone a copy of your deck or executive summary, it will be passed on to whoever you’d least like to have it. But don’t refuse on that account to give copies to investors you meet. You just have to treat such leaks as a cost of doing business. In practice it’s not that high a cost.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Sometimes an investor will ask you to send them your deck and/or executive summary before they decide whether to meet with you. I wouldn’t do that. It’s a sign they’re not really interested.

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

Customer slides are more appropriate for enterprise pitches. Great customers are predictive of future customers for enterprise businesses. On the consumer internet, however, this is a sign of trouble because it indicates that the entrepreneur may not understand how the consumer internet works.

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

It’s always better to have less slides, but it’s much more important to have a great deck. Don’t stress about the exact number of slides. Entrepreneurs often hear advice that their decks should be a particular length. I, for example, recommend a length of 20 to 25 slides. But these are only rules of thumb, which means you can violate them if you have a good reason.

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

It’s helpful (but not mandatory) to put your thesis in each of the titles. If an investor sequenced through the titles, they’d be able to get a sense of the flow of the argument. This is especially helpful when investors are sharing the decks with their investment partners.

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

Show a focus on bottom-up tactics for your strategy. And show that you’re focused on the metrics that matter: revenue numbers, engagement traction, etc. [Total addressible market] slides quote people who have incentives for artificial inflation, so entrepreneurs risk demonstrating that they have no real sense of how to take dominance of the market.

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

Have reasonable numbers and assumptions that can pass the blink test during the pitch. Investors want to make a quick assessment that you have an intelligent view of the model of your business, and they know those assumptions can later be validated by due diligence. You don’t want investors to fixate on claims that appear crazy.

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

One common mistake is putting the team slide early in the deck. The team behind your idea is critical, but don’t open with that. Instead, open with the investment thesis. Persuade investors that your investment thesis is intriguing, then show who can make it happen.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Does It Tell A Story? – AVC

Too many decks (and pitches) are full of facts and figures but lack a cohesive narrative that makes them compelling. Dressing the deck up with beautiful visuals can help, but even if you do that and you don’t “tell a story” you are not putting your best foot forward

David Jackson (Founder, Seeking Alpha)
Why your startup needs a visual message | A Founder’s Notebook

Your startup needs a visual message. Create visual metaphors that stick in peoples minds and are easily repeated.

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
How To Demo Your Startup | TechCrunch

Show your product within the first 60 seconds. Most folks start their presentations with information like the size of the market they are tackling. The longer it takes for you to show your product, the worse your product is. The best products take less than five minutes to demo. The better the product the LESS time it takes to demo. If your product demo takes more than five minutes to demo, it probably sucks. Talk about what you’ve done, not what… (read more)

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital)
How To Demo Your Startup | TechCrunch

Bullet points of obvious facts show that: a) you don’t have the ability to create a compelling story with data b) you don’t think that much of the person being presented the information

Oren Jacob (Founder & CEO at ToyTalk)
Take Your Fundraising Pitch from Mediocre to Memorable with These Storytelling Tips | First Round Review

When you design your presentation, you want to make sure to emphasize the points that will drive people to the conviction that they should back your idea. If you believe the market opportunity is the most compelling thing you have to share, spend more time on it. If you believe the strength of your team is unmatched, take the time to dive into their bios and experience

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

Open with your investment thesis, what prospective investors must believe in order to want to be shareholders of your company. Your first slide should articulate the investment thesis in generally 3 to 8 bullet points. Then, spend the rest of the pitch backing up those claims and increasing investors’ confidence in your investment thesis

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

You should end on a slide that you want people to be paying attention to. A placeholder slide that says only “Appendix” or “Q&A” is never that. Instead, close with your investment thesis.

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

I now believe you should begin and end with the investment thesis. The beginning is when you have the most attention, and the end is when you should return to the most fundamental topic to discuss with your investors.

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

If you anticipate serious questions from the kinds of investors you want, preparing appendix slides with structured answers is impressive, showing that you’ve considered all of your business’ challenges, opportunities, and comparisons. Appendix content typically fall under two categories: providing additional information or addressing objections.

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

Reinforce key concepts when delivering a concept pitch. Diagrams are one way to accomplish this, helping investors visualize key concepts. In our pitch, we [LinkedIn] wanted to make sure investors understood that you build the network first and then you can build a platform of businesses on top.

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

Show your product rather than saying you intend to build a best-of-breed product. Ideally, you want to have the product built. Otherwise, you should show what you have in mind with a mockup.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Pre-Product Phase – AVC

One of my big weaknesses as an early stage investor is my eyes glaze over at wireframes, design sketches, photoshop screens, and prose that describes a product. Until I can get my hands on it and use it, I have an incredibly difficult time imagining what the thing is.
For that reason, I prefer working on projects that are designed in code as opposed to paper, photoshop, or some other tool.