AWS works with many leading VC's in the UK. Join AWS as we share our learnings about venture capital, how it works and provide tips and tricks on how to pitch with the goal to successfully get funding for your startup.
1. Venture Capital, Funding
& Pitching
Zubin Chagpar, Venture Capital Business
Development, Amazon Web Services
@phylosopher
2. Why do we talk about this?
• Work
with
many
startups
&
EMEA’s
leading
VC’s
• Discuss
many
startups
with
VC’s
&
get
feedback
on
pitches
• Not
biased,
no
agenda,
helping
AWS
startup
customers
succeed
“We
win
when
you
win
– and
only
when
you
win”
6. Venture Capital
VC
Fund
General
Partners,
Principals,
VP’s,
Associates,
etc.
Startups
Need
for
Capital
Growth
Potential
Limited
Partners
Institutional,
Government
&
High
Net
Worth
Individuals
7. Two-sided Platform model
Startups
With
need
for
capital
and
growth
potential
Capital
&
Value
Creation
connections,
biz
dev,
GTM,
mentoring,
etc
Risk
&
Return
Reduce
Risk
&
deliver
Financial
Returns
Limited
Partners
Institutional,
Government
&
High
Net
Worth
Individuals
9. “2 and 20”
Management Fee. VC raises a fund of e.g.
$100M and gets $2M per year to operate
the fund (staff, expenses, etc.)
2%
Performance Fee. VC returns the profits
from the fund to the LP’s but gets to keep
20% of these profits
20%
14. AUG-08
Nathan, Brian,
and Joe
JAN-09
$20K Accelerator
Y Combinator
NOV-10
$7.2M Series A:
Sequoia
Greylock
SV Angel
& others
JUL-11
$112M Series B
Andreessen Horowitz
General Catalyst
& others
APR-09
$600K Seed
Round
Sequoia
Y Ventures
16. 01 04
idea MVP monetizescale
Seed Round
Series A, B, C, etc.
Incubator / Angel
Product Risk Market Risk Financial Risk
02 03
$0-250K
$250-$1M
$1M-$5M, or more
19. “Amazon changed the VC industry.
This is mind boggling. That online
book company. Not … or anybody
else. Amazon. 100% of the credit.”
Mark
Suster,
serial
entrepreneur
and
MD
at
GRP
Partners
20. 1995 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1995 – .com
Technology Startups require physical hardware and
proprietary software to build their business
Typical Series A Spent on… Innovation
5-10M
•$2.5: marketing,
sales, etc.
•$2.5M on
infrastructure
•Not a lot, since
experimentation was
costly
21. Typical Series A Spent on… Innovation
1995
1996
1997
1998
1999
2000 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2000: Rise of Open Source
Open source software drove technology costs down by 90%,
which spurred innovation in technology
3-5M
•Less on Software–
LAMP
•More on development
•Still on infrastructure
•A lot more, as
experimentation is
less costly now
22. Typical Series A Spent on… Innovation
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005 2006
2007
2008
2009
2010
2011
2005: Enter the Cloud
Pioneered by Amazon drove total operating costs
down significantly
500K-
3M
•Staff – the battle for
talent
•Customer Acquisition
•Explosion in
experimentation,
innovation, and
Startups
23. 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007 2008
2009
2010
2011
2007: Micro VC / Seed
Public Cloud led to explosion in the number of Startups
and the emerging of “micro VCs”
Angels Incubators VC’s
Angels unite in
‘Super Angels’ for
Seed investments
thru VC-like setup
Boom in incubator
programs, with micro
investments,
mentoring, etc.
Venture funds that
back early-stage
startups with <$1M
24. Why do VC’s care?
More deals
Shorter time to scale
Faster time to revenue
Lower ‘burn rate’
Higher valuation at exit
31. What’s always missing?
Business Model
not just WHAT, also HOW
Metrics
not just traction, also unit economics
Strategy
What will you DO? How will you GROW?
Execution…
39. 4. Business Model Metrics
Metric /
KPI Now Comp
A Comp
B Comp
C Goal
Advertising
CTR 1.5% 3% 6% 2.5% 5%
Average
time
on
site 4 9 6 5 10
Average
Basket
Price $18 $75 $118 $45 $73
Metric
4
Metric N
40. 5. Growth Strategy
Metric /
KPI Now Goal Growth
Strategy
&
Actions
1.
Advertising
CTR
6% 8% 1.
A/B
test
creatives
2.
Continuously
optimize
campaign
settings
for
CTR
3.
Hire
1
marketing
specialist
2.
Website
Conversion
5% 10% 1.
A/B
testing
of
landing
pages
2.
A/B
testing
signup
flows
3.
Run
Marketing
campaigns
(marketing
budget)
3.
Conversion
to
Active Y% 70% 1.
Automate
email
addition
for
known
hosts
2.
A/B
testing
of
email
account
addition
UX
(UI
and
flow)
3.
Hire
UX/UI
Designer
4.
Conversion
to
Paid Z% 25% 1.
Optimize
the
product
package
of
Free
and
Paid
2.
Make
it
easier
to
pay/transact
3.
Develop
the
product
to
add
new
features
to
paid
users
4.
Deploy
payment
gateways
&
get
PCI
compliant
5.
Hire
3
developers
41. 10. ASK
Metric /
KPI Now Goal Growth
Strategy
&
Actions Costs
1.
Advertising
CTR
6% 8% 1.
A/B
test
creatives
2.
Continuously
optimize
campaign
settings
for
CTR
3.
Hire
1
marketing
specialist
75K
2.
Website
Conversion
5% 10% 1.
A/B
testing
of
landing
pages
2.
A/B
testing
signup
flows
3.
Run
Marketing
campaigns
(marketing
budget)
150K
3.
Conversion
to
Active Y% 70% 1.
Automate
email
addition
for
known
hosts
2.
A/B
testing
of
email
account
addition
UX
(UI
and
flow)
3.
Hire
UX/UI
Designer
75K
4.
Conversion
to
Paid Z% 25% 1.
Optimize
the
product
package
of
Free
and
Paid
2.
Make
it
easier
to
pay/transact
3.
Develop
the
product
to
add
new
features
to
paid
users
4.
Deploy
payment
gateways
&
get
PCI
compliant
5.
Hire
3
developers
180K
My
ASK
for
funding
=
$480K
43. 01 02 03 04
idea MVP monetizescale
Seed Round
Series APitch for Angel Money
Pitch for Seed Round
Pitch for Series A
Bootstrap / Angel
44. Angel Pitch
Show
me
a
great
idea!
1.Problem
2.Solution
3.Business Model
4.Business Model Metrics
5.Growth Strategy
6.Status / Traction
7.Team
8.Competition
9.Roadmap / Forecast
10.ASK
45. Seed Round Pitch
Show me
traction!
1.Problem
2.Solution
3.Business Model
4.Business Model Metrics
5.Growth Strategy
6.Status / Traction
7.Team
8.Competition
9.Roadmap / Forecast
10.ASK
47. Series A Pitch
Show
me
a
business
&
show
me
returns!
1.Problem
2.Solution
3.Business Model
4.Business Model Metrics
5.Growth Strategy
6.Status / Traction
7.Team
8.Competition
9.Roadmap / Forecast
10.ASK
48. So before you pitch…
Ask some important questions
Where is my startup in its lifecycle?
Do I understand my business model, metrics?
Can I explain my growth strategy and justify my ask?
Which TYPE of investor should I target?
49. So before you pitch…
And do your homework…
Decide what you look for in an investor
Easy vs Hard, Dumb vs Smart
Investigate who you want to ‘marry’
Which firm? Which Partner?
Speak with people that know them
Business partners (e.g. AWS), CEO’s in portfolio