A roadmap for how to identify, attract the attention of, and diligence the right investors for your startup.

1. 1 © 2013 SoftBank Capital
October 2013
How to Source Your InvestorsHow to Source Your Investors
Joe Medved, PartnerJoe Medved, Partner
@joevc@joevc

2. 2 © 2013 SoftBank Capital
SoftBank CapitalSoftBank Capital
#1 VC for Exits and Seeds with Follow-Ons in New York*
*Over past 5 years per CB Insights
Making early and growth stage investments in companies that connect people, devices and the
world
Recent Exit Highlights
by by by by

3. 3 © 2013 SoftBank Capital
Picking Your Investors is Like Marriage*Picking Your Investors is Like Marriage*
*Except there can be a unilateral divorce clause, and it’s not in the favor
of entrepreneurs, so avoid a shotgun wedding

4. 4 © 2013 SoftBank Capital
How Much Do You Need?How Much Do You Need?
[Insert small pile and large pile of money
image, or scale with small and large]
 Optimally you will raise enough cash for 12-18 months of runway
 You’ll need to be out raising 3-6 months before your next round
 “Raise as little as necessary!” / “Raise as much as you can!”
 Raise enough to get you to the next value creation hurdles
 If you’re raising at a high market price, raise for a longer runway
 Target 20-30% max dilution on your first round. You’re likely getting 20% or
more dilution every round.
 Quality investors understand big companies are built with large teams that
should retain a significant portion of equity.

5. 5 © 2013 SoftBank Capital
Typical ranges by type:
Which Type of Investor?Which Type of Investor?
Customers – Don’t raise! Friends & Family < $250K
Traditional VCs
$1M+
Seed Funds
$250K-$2M
Angels
< $500K

6. 6 © 2013 SoftBank Capital
Where Do You NeedWhere Do You Need
Help?Help? Consider the collective skillset of the individuals and funds that you
would like to bring together for the round syndicate
 Product, Technology, Recruiting, Sales, Business Development,
Distribution, Manufacturing, Market Validation…

7. 7 © 2013 SoftBank Capital
Frequent Communication Batphone
How Much Help Do You Want?How Much Help Do You Want?
Consider the desired level of engagement from both sides.

8. 8 © 2013 SoftBank Capital
How Do You Get Their Attention?How Do You Get Their Attention?
 Referral, referrals, referrals
 Rise above their filters and inbox overload with mutual, trusted connections
 Leverage their portfolio companies & your customers, partners or advisors
 Networking
 Meet them at conferences, community events, narrowly focused meetups,
coworking spaces, alumni gatherings and office hours
 Start your own events bringing together influencers to demonstrate your
ability to connect with potential customers and partners
Active investors see hundreds if not thousands of pitches annually.

9. 9 © 2013 SoftBank Capital
How Do You Get Their Attention?How Do You Get Their Attention?
 Engage online – many investors are active bloggers and tweeters
 Engage in conversation with them through their online presence, sharing
links with info about your company and product
 Build up your own social profile to demonstrate your influence and
knowledge
 New alternatives like AngelList, with its valuable investor data & access
 Build your social proof with investor & advisor endorsements, or presales
 Apply to an accelerator or similar startup program

10. 10 © 2013 SoftBank Capital
Hook Them With A Simple PitchHook Them With A Simple Pitch
Best Practices
 Share demos or mockups, plus KPI
trends if you’ve launched
 Hand wrap an email that a mutual
contact can forward with this info
plus a paragraph pitch
 There’s less spam on Twitter and
LinkedIn. Send an @message or
connection request with a few
words on your product/service and
a link to learn more.
 Give a brief pitch at a conference or
meetup and ask if you can send
additional info. Land a full meeting.
Worst Practices
 Put together a long, text heavy
business plan that requires more
than a few minutes of reading to get
your value prop across
 Cold call or email an investor
through their general fund number
or inbox
 Deliver a message that just says
you have an amazing business you
would like to speak to them about
 Walk up to a speaker at a very busy
conference and give your full pitch.

11. 11 © 2013 SoftBank Capital
You’ve Got a Meeting, Now What?You’ve Got a Meeting, Now What?
 Just like a sales pitch, go into your first meeting with in depth knowledge
of the investor’s interests and needs
 How do you fit within their investment thesis?
 Who else do you know in their network that you can reference?
 Have explicit reasons why they are a match as an investor
 Post the meeting, send the pitch deck you just gave with a brief
summary that can easily be forwarded to other decision makers
 Make the ask
 What is the next step in their process?
 What other information can you provide?
 When should you expect to hear back from them? If you don’t hear back,
send a polite follow up to stay high on their priority list.

12. 12 © 2013 SoftBank Capital
Diligence, It’s For Entrepreneurs ToDiligence, It’s For Entrepreneurs To
 References!!! Speak to entrepreneurs the investor has backed before,
including those who have crushed it or been crushed
 Is their healthy engagement with the investor? And their team?
 Where can they help & what types of board members complement them?
 Leverage their network for customer references
 On top of your existing customer references, ask to pitch your business to
potential customers in their network
 Follow on investments
 If they’ll follow on, how frequently do they?
 How much would they reserve?
 If you’re working with a fund, what is their capital health?
 What percentage of their fund is invested and reserved?
 If they are raising soon, is your individual lead in good standing?
Never take money without running diligence on the investment partner
and their firm when applicable

13. 13 © 2013 SoftBank Capital
What if None of This Works?What if None of This Works?
 What are the proof points you were lacking?
 Ask investors for specific reasons as to why they passed – team, market,
product, stage, etc.?
 Determine if you can bootstrap to get to those thresholds
 Could you provide services for a customer that could help subsidize the
growth of your product?
 You need a scalable solution long term, but services work can get you there
 If all else fails, can you join another startup in your area of interest to
gain the experience required to build your own company long term?
 The key to most early stage investments is the team
 Make your own bet on a promising startup and help it grow to demonstrate
the potential to run your own

14. 14 © 2013 SoftBank Capital
Joe Medved, PartnerJoe Medved, Partner
www.joemedved.comwww.joemedved.com
@joevc@joevc