Recently I gave this presentation to a group of 325 entrepreneurs at Tech Coast Angels event in SoCal. The focus of the presentation was three-fold: 1. What motivates VCs. This will allow you to understand what drives them as you pitch to them so your interests are aligned. 2. What do they look for in promising entrepreneurs and teams and 3. How do they think of promising markets. Once you understand this, you will be able to review your pitch and business to get most out of your interactions with VCs and your funding pitches. Happy Entrepreneurship!

21. Copyright VCs At Work Tarang Shah
What’s Driving VCs?

22. What do VCs Look for?
Entrepreneur
Market First
First
First identify First identify
promising promising
market Entrepreneur
Look for
Follow their lead
promising team
into promising
than can execute
market opportunity
in that market

23. What do VCs Look for?
Billion Dollar Promising Successful
Market Entrepreneur Startup

24. Copyright VCs At Work Tarang Shah
What do VCs Look for?
Stage 0 Stage 1 Stage 2
Formation Build & Prove Grow & Scale
Extended Team ???
Scalability
(Sales, Business
Model, Product
Core Team
Product/ Idea
Product-Market Fit
Market
Cofounding Team
Funding Type Seed Super Angel Series A Series B Series C Series D, E, F
How Much? $50-500k $500k-2M $3-7M $7-25M $15M+ $25M+
Typical Valuation $1M $3-5M $5-10M $15M+ $50M+ $100M+
Dilution 25-40% 5-10%

25. Copyright VCs At Work Tarang Shah
Anatomy of Successful Entrepreneurs
Balanced Ego – Big ego to Real Visionary – Can
pursue unconventional ideas Big & Bold Head see the whole company
but in-check ego to surround – “The World is beyond current product
with people smarter than him Not Enough” ; Big Ears – Listens
Not afraid of non- actively and intently to
Authenticity – Product view consensus view customers and analytics
informed by 10k hours of
tinkering; deep experience that Passionate Disinterest –
provides insights into the fine Passionate to seek out the
nuances of market and customer truth but not biased about the
outcome – highly objective
Iterative – Not afraid of failures
Genuine & Avid Passion to
but like Edison enjoys discoveries High Integrity solve the problem and make
through methodical trial and – Transparent a difference -> A Missionary
errors and
Trustworthy Personal Relevance to the
Extremely Focused – breaking vision pain point being solved –
into short-term metrics and single- motivation beyond making
mindedly pursuing it. money

26. Copyright VCs At Work Tarang Shah
Anatomy of Successful Cofounding Team
High
Complementary Past Successful
Proven Potential
Skills (e.g. Working
Chemistry Cofounding
business, tech) Relationship
Team

27. Copyright VCs At Work Tarang Shah
Anatomy of World Class Team
Lift the quality Hire unfettered
Hire for Cultural
of team with passion without
fit as much as
each hire and ego & restrictions
functional skills
fire of past learning
Hire people who Fire promptly and
Hire People you
can start adding amicably
have worked
value day 1 – No someone who is
with well before
time for training not fitting well

28. Identifying promising new markets
Changing Highly
New Supporting
Customer Attractive
Technology Infrastructure
Behavior Market

29. Identifying promising new markets
Changing Highly
New Supporting
Customer Attractive
Technology Infrastructure
Behavior Market

30. Identifying New Promising Markets
???
Netscape
eBay
Cisco Amazon Mobile
3Com
Apple Internet
Microsoft WANs
LANs
IBM
Intel PCs
Micro
Computers
Chips
Transistors
1950 1960 1970 1980 1990 2000

31. What are some of the Emerging Platforms
Today?
Smartphone iPad/
Facebook Twitter
Tablet
PayPal Amazon ??? ???

32. Making of New Markets
Horse Donkey Mule

33. Disrupting Established Markets
New New Lean Mean
Fat Cats
Technology Cat
Fat Telcos P2P Sharing Skype
Blockbuster Internet Netflix