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The Helpful VC
1. The Helpful Purple
Polka Dot VC
How to Position Your Unique âValue-Addedâ Superpowers
for Better Branding, Marketing, Fundraising & Dealflow
Dave McClure
Dec 2018
2. Dave McClure: Nerd, Hillbilly VC
Geek, Engineer, Marketing, Blogger, Entrepreneur, Angel Investor, VC
â Born in WV (â66): Hillbilly & WVU Mountaineer football fan
â Johns Hopkins (â88): Applied Mathematics / Engineering, CS
â Silicon Valley (â89): Programmer & SQL Databases, Intel / MSFT
â Founder/CEO Aslan Computing (â92-â99), Internet + Ecom Consulting (small exit)
â Director Marketing @ PayPal (â01-â04), Simply Hired (â05-â06)
â Angel Investor/Advisor (â04-â09): Mint, Slideshare, Mashery, Twilio, WePay
â Founders Fund (â08-â10): Lyft, Credit Karma, Twilio ($TWLO), SendGrid ($SEND)
â 500 Startups (â10-â17): $400M / 2000 companies / 50 countries / 10 Unicorns
3. How You Help -> Brand + Competitive Positioning
YOU
(THE AWESOME VC)
â What you can do (well)
â What you do better / different
â What you promote / promise
(your brand value)
TARGET
PORTFOLIO
COMPANIES
â What they want
â What they need
â What makes a difference
COMPETING
INVESTORS
â What they say they can/will do
â What they actually can/will do (well)
â What they do that really matters
4. Investment Thesis
â What Kind of VC do you want to be?
â Stage, Geography, Industry Vertical
â Fund Size, Check size, Follow-on
â Lead rounds? Board seats?
â Why You? Are you sure you can do this? (3X / 20%)
â 1) can you raise money?
â 2) can you get dealflow?
â 3) can you help companies? how?
Q: Are there competitors with a similar thesis? Why are you different / better?
Why will great companies come to *you* instead of other competitors?
5. VC Dealflow Funnel
â Thesis: what/how you plan to invest
â Brand: use your value-add to attract companies
â Marketing: activities that generate dealflow
â Evaluation: filter dealflow *before* taking mtgs
â Meetings: in-person evaluation & DD Qs
â Deal Memo: document deals you want to do & why
â Negotiation: specify terms and make / close offer
â Investment: wire the money!
â âŠ
â ⊠(then wait 7-15 years) ...
â âŠ
â OMG UNICORNS!
BRAND + MARKETING
DEALFLOW
EVALUATION
MEETING
DEAL MEMO
TERM SHEET
INVEST!
THESIS âVALUE-ADDâ
UNICORNS!
(hopefully)
6. Branding & Marketing: How to Generate Dealflow
â Brand: whatâs your name / logo / soundbite / unique value proposition?
â Whatâs the story youâre going to tell the market?
â Superpower: what makes you special / why are you different?
â Is there something you can do that will make companies come to you?
â Marketing: activities / communications to LPs, founders, press, etc
â Content: writing/blogging, speaking, training
â Services: are there services you can provide to startups to generate interest?
â Founders: where do the founders you want to invest in hangout? FIND THEM!
â Networking: who do you need to know in the industry? VCs? Scientists? Partners?
â PR strategy: who can help generate news about you / your firm / your strategy?
â Events & Conferences: should you speak / attend industry events? Should you run events?
â Online Platforms / Other Investors
7. Help Framework: Why, Who, When, What, How?
â Why Help Companies?
â Just help them win! (goodwill)
â Help them with something youâre good at
â Find out how they are doing (metrics)
â Build your reputation -> better dealflow
â Earn right to participate in future rounds
â Who Should You Help? For How Long?
â Only Winners? Everyone? Even Losers?
â Until next round? Forever?
â Until they âwinâ (or FAIL to win...)
â Board Seats / Advisor seats?
â Define when / how you will pull the ripcord
â Define your âHelp Framework.â
â What will you do?
â Who will you help?
â For how long?
â Until something happens? Or forever?
â Tell them what you expect to get back
â What is Your Unique Help Superpower?
â Product Development
â Marketing/Sales
â People/Recruiting/Hiring
â Operations/Process
â Raise More Capital (*not unique)
8. Fundraising: Key Slides in Your Pitch Deck
Core Deck (10 slides)
â Cover: Name / Brand / Image
â Thesis: Basic Fund Concept + Goals
â Team: Bios / Academic / Work Experience
â Track Record: Prev Portfolio / Top 3 Deals
â Superpower: Services / Value-Add
â Competition: Differentiation / SWOT analysis
â Dealflow: Marketing / How to Get Deals
â Selection: Criteria / DD / Process
â Fund Model: [spreadsheet]
â Capital: AUM / Current LPs / Fundraising
Appendix Slides
â Investment Thesis / More Details
â Winners / Case Studies (1 slide per win)
â Team Bios (1 slide per GP)
â Advisors / Mentor Network profiles
â Examples of dealflow-generating activity
â Sample Deal Memo
â Fund Terms / Legal
* emphasize items in blue if you have âhotâ
thesis, pedigree, experience, track record
* emphasize items in red if you donât
9. EXAMPLE: Wingnut Investment Fund
Wingnut Ventures ($20M seed fund)
â Stage: seed investments + some follow-on at Series A/B
â Vertical: internet-connected hardware/software devices
â Geo: US-centric (mostly US tech metros, some non-US)
â Allocation: 40 seed checks @ ~$250K + 10 Series A/B @ ~$1M
â Lifecycle: 10 yr fund + 2 x 1yr extensions; 5 yr initial investment period
â Reserves/Recycle: 50% 1st checks + 50% follow-on; recycle up to 120%
â Fees/Carry: 2% avg mgmt fees, 20% carry (after 1X returned)
â Team: 1-2 partners + 1-2 associates + 0-1 admin
10. Limited Partner Profiles/Issues
Types of LPs
â Institutional
â Pension Funds
â Foundations / Endowments
â Financial / Insurance Companies / Banks
â Corporates
â Government / Community
â Private
â HNW Individuals (âHigh Net Worthâ)
â Family offices (SFO, MFO)
â FFF (Friends, Family, Fools)
â You, Your Dog, Your Cat.
Issues for Potential LPs
â Asset Allocation
â Equities, Bonds, Cash, Real Estate, âAlternativesâ
â Alternatives = Hedge Fudns, PE, VC, etc
â Time-horizon / Liquidity needs (short vs. long)
â Investing Motivations
â Pure Economic Returns (perception vs reality)
â Strategic (innovation/IP, M&A, people, product)
â Access to Dealflow (industry vertical focus?)
â Economic Development (Jobs, Ecosystem)
â Marketing/PR (âItâs cool to invest in VC/techâ)
â Have they invested in VC funds before?
â Have they invested in startups before?
â Interest in Emerging Managers / Early-Stage?