*This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here*

Of all of the slides in a pitch deck for VCs, the team slide should be the most straightforward. However, we’ve found that it’s frequently the most over-engineered, and often filled with extraneous information.

The purpose of the team slide is to quickly establish strong credibility. That’s it, then move on.

Which is why we at NextView like to have it at the beginning of a slide deck. Yes, with Demo Day presentations Founders generally weave a story about the problem and market, and then close with something like “we are the right team to do this.” But when you are having a real conversation with a real person, you always start by introducing yourself. And almost every investor flips to the team slide first anyway when they receive a deck, so it’s best to save everyone the trouble and put the team slide up front.

The intent of the team slide should not be an extensive biography of the team. Yes, everyone on the team has had numerous accomplishments which are important to them. But a potential investor should just be able to look at the slide, and as quickly as possible, “get”, why this team is the right mix of people to have an unfair advantage to succeed in the startup’s space. The sooner that objective can be accomplished, the sooner time can be spent in the meat of the presentation explaining the narrative of what is being built.

Accomplish this goal by succinctly citing the prior accomplishments which speak to domain and functional expertise, as well as the complementary nature of the team. And the best way to successfully accomplish this task is visually, rather than a wall of words of lengthy bios.

So tactically speaking, start with a line-up of faces. After all, a startup is comprised of human beings. Then add logos of only the companies or institutions which matter to that person’s domain or functional expertise. The logos are more quickly recognizable than written text. Thirdly, add a few phrases speaking to what that person’s title or role was at each relevant stop. Director of Marketing at Facebook, VP Engineering at Startup X, Ph.D. in Mechanical Engineering at MIT, etc. (If you really feel the need to have a more extensive set of bios which are relevant, they can be part of the Appendix “kitchen sink.”)

Lastly, a note on advisors: Entrepreneurs often spend way too much slide real estate and pitch time detailing the startup’s advisors. Any credible set of Founders should be able to recruit important and influential people to formally help the company. But never is the set of advisors the reason why a company fails or succeeds. Unless in the truly exceptional case where an advisor is actually a part-time member of the team actually doing real operational work, the team slide should only be those people who are really working on the venture on a daily basis.

The voiceover, when actually presenting the Team slide, is to briefly highlight where everyone is coming from, why that’s extremely relevant to the endeavor, and how the functional duties are delegated. While the Team slide is so important it should be at the front, discussing it shouldn’t take a third or more of the meeting, rather just the first few minutes to establish credible context. Short, sweet, and to the point, the key to the Team slide is to focus on what really matters as background for the startup and leave everything else out.

Seriously, don’t over think this slide. Show investors who you are and frame the story around why you are the best team to solve this problem up front. Then get into more of the meat of the presentation by discussing, “What do you do?”, which is what we will be covering next.

Subscribe to our email list to get the posts delivered straight to your inbox, and have the final version waiting for you at the end of the month.

Originally published at https://nextviewventures.com on September 5, 2019.

Pitch Deck Month: The Team Slide was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

Venture capital firms all have different practices on how they make decisions for new investment decisions. The number of investors in the firm, its style & approach, and the specific criteria for new investments yields vastly different processes (or sometimes lack thereof). My partner Rob has previously blogged about our framework on how we make decisions at NextView, as well as what we talk about when we talk about companies.

However, there is another integral component of the NextView internal investment process: creating an investment memo document. For every single seed stage startup we invest in, we write a one to two page summary which provides an overview of the company and our thesis about investing. It’s something that perhaps especially most of our peer seed venture firms don’t (always) do, but writing an investment memo has been a key component for NextView since the very beginnings of our firm.

The purpose of a writing “formal” investment memo for us is twofold:

1. The process itself. Taking meaningful time to deliberately think through the key components of the investment and clearly & concisely(!) articulate the rationale for an investment decision is an extremely beneficial act. It hones the decision process specifically for this particular company and for continual improvement for the firm as a whole.
2. A snapshot in time. The document is a way to time stamp a summary all of the contributing factors that gave us the conviction to invest, and therefore becomes a reference point for the future. It documents our thinking at a specific moment which can be helpful to look back towards as the facts of the company or a market change.

Again, our memos aren’t needlessly exhaustive binders of financial analysis and diligence details, but rather intentionally no more than two pages, broken into the following sections:

Overview. The overview is at most two sentences that explain the company’s concept clearly and concisely.

Market & Background. This section can be one of the most extensive, depending on how young the company is, as we articulate our current market analysis and map the company against projected product-market-fit via publicly available data and proprietary info from past and present portfolio companies.

Founding Team. Short and sweet, we include a few bullet points on each key team-member’s background, especially as relates to why they have an unfair advantage to be successful given their domain expertise, past functional execution, and experience.

Business Model & Strategy. Here we outline the current approach the startup is taking to address a problem and/or market opportunity, as well as attempt to map the current/future growth and revenue metrics. A reader upon completion of this section will appreciate what the startup “does” and how it will win.

Competition. This section is a summary of the existing and speculated potential competitive landscape for the company. We draw largely from publicly available information and in-network, in-portfolio diligence calls here to address differentiation points vis-à-vis competitors and the relative threat-level.

Financial Metrics & Financing. The first part of this section can be a detailed metric-laden financial reflection of the traffic to date -or- a high-level anticipation projection. Since we at NextView invest across the broad range of seed, our investments range from incubated ideas that are pre-launch/pre-product/pre-seed to companies that are just at the point of reaching product-market fit. The second part details just the facts of the round: structure, pricing, terms, amounts, and syndicate partners.

Due Diligence Summary. Our diligence process varies quite a bit depending on the type and stage of the company, and these paragraphs share an overview of a typical combination of in-network calls, in-portfolio calls, individual research, product testing, customer-user interviews, and extensive founder (backchannel) reference calls.

Investment Positives. Taking a step back to see the big picture, we articulate no more than four bullet points which highlight the true why of what makes this startup a compelling investment.

Investment Concerns. We strive to directly and accurately identify the startup’s risks up front to include an honest assessment of downside challenges. It’s better to articulate the risks which yield negative results than to be completely blind to the possibilities. Putting them at the forefront allows you to hopefully recognize when these challenges do manifest to potentially address them earlier.

Exit Scenarios. A short presentation our internal set of projected outcomes for the company, both in quantitative and qualitative/scenario forms.

Glimmer of Greatness / Golazo. My personal favorite, this concluding section attempts to articulate the improbable & exceptional goal for the ultimate vision of what this company could become. Golazo is Spanish slang word most often used in soccer for a truly special goal — it has become a seamless part of our verbiage and dialog here at NextView. All of the investments which we make must demonstrate that they have a possibility of greatness, the glimmer that they can become transformative companies that fundamentally change how consumers experience the world. One or two sentences here paint the picture of what could be if all the stars align.

As I mentioned, all VC firms treat investment write-ups differently. At NextView, the memos are an internal discipline that we keep confidential within the team to ensure that they’re fully honest. Other firms treats their blog posts announcing new investments as the de facto investment memo made public for the world. Some (especially larger firms with more analysts) write even much more lengthy memos, while some do not write any at all.

In the end, for me, writing an investment memo is a learning exercise. Learning why you’re following both your gut and your brain to make an investment. Learning where you can be impactful for the company, especially at the earliest of stages. Later on, learning upon reflecting back what you saw correctly to affirm rationale and reasoning. And perhaps most importantly, learning what you saw incorrectly help you work with that startup effectively and push you to become a better investor in the future.

Note: this post was originally published on our NextView blog and is an updated version previously published by our firm.

.

The NextView Seed Stage Investment Memo was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

It is the one message-space on your phone that you always pay attention to: SMS text messages.

Not just “messaging” broadly, as there are numerous apps where people send and receive communications & messages. Couple that noise with the flurry of AI/messaging startups from a few years back (set off by Facebook’s WhatsApp acquisition), in conjunction with app developers’ notification euphoria… all of which have resulted in a state on our mobile phones where “ our brains being overloaded with push notifications about nothing.”

How do consumers cut through all of it? They don’t. Instead they limit what channels they actually pay attention to. And SMS text messages are at the top. Call it the ultimate priority inbox.

Yes, there is something truly special about SMS… it’s:

1. Universal. Every U.S. phone user has it.
2. Prioritized. The SMS inbox consumers treat as sacred, but when it’s opened up to a new “contact,” it implies a high level of trust and importance.
3. Immediate. Not only is it prioritized, but users also tend to address & react to any incoming message immediately.
4. Personal. Most important, yet the most subtle, SMS implies a personal interaction. Historically there’s always been a person at the other end, not a “machine,” so users interact with these messages fundamentally differently. This context opens the possibilities for fostering a truly unique relationship.

Because of the above, are a handful of services (many from startups) which have emerged recently which take advantage of these attributes. On the commercial side, increasingly ecommerce retailers have started to use SMS as a two-way communications channel with their customers. The shockingly high engagement rates go beyond the one-way “promotions” over email which have now been relegated (and buried) in their own tab in Gmail. (Our NextView portfolio company, Attentive Mobile, provides a tech platform for these retailers to employ these text campaigns.)

Even more forward-thinking for an online retailer is the service Jetblack, one of Walmart’s incubations under Marc Lore, a “personal shopping service over text message… [in which consumers] simply text your shopping requests to Jetblack anytime day or night and consider it done.” Recently the Wall Street Journal profiled this offering, and while acknowledging it’s “money-losing,” to me the eye-opening stat that “Jetblack members are spending an average of $300 a week for products because the ease of the service encourages more frequent purchases” highlights the power of the channel.

Along those lines, there was a set of personal concierge models which launched a few years back like Magic, Operator, and 26 other alternatives (including my own personal favorite Delegate, as I’m a happy customer). It’s unclear to me how sustainable the business models are, but there’s no denying that the immediacy & directness of the text message UI lends itself to consumer services which can become incorporated into the daily rhythm of people’s lives. If someone’s any wish can be granted with a simple request, SMS lowers the friction to those fulfilling those dreams.

My personal startup investment hypothesis is that a SMS-native service need not be an all-encompassing genie, but rather a focused one with a narrowed-yet-functional scope (and therefore scalable cost-structure) which can overdeliver expectations. At NextView, we’re investors in The Nudge, a lifestyle “planner friend in your pocket” that text consumers three times a week nudging their members to a range of fun activities. In their first launch city of San Francisco, the service has become a mini-phenomena… nearly 25% of all of millennial-aged women in the city are members.

Other SMS-native service rhyme with that focused approach, including Shine, which empowers users to “start each day strong with a free, motivational message.” It’s a “daily self-compassion coach in your pocket,” giving users a way to “to talk to yourself like a friend.” And if it’s a true friend you’re in need of, another service, HuggingFace, will always be there for you, as it’s social bot “who learns to chit-chat, talks sassy and trades selfies with you.” A SMS interaction which is deeply emotional, and feels personal, because of the intimacy of the channel. Is it your friend if it’s not “real”? I don’t think it even matters, and in part, because the SMS medium makes it feel like you are.

Where we are with SMS I akin to where we were with email a ten years ago. Considered an “old” technology & channel in the context of the rise of social networking, 2009 was seminal for the email marketing space. That year, MailChimp launched their freemium offering that lowered the barriers for even wider adoption for senders, setting the stage to usurp then-market leader Constant Contact. Meanwhile, SendGrid was founded that year, too, providing enterprise-grade/-scale delivery of email (and subsequently acquired for $2B). In the following decade, email-native services like The Skimm ( 7M subscribers) and BookBub( 10M members) have emerged, as well as a myriad of daily deal services which have integrated into people’s lives.

I believe that we’re at that same spot now for SMS-native content and services. It’s 2019 and we’re going back to the future with SMS. Perhaps counter-intuitive for another older technology, but now is the time for startups to experiment with SMS-native services, as it’s the one channel which can immediately cut through the clutter on a mobile phone to reach consumers directly. Like with email, there is risk that the channel becomes diluted and somewhat tarnished as more companies focus on it. But similarly, it SMS will still persist as an enormous channel for a long time. And SMS-native services are in a key position to capitalize on that enduring opportunity.

This post was originally published on the NextView Ventures blog.

Back to The Future: The Power of SMS-Native was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

At the earliest stages, a startup Founder/CEO is typically the star of the show. She or he is often the one who brings the early team together. Even with a full founding team plus early integral employees, the responsibility of truly driving the startup forward rests on the CEO. And perhaps most importantly, the startup CEO is the face of the company: to employees, to customers, and to investors. Usually it is the charisma and communicated vision of a Founder CEO which is able to convince the earliest of investors to put their risk capital into the venture. Their name becomes synonymous with the company.

However, as a startup matures, investors are looking to see a leadership team that can scale, not just the powered CEO who can do it all. This is especially true when the early founding teams are “doers” and not (yet) leaders who will be able to take the company to the next couple of levels.

For me, there is a mental yardstick once a startup reaches Product-Market Fit: the team goal then becomes to hire & promote for the future, not just for today. And in conjunction with that shift, there becomes a need for the projection of the company to go beyond the Founder Show.

This necessary change matters in two ways. First, in the early days of a startup where everyone is a doer and wearing multiple hats, the search for PMF is about survival, so a Founder/CEO-driven organization makes sense for efficiency’s sake. Once there is a real business that is working, ready to scale, the horizon opens where the venture’s goal isn’t about merely surviving, but about thriving. The cast of characters required to create that play (to carry the analogy further) must be larger and not just filled with only supporting roles.

Second, the shift also directly relates to fundraising and interactions with investors. There is a tension between a CEO running the entire fundraising process by themselves to insulate the company from the distraction vs. bringing other management team members into the process to send a signal about who is integral to the company. The right answer is that it’s a balance, and showing up to a VC partner full pitch by yourself sends a message. A CEO-only road show can make sense during the early part of a process, but later in the process as firms are really digging in, I believe it’s helpful to show that there’s a whole team involved, not just a sole alpha individual.

Those interactions with venture capitalists carry over once an investment is made. Investors most often have a one-dimensional view of a company — what’s filtered through a CEO. They don’t have the benefit of being “in” the company, and seeing the day-to-day of who is doing what, who is leading which initiatives, etc. Often what’s presented is merely an org chart, which certainly never does justice to the team’s contributions. A board’s interactions only with one founder can make sense in the early days. But as a company matures past PMF, successful exposure of the management team to the board is very beneficial.

With some founders, particularly earlier in careers, there is some hesitancy to bring in outside new leadership talent or even highlight others within the organization. It can be (sometimes unconscious) pushback against a “babysitter adult in the room” scenario. However, it’s in fact the most capable of CEOs who recognize this need to prepare the company for the future and not just manage for now.

Here at NextView, we affectionally talk about the time when our portfolio startups become ready to go “beyond the Founder Show.” Of course, there are plenty of truly exceptional companies that exemplify a cult of personality that shine a spotlight on one individual. But all organizations are comprised of people greater than the sum of its parts. Empowering other actors into leading roles into leading roles further catalyzes any organization into a great one.

Going Beyond the “Founder Show” was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

Exploring The Everyday is an interview series exploring interesting individuals or companies who are trying to make an impact on the lives of everyday people. You can learn more about this series here, or read our past interviews here.

At the core of the Everyday Economy is people and their needs. One need that is universal around the world, no matter your race, religion, gender, or social standing, is water. Life needs this basic resource to survive, and yet, most of us take it for granted. A big population of the planet, 783 million people, do not have access to clean and safe water. That doesn’t include the fact that water costs are rising at an unprecedented rate due to climate change, and water shortages around the world. According to the American Water Works Association, nearly 1/3 of all American households may struggle to pay for water.

I sat down with David Spandorfer, co-founder of Janji, a running apparel company, to talk about the intersection of an everyday need, water, and an act of physical activity that almost everyone can do, running. Janji donates 5% of their proceeds to a clean water project somewhere around the globe. Running relies heavily on the need for hydration, so it’s easy to see where this donation choice comes from. Janji was born out of the simple realization that water is a necessity for life, and yet, easy access to water isn’t a luxury for most.

David also wanted to build a brand that helped people see the similarities in other humans, instead of the differences. Janji’s belief is that running is a great way to easily explore new places and understand the world around you. Really, at the heart of this brand is the belief that it really isn’t so hard to make the world a better place, and that’s something I think we can all get behind.

*This interview has been edited for length and clarity*

Talk me through the inception of Janji and the basis for your business model.

We created Janji in college as a way to use running, which is something that my cofounder and I both did in college, as a way to connect and really change the world. We feel like running generally is this unbelievably powerful tool that allows people who think that they can’t accomplish certain things to see that with running that’s not true. It’s a way for people to improve themselves, to be able to see the world around them, and to really live their best life. We wanted to create a brand that really allowed people to do that, and specifically do that through seasonal gear where all the pieces of clothing of a design inspired by somewhere in the world.

We travel to locations, for example Bolivia, and work with artists and makers there to design apparel. We also donate 5% of sales to a well-funded water project in that country whenever a piece is purchased. At Janji, we like to look at it like a really cool way of using running as a passport to not just see the world but to really experience the world around you.

If we didn’t have access to the water that we needed, or the support that we have, this would be impossible, so imagine how people across the world feel not knowing how to access clean water.

Was there a moment in your life that was a source of inspiration for Janji?

Yes. We actually came up with this idea on the way to a championship cross country meet going into my senior year. It was one of these really hot days, about 90 degrees in Ohio and I was running the 10k. We had a thought along the lines of, “you know, if we didn’t have access to the water that we needed, or the support that we have, this would be impossible”, so imagine how people across the world feel not knowing how to access clean water. And during that meet we just started typing up the business plan right then and there.

Now look, I was a History major in college, my cofounder was in Urban Studies, so we didn’t really have a background in entrepreneurship or clothing. It really came down to connecting with the right people. Like talking through our ideas with some mentors, for instance a founder of Build-A-Bear is heavily involved in the school that I went to, and she helped guide us, and we ended up just calling up random running stores and asked if this would this be a product that they would be interested in, is it fulfilling a market need?

We applied for, and eventually won, a business plan competition the next year. Really, at the core of this business, it’s not just about the gear, but there is a sense of greater good behind it.

It’s apparent that this mission has been designed from day one as opposed to just kind of an afterthought.

There are a lot of running brands out there. And what makes us unique is that we want you to know that from the beginning, you can use Janji as this tool to really improve the world.

In the beginning, we used to show support for these countries by creating gear that looked like the flag of the country we were highlighting. Over time, we began to work with local artists for inspiration. We wanted it to be that when you put on a pair of Janji shorts you weren’t just wearing a plain black pair of men’s running shorts that everyone else had. We wanted each article of clothing to have a story behind it. I think really the future of commerce generally is you can either go for the cheapest option, or you can go with something that has a profound story behind it. One that highlights who you are, and we sort of interwove that into the brand itself as we grew this thing.

All of our gear is created to have meaning. That meaning can come from the designs, or from the unique features. For instance, we are the first and only brand to use alpaca. We use alpaca because it’s sustainable, it’s moisture wicking, it’s anti odor. It’s the perfect thing to pack for your next trip. And that really is emblematic of what we’re trying to do here at Janji. We want a great brand, but we want to create gear that tells a really cool story. We want to brand that tells a story, that’s sustainable, and really that has meaning in everything we do.

You mentioned that 5% of each sale goes to fund clean water projects. Walk me through how you source these projects and how you see these dollars making a meaningful impact.

The first thing is to make sure we are finding the right partner. It can be difficult to find the right partner in all these different countries, so that plays a part in how we choose the countries. But we’re really about figuring out how we can empower these organizations to do their best work. These organizations are on the ground, active in the communities so that the people who live here know it’s not just a bunch of people who work in some office in the U.S. helping them.

When we’re finding partners and trying to support these partners we want to make sure that they are being capital effective but also are really ingrained the community to make the most difference.

When I visited an organization that we work with in Kenya called Evidence Action, we visited the site in which these people were getting these chlorine water pumps and we helped fund an education around these clean water pumps. You might be able to build these clean water pumps, but if people do not know how to use them, it’s sort of useless if it falls into disrepair. When we’re finding these partners and trying to support these partners we want to make sure that they are being capital effective but also are really ingrained the community to make the most difference.

So how do you go about picking the country to highlight and find artists or inspirations there?

Every season we pick a different country. This past fall we did Libya, the season before that we did Uganda, and we’re going to be doing Cambodia in 2019. The goal is really to figure out how can we highlight and showcase these places around the world that traditionally a normal tourist or a normal runner wouldn’t necessarily go to, but we know there’s so much beauty and art to be seen there.

And look, there are two things that I think that we do that connects everyone. One is water, everywhere people are, there’s water, we need water to survive. The other thing is, we believe that running is something that everyone can do. Highlighting these cool places around the world, be it in the mountains in Bolivia or in the chaos of Katmandu in Nepal, we want to highlight those stories and highlight those people who are doing really cool things. Doing cool running things all around the world.

Something you said that really struck me there is the two things you believe connects people, water and running. Let’s dive a bit into the water aspect, how is this wrapped up into your business?

Like I mentioned earlier, we started Janji in college because we had a moment of clarity about access to water in the world. We wanted to find a way to give back in something that’s essential and something that’s really needed around the world. There are 7 hundred million remind people that rely on water but have to walk six kilometers or more to fetch water. That’s far from an ideal state. And so, if we can use Janji’s cliental, people who run and need water, as a way to empower people around the world who are struggling to find water, then I think that we can do some really cool things.

In terms of the running piece you know there is a lot of research around the evolution of humans and running. With the right kind of training, any human can actually out run a very fast horse. Humans are the mammals that can run the longest distances, and that has been elemental, both for our own survival and evolution. So we want to encourage people around the world to run and use running as an amazing tool to see the world. One of the first things I do when I travel to a new place is lace up my shoes and go for a run.

Can you talk a little bit more about the trips you take to these countries for inspiration? You not only bring employees, but you also bring along Janji customers, right? What have you learned in organizing these trips?

We run several trips a year so this year we’ll do between four and six. These are what we call the “nomadic run series”. In early January we’re taking people to Mexico City and doing a trip where there’s running, exploring and great food and we will get a great partner who is on the ground who knows Mexico City a lot more than we do. We’re also doing trips to Bolivia, Cambodia and we’re even going to do one in Vermont, which I know seems to be a little out there. But you know what we want to do is use running to tie this back to our mission statement as a way to explore and connect to change the world.

Doing these trips, I think, helps put this brand in perspective and it really helps crystallize the brand itself. People who walk into these trips have just such an unbelievable life changing time that we think that if more people were to get out there, to go run, go explore the world, I think the world would be a much better place, in terms of understanding other people not as a “them” but as an “us”. And that’s what we hope these trips represent.

So how do these trips differ from other preprogrammed trips, other than the running aspect?

They’re definitely a little harder, more physically straining. Our goal is not to exhaust everyone with just running, we welcome all people and skill levels. For instance, on our last trip to Mexico which was in Oaxaca, we went to sweat lounges and did these cool traditionally you know Oaxacan activities that was both a little bit challenging, but also incredibly relaxing. Sitting in a very hot sauna for a while is not particularly comfortable, but it allowed you to contemplate a lot of things and reflect on your life.

When we go to Bolivia later this year in May, we’re going to be running on Death Road. Death Road starts out in snowy conditions and as you go down the mountain you go through every single type of climate and through jungles. It’s just really this crazy cool experience that highlights the diversities of Bolivia but also, you put a little strain on yourself too.

Yes, people there are wearing Janji, yes, we love the product and think it’s meant for everyday use, but we’re also really just interested in how we connect and together make the world a better place both around the world in Bolivia and in Uganda but also here in our own backyard.

Do you have a favorite customer success story or, a moment that personalizes the relationship that you have with your customers and how you are a factor of their everyday lives?

So what we’re about at Janji is really figuring out how do we build and how do we really establish this really cool community that cares about something more than just running the fastest possible time. And so for instance, we’ve got some customers who heard about us when we did like our first pop up store and they fell in love with the brand. They wanted to start an ambassador group. So we started Ambassador group called the Janji core and Janji core has since evolved to another group that’s called Janji Collective and we have over a thousand people this group who are just diehard Janji people. Some of whom actually pay to join this group and they really care about making the world a little better place.

These people love Janji so much they actually started their running group totally, unaffiliated or highly encouraged by us, which has a few dozen people meet every single Thursday at 7:00am at Long Fellows Coffee and they just use running as this way to see the world around them. And you know, yes people there are wearing Janji, yes we love the product and think it’s meant for everyday use, but we’re also really just interested in how we connect and together make the world a better place both around the world in Bolivia and in Uganda but also here in our own backyard.

Exploring The Everyday: Janji Wants You To Change The World By Running was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

Surprise! A startup fundraising process doesn’t always go the way you planned.

Regardless of round stage, and especially if previous raises have resulted in successful outcomes, there’s almost nothing more frustrating that a fundraising process gone awry. While there is no magic number of when to hold up & pause a process, once a Founder has heard a half-dozen or dozen “no’s,” then the market has spoken. Though fundraising is a pursuit of seeking believers instead of convincing the skeptics, a conclusive set of feedback from a series of fundraising conversations shouldn’t be ignored.

Often Founders (understandably!) feel pretty beat up at this standpoint. Taking a breather to regroup and rebuild morale & energy is a requirement, because a lack of excitement and confidence always shines through in a fundraising conversation regardless of the veneer.

But what to do from here? Should you keep going? Change the story? Redefine the target list?

There are three core reasons that fundraising fails:

1. The business doesn’t have the necessary traction / metrics to produce a positive outcome.

2. Something about how the story is presented isn’t resonating with funders.

3. The entrepreneur isn’t speaking to the right target investors.

Pausing on a fundraising process mid-stream to reflect and assess, and potentially make some changes, provides the potential alter the eventual outcome. Whereas going back out to the market with the same strategy will likely yield the same results.

The Traction

As much as you’d like, entrepreneurs can’t dictate reality, as the business is where it is in terms of traction. However, in assessing what would be the best potential next steps from here, it’s helpful to ask if or how the situation will or could change in the short- to medium-term. Are there milestones coming up (before cash-out date, of course) that materially change the trajectory of the business or proof points confirming certainty of the opportunity?

These can include introduction of monetization, a new product launch, testing a set of marketing channels, or addition of an integral team member. In other words, is there a forthcoming event which will yield a step-function change, rather than an incremental one, about the core business itself? If that’s the case, it may make sense to wait until that gate has passed until reigniting that financing process.

Absent that modification, there may be aspects of the underlying business metrics that can be further highlighted. For example, at the seed stage, extremely strong retention numbers can demonstrate product-market fit, even if absolute revenue growth isn’t yet achieved because of marketing constraints.

The Story

Challenges in the narrative of the pitch is the most difficult to assess and the certainly the most difficult to correct. All investors, no matter how analytical, ultimately make decisions based on their hearts as much as their heads — successfully crafting a story that plays into real emotions can be key. Investors want to be truly excited about the possibilities of getting involved with a venture, so that high-level storytelling art needs to shine through the pitch.

Additionally, sometimes there are specific aspects of the business which investors find challenging — from unit economics to competition/landscape — and how those are presented can be better articulated. Lastly, especially at earlier stages, VCs’ feedback is often around the ultimate market size of the opportunity. My partner Rob in a previous post talks about how that can be a red herring.

The Targets

There is a tendency to over-lean on this third reason why a fundraising process has gone wrong. Often Founders start with a small handful of what they perceive to be their absolute ideal VC firms, and once they receive a full set of “no’s,” they then go to the next rung on the ladder.

Unfortunately what often results is a series of successive iterations of this cycle, which is exactly the wrong way to approach a fundraising process. Once there is conclusive evidence that the current process isn’t working, it’s a catalyst to look at reasons #2 and #3 to refactor if there’s time and energy to do so… rather than just blindly adding new names to the top of the funnel.

That being said, the targets do matter, especially in terms of the size and profile of the round which is being raised. No matter how well the underlying business is doing, all processes should have “ivy-league” and “safety school” investors on the list of prospective firms. Lowering that target raise can open up a set of investors more comfortable with that round size. Or, looking to vertically focused funds that match the venture’s domain, or strategic investors, both of whom have a higher likelihood to “get” the opportunity might be more appropriate.

Unfortunately, a troubled fundraise often means resetting expectations about the round, including potential valuation. And depending on the startup’s cash situation, it can be a harrowing experience. But feedback about and honed awareness to a startup’s traction profile, storyline, and prospective funders that result in real changes to the fundraising approach are the best way to alter the outcome of a fundraising process before it’s too late.

When Your Fundraising Goes Wrong was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

What? Another d2c gourmet pet food company? Another full-stack short-term rentals startup? Another affinity-based co-working space?

It seems as though in many categories, especially in consumer internet space, a handful of startups pursuing quite similar or even apparently identical ideas launch within months of each other. What’s going on with these apparent copycat companies? Are the barriers to entry so low and information disseminating so quickly that we’re in a perpetual copycat environment?

Despite the perceived increased perception of this situation, I believe instead that there’s often a Startup Copycat Fallacy. As a seed stage VC, I have a unique privilege of confidentially spending time with a number of entrepreneurs throughout their company formation and initial product development process. And it’s amazed me how many times I’ve seen two or more entirely separate groups of founders — without any knowledge of the other’s activities — independently come to launch very similar products/services.

Yes, information about markets and trends affecting them is near ubiquitous given our media landscape. Smart people with direct authentic knowledge about a space thinking critically tend to be led to the same conclusions about wherein lies the opportunities.

If a large and venture-scale objective market opportunity truly does exists, it would be unusual for it to go entirely missed by everyone with experience in the space. However, not everyone sees it that way — competing entrepreneurs, VCs, and tech journalists others sometimes privately/publicly accuse and dismiss other groups of copycat tactics.

Rather than just a harmless, misplaced attitude, this copycat fallacy can be a detriment to seed stage founders for two reasons. First, this copycat threat leaves entrepreneurs hesitating to share their startup idea and early experiments. Yes, there is certainly risk in this perspective and there is a logical set of reasoning for operating in stealth mode. But I believe the risk of another someone literally copying an entrepreneur’s startup idea is largely overperceived and overweighted.

Generally-speaking, isn’t it better to bang your drum about your idea with better hopes to attract co-founders, employees, advisors, capital, and other important continents to make your company successful? The biggest challenge for most seed stage startups isn’t that the world is going to be paying too much attention to it, it’s that nobody is.

Second, the copycat startup fallacy can simultaneously lead founders to be unfairly dismissive of their competitors. When the competition is merely copying, it’s easy to think that they’re going to be perpetually behind in the race. But in reality what’s launched to date doesn’t truly reveal the startup’s master plan of what’s cooking underneath.

Intelligent people reacting to the same market forces, yet with a different set of previous experiences and perspective, will result in a competitor that might approach go-to-market, the product roadmap, or some other facet of the business differently over time.

Recognizing the startup market fallacy should result in a paradox of being both more open about what your startup is building while simultaneously be even more paranoid of competition.

Of course, there are exceptions to every rule — sometimes a founder has unique perspective given his/her past experiences that allows her to recognize an opportunity in the market which others do not see. And I would highlight a distinction between the essential startup idea and a trade secret or other proprietary information which provides unique competitive differentiation.

However, I typically start with a skeptical stance about first-mover advantage claims as the primary barrier to entry into a competitive set. Sure, network effects provide clear competitive advantages in many markets, but it hardly guarantees success without other differentiation. Defensibility with other aspects of the business model and above all, execution, mean so much more than a few months’ time-to-market.

Entrepreneurs credit where it’s certainly due — very few set out to pursue a true copycat strategy. Almost all are reacting to market dynamics and an authentic (though sometimes incremental) idea.

The question when pursuing a new idea for a business isn’t “has someone else thought of this and how can we prevent that from happening?” but rather “how can we beat someone else who is also thinking of this right now?”

The Startup Copycat Fallacy was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

Five years ago, as the mania around seed fundings was accelerating, Founders were very eager to announce their seed round to the world. It marks the beginning of the journey with hard work & the real business success to be accomplished ahead, but a milestone nonetheless. And seed VCs, especially as new firms were being established, were eager to encourage their portfolio startups to plant that flag in the ground publicly. It seemed like every other TechCrunch post was announcing a startups’s new seed financing round.

Fast forward and that situation has now dramatically changed. Seed stage companies just aren’t announcing their rounds anymore. Case in point, according to CrunchBase, NextView has made only two new seed investments this year in 2018… the actual number is: eleven.

What’s going on?

One aspect is demand-side: when the number of seed financings peaked in 2014–2015 timeframe, a new seed round stopped becoming “news,” and so it became less interesting for the press to actually report on these events.

However, most of this funding announcement waning effect is supply-side related. With the atomization of seed and an increasing number of rounds prior to Series A (pre-seed, seed, super-seed, etc.), there often isn’t one seminal round to announce. More importantly, with the proliferation of seed capital and seed-stage startups, entrepreneurs perceived a round to be a double-edged validation: one which cemented your standing, but one which could also attract other capital to competitors.

The last thing you want to do is raise your hand to attract others into your space. So on the endless list of things to do for a startup, announcing the round dropped slowly down the list. Also, it takes a bit of work, because if you’re going to do it, you’re going to do it right. So at least anecdotally my perception is that often not announcing a round isn’t a conscious decision of “we don’t want to announce,” but rather hitting the snooze button indefinitely on it.

But I think that endless snooze cycle should stop. It’s time to wake up and declare your seed stage startup to the world. Here’s why.

1. Recruiting, recruiting, recruiting

It’s a jungle out there. Especially in the Bay Area, but in all major tech hubs, it’s extremely challenging to recruit new employees onto the team. You can of course share privately that you’ve raised a round, but it’s a different story than a prospective employee (and their friends & family who she is going to brag to) can easily find it with a web search. Seeing on the screen just feels more “real” to many prospective employees, even if it shouldn’t. Perception is reality in the game of recruiting.

2. Inbound partners

There’s a lot of inbound when announcing a new round. Unfortunately including service providers who drop in like vultures. But in my experience, it rarely fails that press coverage attracts the attention of a potential customer or possible new partner. Typically, one that is orthogonal to the Founders’ network that wouldn’t have surfaced otherwise. True opportunities are just that, opportunistic, so why forgo that chance for a game-changer early in a company’s life?

3. Always be fundraising

With the atomization of seed and multiple seed rounds the norm, I believe that there is a new playbook for raising a Series A. It’s not about teeing yourself up for one big fundraising process six months prior to cash-out, but rather often the optimal path is an running ongoing campaign with prospective VCs who demonstrate true interest. And one of the best first steps to attracting downstream partners at venture firms is to put yourself on the map. Announcing the round will (hopefully) generate a round of attention and land you in CrunchBase, CBInsights, and rest of the industry catalog.

Of course, the best way to execute isn’t a funding announcement alone. Instead, following PR 101 to get the most bang — and hopefully media coverage — by tying it to a strategic event: a product launch, and partnership announcement, or some other key milestone which the industry landscape should care about.

But what about the previously mentioned competitive risk?

Yes, it is real, I’ll admit. But it typically isn’t huge and is outweighed by the risk of being too quiet.

There are legitimate reasons for a startup to be in stealth mode. For example, if a company is creating a new category, yet has reasonably low barriers and is execution-driven, then a conscious decision to prioritize a stealthy existence (at least on the funding front) can make a lot of sense. But for the most part, if you’re generally public about what you’re doing, you’re not in stealth mode, you’re in outbound mode. And anything in-between is only poorly executed outbound mode.

While later-stage startups that may attract unwanted competitive attention by showing that their model is working with later rounds of financing, I believe that at the seed stage few really care that you raised $1.5M. The biggest challenge for most seed stage startups isn’t that the world is going to be paying too much attention to it, it’s that nobody is.

So for that reason, for the typical seed stage startup, I believe announcing that first funding milestone should be celebrated and valued. It can help add to the business in terms of attracting key constituents into the company — from future team-mates, to business partners, and to potential investors. Share with the world that there are others out there who also see the value in what you’re doing, it’ll make a difference.

Nobody Announces their Seed Round Anymore and That’s a Mistake was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

I once had a VC mentor (only) half tongue-in-cheek tell me that “all investment diligence is merely an exercise in confirming what you have already decided during the initial pitch.” Diligence validates your gut to invest or (hopefully quickly) kills an opportunity that sounded reasonable but you just didn’t like.

I’ve come to believe a much less cynical view of investment due diligence, that, especially at the seed stage, it’s is best when followed the 80–20 rule.

I’ve found that with just a couple phone calls and/or a little research work, you’ll quickly learn if your initial hypothesis was correct with an over-the-top-positive backchannel personal reference, a strong customer call, positive indications from careful analysis of a dataset… or lack thereof.

The challenge for some VCs is that real, deliberate diligence like that, takes actual work. And work is, well, hard.

So instead, VCs often “outsource” that work to others. Most often, VCs ask founders to pitch another member of partnership. And then another, and sometimes another.

This endless string of meetings can be helpful in validating an investment idea, but too many is just abdicating responsibility of building conviction through peers’ consent. And that doesn’t typically yield successful end-results.

Other methods of outsourcing work include assigning founder “homework” or having junior staff run some analysis, make phone calls, or write up a report.

Venture capitalists are used to meetings.

In-person meetings, phone meetings, portfolio meetings, new company meetings. And it takes time out of an (intentionally) over-scheduled VC’s day to stop, sit down, and critically think about what has to be done to build conviction around an opportunity. Notably, it is a change in the typical rhythm of a day.

The decision for VCs to partner with an entrepreneur to take on a project where the odds are stacked against it is not one which can outsourced to others, but rather a VC partner has to “feel” the validation first-hand.

So this notion of “doing work” (and friction towards it happening) yields a couple takeaway for entrepreneurs:

1. In most cases, progression towards a potential term sheet isn’t really happening until a VC partner is doing work.
   Meetings and other people doing work (often) signal genuine interest from a firm, but until a specific VC partner experiences third-party validation first-hand, a founder’s fundraising process with that firm can get stuck treading water.
2. It’s OK to ask what diligence steps will be made in the course of the current meeting and the next, as well as suggest a task if it’s not clear.
   There’s an art to this communication, but it can be extremely productive to subtlety nudge VCs about a simple diligence task beyond another meeting with the firm. For example, offer to intro the partner to one customer — fit the “work” into a discrete time-period which slots perfectly into a VCs calendar. What’s a strong validating third-party touch-point which will help them build more excitement about the company?

Investment due diligence can both address outstanding questions or clarify risk areas for a VC looking at a potential new investment. More importantly, it can solidify the excitement coming out of that first pitch into conviction and commitment required for making a new investment.

Real work here takes effort, so founders understanding what actually has been completed in this regard gives them an edge into prioritizing the multiple conversations when running a fundraising process and nudging potential investors along.

“Doing Work” to Build Investment Conviction was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.

When thinking about how much seed capital to raise, we need a more sophisticated lens than just the old rule of thumb of “18 months of runway.” This is especially crucial given that the 18-month timeframe is a bit circular — a founder can always just take whatever amount she closes and divide by 18 to determine what her monthly burn rate should be.

The true question, however, is if that level of spending will result in enough progress to successfully raise that next round of (hopefully) Series A capital.

So in reality, a milestone-driven, needs-based approach to determine the right amount to raise in a seed round is to build a financial model, adjusting for real-world scenarios and considerations, adding a fudge factor, and accounting for optics.

But before you get that far, there is one additional factor to consider to determine the right amount of seed capital to raise: an honest reflection of your fundraising ability.

There are numerous dimensions which can affect the capacity of an entrepreneur to fundraise, after all: experience, amount of traction in the business to date, industry category, geography, accelerator involvement, and so on. Fundraising is rarely easy, but it can be much less difficult for some than for others.

So how do you consider these many factors, in particular your ability to fundraise as a founder, into a headline “target” for your seed fundraise deck?

Let’s first consider a correlation between effort (on the x axis) resulting in more capital raised (y axis).

At first, fundraising goes slowly (…until it goes fast), as it takes a while to set the direction for prospects and to work through the kinks in the story and pitch. Those first few days and maybe weeks won’t yield much capital if any at all:

But soon, for any successful fundraising effort, the more effort you put into fundraising, the more results it will yield, in meetings and eventually in capital:

Spreading your network broader to pitch more potential investors will inevitably result in more capital being available:

So far, this is somewhat expected — if it’s a good team, product, and market, effort in means results out. However, this is where the model becomes so important. At some point, an entrepreneur begins to exhaust her network, and her network’s network, and the incremental hours devoted to fundraising will begin to yield less capital raised than the previous.

There begins to be diminishing returns to devoting more time to fundraising:

Eventually, a founder reaches a point where, given the state of the company, the team, and the traction to date (and all of the various factors), more time devoted to fundraising just isn’t worth it.

This means there is a theoretical “maximum” amount an entrepreneur can raise at any point in time in the seed stage. For some, it may be just a couple hundred thousand, for some, $1M or $2M, or for others, even more.

Here’s the biggest takeaway in this exercise:

DON’T GET TO THAT POINT.

That point of diminishing returns is NOT actually the magic number you want to raise. Instead, your magic fundraising number is actually the one which corresponds to approximately 80% of effort devoted to reach that highest point.Right when the curve begins to bend and fundraising begins to feel increasingly difficult is the moment where you’re better off ending your fundraising process and devoting the entirety of your attention to building the business.

At this point, a CEO’s energy should be focused on efforts which will increase the ability to raise capital in the future, which is now best done through accomplishing key business milestones rather than more legwork on an existing fundraise.

Of course, it’s impossible to know before embarking on a fundraising process — seed or otherwise — what that exact, optimal fundraising target should be. But the above heuristic does force you to ask the right questions. The point is not to ask, “What’s the most seed capital I can raise?” but rather to ask, “What’s the most amount of seed capital I can raise without increasing difficulty?”

The answer to that question provides the most useful data point to then answer the real question: “How much seed capital should I try to raise?”

The goal of fundraising shouldn’t be about maximizing dollars raised but rather optimizing the balance between effort and amount.

If you have any topics you’d like to see covered, or any questions you want answered as part of #FundraisingMonth, please reach out to us. You can comment below or tweet any of us (@robgo, @davidbeisel, @leehower, @melodykoh, @nextviewvc).

How Much Seed Capital Should You Actually Raise? was originally published in Better Everyday on Medium, where people are continuing the conversation by highlighting and responding to this story.