Archive for the ‘Venture Capital’ Category

Demo tips from a seasoned pro

September 5, 2008

Demos are vital for any startup whether you are trying to raise money or close a sale. Collected below are the insights of a veteran of demos — Jason Calacanis.

For the past 10 days I’ve sat through 200 company demos for the TechCrunch50 conference. These demos are mostly done over the phone for 10 minutes using the phone and web conferencing software like WebEx or Adobe’s wonderful new “Connect” service.

After doing 2,500 minutes of demos (40 hours) this year and many more last year for the conference, I’ve learned a lot about what makes for a great demo and what makes for a horrible demo. Since demoing your idea is a key to your success as an entrepreneur, I thought I would share everything I know in a few simple bullet points.

These tips are applicable to presenting in front of an investor, a partner as well as a demo style conference. Of course, every situation is different so consider these loose guidelines.

Background: The TechCrunch50 conference is taking places on September 8-10th in San Francisco and you can find more information here: www.techcrunch50.com. Mike Arrington of TechCrunch.com and I started the event last year as a place where fifty startup companies could launch their products without having to pay a fee (i.e. the incumbent conference called DEMO charges $18,500 to launch a startup company–that’s really low/abusive in my book). Google, Microsoft, Yahoo, Sequoia Capital and a bunch of other fine partners have joined us in hosting the event.

I have listed his tips below. If you want the full commentary, go to the article on Techcrunch where he expands on each tip.

1. Show your product within the first 60 seconds

2. The best products take less than five minutes to demo

3. Leave people wanting more.

4. Talk about what you’ve done, not what you’re going to do.

5. Understand your competitive landscape–current and historical.

6. Short answers are best.

7. PowerPoint bullet slides are death

8. How to use this new device called the phone.

9. How to handle questions you don’t know the answer to

10. Always confirm the time of your meeting/call, and always be 15 minutes early.

Jason went on with some more tips in Part Two. He set up Part Two before going into his additional tips.

Last week, I camped out at Sequoia Capital on Sand Hill Road and did rehearsals with most of the 50 companies that are presenting–in fact, launching–new products at the TechCrunch50 event next week. These 50 represent the top 5% of the companies that applied to our demo-style event. Truth be told, the top 150 companies were all qualified to be on stage–if only we could have a five day event with two tracks. -)

These are the best of the best, and most of them came into “first rehearsal” with a demo that I would rate a seven out of ten. (Yes, I’ve come up with a rating system for these presentations, but that’s another email).

Actor Ashton Kutcher did his rehearsal last week, and I have to say it was kind of ironic to be sitting there giving presenting advice to someone who’s been in, and created, a large number of movies and TV shows. As an actor, Ashton obviously has the ability to draw you in, but presenting a product in this format is a very, very specific skill. He picked it up quickly.

After coaching hundreds of folks over the past two years, I’ve developed 18 solid rules. You can see the first 10 rules over at TechCrunch, which reprinted the previous email with permission here. These extra eight are very detailed and speak to some deeper techniques for capturing people’s attention and transferring your enthusiasm for your product to them.

These eighteen rules are just a framework, and are based on demoing at a conference. However, the rules can apply, to various degrees, to presenting your product to investors, partners and potential employees.

11. Show Don’t Tell

12. Use inclusive words, live in the present

13. One driver, one navigator

14. How to handle technical issues

15. The Setup

16. Horrible ways to start your presentation:

17. Describe your product five times

18. Change up your style (i.e. shift your tone)

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Excellent deal terms series

December 1, 2007

Brad Feld of Mobius Venture Capital has done a great job of raising issues and sharing experiences with various elements of a VC term sheet with a balanced perspective. So far, here’s what he has…

Brad claims the list is complete (one update below)…

Underdelivered VC cliche: Roll up our sleeves

October 31, 2007

Fred Wilson (a NY-based VC) highlights how most VCs talk a good game about rolling up their sleeves to help out their portfolio companies but few deliver. Fred makes a good case why he strives to be an exception. I’ve observed the exactly same thing. While I think most VCs have the best intentions, they simply don’t have (or make) the bandwidth to really roll up their sleeves (between wading through their deal flow, board meetings, etc. they run out of time). This leaves an opportunity open for venture consultants like Altus Alliance. We’ve consistently found that entrepreneurs are willing to have venture consultants earn sweat equity by rolling up their sleeves whether it’s to play an acting executive role such as a VP of Business Development/Sales or CFO. There’s often a point where the founders are overwhelmed yet the time isn’t right (or the funding isn’t there yet) to hire a full complement of staff. In addition, the talent that is willing to work at a company at that stage is usually less experienced than what a strong venture consulting firm can offer.

10 Commandments of Venture M&A

August 31, 2007

Bill Burnham has an excellent post on the Top Ten Commandments of Venture M&A. I’ve picked my top 5 below. Go to his post to read the details on these 5 and the rest of the “commandments”.

  1. Thou Shall Not Give a Strategic Investor a Right of First Refusal, Right of First Offer or a Protective Provision that Enables Them to Block a Sale.
  2. Thou Shall Write All Customer Contracts And Partnerships Such That They Can Be Transferred to An Acquirer And/Or That Such Contracts Can Be Terminated With Reasonable Notice.
  3. Thou Shall Not Enter A No-Shop Without Hammering Out All of the Key Terms and Conditions of a Sale First.
  4. Thou Shall Not Allow A Buyer to Interview Employees Until At Least An LOI is Signed.
  5. Thou Shall Discuss Exit Expectations With Management and Board Members Prior to Funding and At Least Twice a Year After That.

Entrepreneur’s view of VC investments

June 30, 2007

Tom Evslin provides a succinct set of lessons on taking VC investment that’s worth a read whether you are an entrepreneur or a VC. These links are to part 1 and this is to part 2.

Venture 2.0

March 31, 2007

Peter Rip’s post on Venture 2.0 is worth reading. In the first part, he does a preamble on Venture 1.0 that’s worth a read to better understand the current landscape. Here’s his intro to the series…   This the first in a series of posts on the idea of “Venture Capital 2.0.”  I thought it was appropriate to first set the stage of Venture Capital 1.0 as the point of contrast.  This first post is obvious stuff to those of us who have been in the business for a while, but less so for the casual observer.   It will be interesting to see if he comments on the implications of fund sizes on the current landscape. In a nutshell, most Limited Partners (“LPs”) don’t want to invest less than $10M at a pop and don’t want to own more than 10% of any given fund. This makes the minimum fund size $100M. A fund can only manage so many deals at a time due to board commitments, etc. thus they typically need to invest $5-10M at a pop. That figure is no issue for some sectors but it is overkill or premature for others leading to unnecessary dilution for founders and current shareholders.  

Most startups should avoid venture funding, not pursue it

November 30, 2006

At least that’s what Greg Gianforte, CEO of RightNow Technologies, thinks. I don’t think it’s that black & white but the points he makes are good.

Here are some links to past posts about fundraising and venture capital that can shed additional light on the issue:

If you do end up fundraising, check out this series on deal terms, etc.

Demo tips from DEMO

May 1, 2006

Periodically, you’ll have opportunities to demo your product in front of influential customers, partners or investors. David Hornik has some useful tips based on his observations from the well-known DEMO event.

Advisory Capital: An alternative or complement to Venture Capital

February 27, 2006

Stowe Boyd has articulated an alternative or complement to venture capital that essentially describes Altus Alliance’s business model. We see a gap between what angel investors and venture capitalists offer in the market. To date, we’ve referred to ourselves as “venture consultants” as do others such as Jeff Clavier. We let people know that we go the “sweat equity” route vs. writing checks as VC’s do. He suggests calling what we collectively do “Advisory Consultants” and even proposes an Advisory Capital Code of Ethics heavy on disclosure, openness, and transparency. One challenge I see is that there are lots of wannabees and in-between-jobs consultants claiming to do what we do who might be willing to sign up for the Code of Ethics but don’t deliver on the items laid out in Stowe’s post. From a startups standpoint, at least with VCs, they’ve had to raise capital and had some degree of vetting done by their limiteds. We’d need to go beyond a code of ethics to separate the wheat from the chaff – something akin to an eBay reputation rating though having enough scale would be tough. In absence of that, we let our track record be the foundation for our reputation though our success-based business model is what ends up being most compelling. He wraps up his post suggesting there may be a blending of advisory and investment capital whereby smaller amounts of capital would be invested. We are well down the road on developing a framework along these lines. If you are interested in providing us feedback on what we’ve developed, let me know as we’re in the process of vetting it with entrepreneurs.

Here’s another (Jeff Jarvis’) take:

As VCs find themselves unable to throw big buckets o’ money at ever-smaller, nimbler, quicker startups, it becomes impossible for them to manage their real assets: time, distraction, and knowledge. I think that this provides opportunities for strategic investors who have more than money to offer and also for smart, independent people (such as bloggers, Boyd suggests) who can offer advice, connections, and questions. The challenge is to make this more than a show advisory board but a real relationship and a longer-term commitment for both than old-style consulting (thanks to payoffs in long-term equity). I’ve started down that path with a few companies myself.

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Can VCs and Angels get along?

August 31, 2005

There’s been a bit of non-news news about how VCs and angels feel about each other. Brad Feld has another good post sharing his experiences on both sides of the equation while also showing how the “news” has been purposely provocative when there wasn’t much news to begin with. He shares some good words of wisdom.

Update: Fred Wilson, another seasoned VC, adds his two bits with comments strongly in favor of the value of angels.