Notes from Startup Grind
I took a fair amount of notes in all the sessions I attended at Startup Grind on Tuesday and Wednesday of this week. I’ll be publishing some of the notes here.
How to Succeed at Fundraising from Seed to Scale
Jeff Richards, GGV Capital Managing Partner, 13 years operating experience.
- Market today: tough fundraising for Series B and C. Need to live up to promises made previously: living up to hype is hard. On the opposite end, businesses with strong underlying business fundamentals and great unit economics don’t have a hard time raising now.
- Seed: Team, market, model. Find a good anchor investor. How interesting is it?
- Series A: User traction/proof points. Team, market, model and proof. Don’t believe the hype and stay humble, because it’s never as easy as you think.
- Series B: Revenue and user growth, data driven. Help the investor see your business as a billion dollar company. Have the diligence ready before you start the process. Ask counsel for help on deal terms.
- Relationships matter: make the process easy and be patient and rational.
- Don’t send cold emails: always reach out through other entrepreneurs and make it through the first filter.
- Fundraising is an art, not a science. Knowing when to fundraise is tough. Personal belief: never too early to fundraise, follow up, and engage.
- Greatest value-add as an investor: operating experience, because you have more empathy and understand the mental side.
- Focus on the bigger picture of growing the company, not on gross margins/little things.
Bootstrapping a unicorn outside SV
Ryan Smith, Qualtrics; Ryan Sweeney, Accel Partners
- On the origin of Qualtrics: launched at universities/for academia and moved to enterprise. Capitalized on the transition and change in the lives of the audience: these people brought the product with them to enterprise after they graduated.
- On bootstrapping: they bootstrapped out of necessity, as there was no VC environment in Provo. Capital would’ve made them lazy at the incubation stage, so they instead used VC to scale the business.
- On strategy: Short-term thinking doesn’t help: keep the long-term vision. Let happy customers talk about you: virality component.
- On fundraising: get to know each other and don’t make fundraising just a one-time transaction.
Lessons from the Front Lines in Digital Health
Christine Lemke, Evidation Health; Bill Evans, Rock Health
- CL: starting companies never gets easier, always harder. The team has to learn a new sector and you have to understand an entire industry. Why do healthcare if it’s so tough? Impact. Within healthcare, many sub-verticals with lingo/intricacies
- Big shift in healthcare: being paid on outcomes, not number of tests/drugs issued
- The most insecure people are the most innovative
- Burden of proof lies on the healthcare startup. Have to show data/evidence proving the tech works, which is a massive and expensive barrier to entry. But, if you overcome this, you have an advantage. Can’t just walk in and promise things you don’t have: need evidence.
- With health startups: go big/orthogonal, find a tech investor to make the big bet. Otherwise, if you want to play in the system, then find an investor who understands the industry and has the network to help.
Building for Builders: Coding the World’s New Business Infrastructure
Patrick Collison, Stripe; Derek Andersen, Startup Grind
- Underrated strategy: work within the bounds of the law, methodically and (sometimes) painfully
- To sell or not to sell: does it further our goals?
- Tech moving from digital-only into different industries. Also moving outside of Western Europe and US.
- There will always be tension/disputes among cofounders
- Spot problems, but maintain optimism: need both in balance. Optimism and pessimism are both self-fulfilling prophecies.
How to Raise VC Like a Pro
Clate Mask, Infusionsoft
5 core principles:
- Know the purpose of raising. Use this to attract the right investors. Have clarity on purpose.
- Sell: if you don’t have paying customers, it’s too early for VC.
- Know your metrics. Do the unit economics work?
- Leverage customers: testimonials
- You run the process. Find 12 target/good-fit firms, start at same time. 6/12 should be partner meetings. Get full partner meetings from those 6. Get 3 term sheets at the same time. Takes 3–4 weeks if you control the process.
- Getting first intro to VCs: events, hustle.
- Let the market decide the valuation.
- The entrepreneur has the asset, and the VC needs the asset to increase their pot of money.