Clear business model
At minimum, we need to see a working product with clear demand in the market, possibly with referenceable users and a clear path to revenues plus a clear customer acquisition plan. At best, you are generating early revenues and are executing on a clear and affordable customer acquisition strategy. We love SaaS and other subscription models. We are less keen on models that require huge volumes of customers as they tend to be hard & expensive to acquire.
World-class CEO & team
Complementary leadership team
Relevant past experience
Consistently successful
Data-driven
Hires great people & delegates to them effectively
“Lean”
Listens and speaks clearly
Really knows the customer and understands the problem
Huge market
We want yours to become a global business and are looking for exits >£100m. If your market is >£0.5B in the UK & you have typically high software margins, this suggests a large enough global market to grow into a great sized business for Episode 1, but we use that number only as a rule of thumb.
What we are NOT looking for
A founding team of individuals who have over-lapping skills and little experience in their market
A CEO who has found a gap in the market, but there is no market in the gap – a lifestyle business
A product with no business model and no prospect of sales traction in the very near future (we know that means we would not have invested in Facebook and Twitter or Pintrest, but hey, every VC needs its anti-portfolio)
A business in a fiercely competitive market with little differentiation
Resources & Advice
What to present
Something that can easily demonstrate what the product does, why it’s different and important (and who you compete with), how big the addressable market is (and how you worked that out), what your financial forecasts are, what your sales pipeline is, why your team is awesome, what you’re raising at what expected valuation and what you’re going to use it for
Usually this ends up being a 10-20 slide PowerPoint deck, but we don’t care what it is, as long as it works, but we care that there’s something to structure the meeting beyond just your voice. Not 45 pages of A4.
How to present
Tell us what you plan to present and ask us if there’s anything else we’d like to hear (when we read the business plan ahead of the meeting, questions can come up that require extra attention)
Run through your presentation slowly and keep an eye on us sending signals we’d like to ask a question – it’s a dialogue, not a monologue
If you bring team members, bring them for a reason – let them present relevant material, or at least answer relevant questions
Get through your material in 30-40 minutes so we can chat and question for 20-30 minutes
It’s not complicated and it shouldn’t be nerve-wracking – it’s just a dialogue between 2 parties who want to find a way to help each other
How to prepare
The best thing you can do is to meet us early, before you need investment, but once you have an alpha that you are testing and a pretty clear idea of what your business model will be. We have set up our Open Office for just these kinds of meetings. We like to meet you early so we can track your actual progress against what you promise you will achieve. This makes our decision making better and faster when the time comes for you to raise money from us
It’s also very useful to practice your pitch with your existing investors before coming to us. They know the business well, are likely to be investors in many other startups and so will know what we, as a VC, will want to hear and, as your parents told you, practice makes perfect
Term Sheet
We pride ourselves on being open with entrepreneurs - we have nothing to hide and prefer to be transparent in all our interactions. As part of this transparency we think it would be helpful for you to see our Term Sheet. This is the Term Sheet every one of our entrepreneurs receives, with no “funnies” added. It is based on the Seed Summit standard term sheet with a few changes to make it more entrepreneur friendly. For example we removed the equalization of terms clause because we don’t think it’s great for entrepreneurs. Our term sheet is also more entrepreneur friendly in terms of the founder vesting. Our standard says that 28% of your shares are vested on the date of investment and 2% per month then vests over 3 years instead of straight line vesting of 0 up front and 1/36 per month for 3 years in the SeedSummit term sheet. We hope you find it useful to read and look forward to discussing it with you should the opportunity arise.
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