TC Early Stage 2020: Pitching at Seed Stage

Jeff Clavier (@jeff) - Managing Partner

Pitching at Seed Stage

 Brief Bio
Jeff Clavier (@jeff) Uncork Capital (@uncorkcap)
• French born • Formerly SoftTech VC

• C/C++ & Distributed Computing • Raised one of the first micro-VC funds in
2007 (Fund II, $15M)
• CTO at Financial Services startup in 1989
• 220+ investments
• Acquired by Reuters in 1993
• 70+ exits, 3 IPOs
• “Traditional” VC in the Valley since 2000
• $4B+ in follow-ons, $15B+ in exits
• One of the original ”Super Angels”, investing
since 2004 • Investing out of $100M Fund VI (seed)
and $100M Plus II Fund (growth)
• Former Board Member of the NVCA

• Midas List, CB Insights Top 100 VCs

7/22/20 Pitching at Seed Stage

The Seven Steps to a VC Pitch
Target

Prepare

Rehearse

Get Introduced

Track

Update

Win

7/22/20 Pitching at Seed Stage

Target
A pitch varies greatly based on the stage of your startup: the earlier you are the less data
you have, the more it’s about you (founders), the market and the idea. That’s the case at
seed in general.

You need to identify firms that are comfortable with the level of uncertainty of your
opportunity. Do your homework, and research your pitch targets.

The funding ecosystem is now way bigger than most realize – there were over 1,000
firms investing at seed stage at the end of 2019. And there are tons of Series A firms
writing seed checks these days.

Use sources like AngelList, Crunchbase. Talk to founders in your particular sector who
raised recently.

7/22/20 Pitching at Seed Stage

 •Bootstrapping/Friends and family
Pre-Seed •Pre-Seed Funds and pre-order/crowdfunded campaigns

The Funding Ecosystem

•Incubators and Accelerators (YC, Techstars, AngelPad, 500 Startups, SeedCamp)
< $1.5M

•1000+ Micro-VC firms in market at the end of 2019

Seed •Syndicates of micro-VC firms, angels and (potentially) traditional VCs
•AngelList and Crowdfunding services as alternative or “fill up” opportunity
$2 to $4 M

•Companies that can not raise a Series A will raise a bridge from existing investors
Seed Prime
$3M to •Some funds like have positioned themselves as goto leads for Seed Prime rounds
$5M

•One traditional VC, with micro VCs investing pro-rata and adding strategic angels
Series A •Syndicates of micro-VCs leading smaller series A rounds
$5M to •Family Offices, Strategics, Micro-VCs + Crowdfunding pools as alternative
$15M

•Another traditional VC (or two), with insiders coming in for pro-rata. Corporate VCs start showing up.
Series B •Same mix as Series A for alternatives plus the YC Continuity Fund and Strategics
$10M to •Family offices and growth investors coming into Series B rounds of top performing companies
$30M+

•Mix of traditional/growth VCs, PE firms, hedge funds – and the Softbank Vision Fund. In parallel, secondary transactions.
Growth •Alternative: direct co-investments from LPs, hedge/mutual funds, cash rich corporates
$20M to •SPVs (Special Purpose Vehicles) coming in all over the place
$100M+
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Target: Qualify
Covid has changed the way VCs do business. Most don’t spend time with founders face to face –
a must in previous times.

As you pitch, ask questions like “when is the last time you made a brand new investment (at
seed stage)?” or “how has your investment process changed as a result of Covid?”.

Firms have to accept they will invest in founders they have not met (Uncork has made 4 of these
investments in the last 4 months). Some are still struggling with this.

During the first couple of months of the pandemic, most partnerships focused on portfolio
triage. Now it feels like a lot of firms are back at investing (with new processes), and we have
seen a robust level of activity at seed and follow-on stages. “Hot” deals can be done extremely
quickly (which is counterintuitive).
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Target: Identify your lead(s)
There are two types of investors: those who lead, and those who follow.

The lead’s responsibility is to 1) negotiate and set the terms of the round, and 2) help you
assemble your funding syndicate.

Picking a reputable firm as lead investor will help you build a stronger syndicate, and will make
the closing process much faster as other investors will trust the lead’s process and due diligence.

In today’s market, you may almost fill up your round with “follow” commitments. But these are
useless until you get a lead. So focus on finding a lead first (typically larger firms), and then work
with them on filling up the round with other firms and angels.

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Prepare
Critical phase: the better prepared you will be, the faster the process will go

Materials:

Pitch deck

Backup slides

Due diligence references

Financials: model and statements

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Prepare: Pitch Deck
What? How Much?
How?
What For?
Who?
Hires
Why?
Product Plan
Why Now?

For Whom? Demos?

Sell How?

Against Whom?

How Big?

7/22/20 Pitching at Seed Stage

Prepare: Remote Pitch
Make sure your remote pitch works well! Don’t get
distracted by technical glitches.
1. Use Zoom. Everyone in the VC world uses Zoom.
Don’t try to use something else that would
require installing a new client.
2. Don’t pitch from your phone. Use a computer
and prefer a fixed connection to your router
than Wifi.
3. Make sure your light environment, ambient
noise, background “work”. Turn off notifications
on your phone or computer to avoid
distractions.
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4. Most VCs will expect to go through a deck: share
your screen, don’t ask the VC to go through their
own copy of the deck.
5. Try and make eye contact, and engage (which is
challenging in a remote setting)
6. Don’t trip and show your inbox or calendar
showing your other VC conversations ;-).
7. When multiple co-founders are on the zoom call,
everyone has to participate – at least in the Q&A
part. Be prepared for this.
Pitching at Seed Stage
Rehearse
Practice your narrative, over and over

Know it well, be comfortable with interruptions and not going linear

Pitch friendlies: advisors, fellow entrepreneurs, existing investors

Incorporate feedback, and initiate introductions once “it feels right”

Do this in the same remote environment you will pitch VCs

Be in the groove, think and act as if you were pitching VCs in their offices

7/22/20 Pitching at Seed Stage

Get Introduced
Most successful pitches start with a strong referral – ideally someone who knows your
target VC/Partner enough to endorse you

Prepare your list of target VC Partners, and ask who can effectively introduce you

Once your spreadsheet of intros is ready, initiate the initial batch of discussions

I don’t advise having more than 10/12 conversations at any point in time

Most seed stage VCs will read cold emails, just send a compelling narrative that gets us
to want to learn more (some will ask for a deck, others for a short intro call)

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Track
Like sales people are supposed to do it, write call/meeting notes

Key points to record are pushbacks, feedback, interesting ideas – and most importantly,
firm’s process and next steps

Momentum in fund raising is the most important, be prompt with follow-up emails and
meetings

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Update
Incorporate the most consistent feedback you get – sometimes the same thing will be
heard over and over

As you become more comfortable with the pitch, you’ll get a feel for what works better

If no one bites, you may need to redo the pitch – or go back to the drawing board
(entirely)

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Win or Rinse and Repeat
Some companies will pitch 5 firms and get three competing termsheets

These are the exceptions

Most will pitch 50 firms, and will get one yes

It only takes one investor to give you the runway to clear the next round’s hurdles

It’s not easy, it’s not fun, but that’s the job

And we VCs do it too (when we raised our own funds ;-)

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Bonus Slide
Not all VCs absorb a pitch the same way, be Don’t do this:
ready for anything, especially remotely
Send your deck to a competitor’s investor
Example: a real deck and a post mortem: Fudge your answers and/or numbers
http://bit.ly/frontsa
Pretend you have a termsheet if you don’t

Not know all your key numbers

Hide anything that will come up in due diligence

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Thank you!
And Good Luck ;-)
www.uncorkcapital.com

@jeff / @uncorkcap

jeff@uncorkcapital.com

Pitching at Seed Stage