You have 10 seconds to get an investor meeting…

Originally posted by justkindahappened

My colleague at 500 Startups pinged me last night with a pitch deck from one of our portfolio companies gearing up to raise a post-seed round.

Gawd it was TERRIBLE.  And embarrassing because they are one of our companies.

Unfortunately, their deck was representative of what I see in about 99% of email pitch decks I receive.

What was wrong?

I couldn’t understand the key components of this business in < 10 seconds.

The disconnect between entrepreneurs and investors around pitch decks is that entrepreneurs often think that investors will spend a few minutes looking at their decks.  In reality, I’ll spend 10 seconds, at best, on an email deck because all I want to know is whether I should schedule a meeting.

This is why I say over and over: you need multiple pitch decks. You’re selling different things at different stages of the fundraising process (e.g., selling the idea of just doing a pitch meeting with an investor vs selling the opportunity to move forward and invest in your company).

Originally posted by televandalist

All I really want to know in 10 seconds can be summarized like this:

  • Team: what are the notable accomplishments and domain expertise of the founders?
  • Problem: what is the big problem you’re solving?
  • Solution: how are you solving it? If you’re in a competitive space, how is it differentiated and 10x better than alternatives?
  • Traction: what are the key performance indicators and how do they track over time? Please don’t include 10 KPIs – the definition of “key” is just that. Only 1 or 2 key indicators are important.  This could be your monthly revenue.  It could be DAUs.  It could be number of email subscribers. Or whatever.  Be selective here. Also, be sure to own up to your traction.  A lot of early teams try to hide it.  I always ask what the traction is even if it’s not included in the deck before taking a meeting. There is no reason to leave it out.
  • Market: I personally care less about this in an email deck because I know I will need to think and digest what the “true market” is only after taking a meeting.  However, other VCs see this as very important in qualifying whether or not to take a meeting.  When you do market sizing, make sure to show visually what niche you’re starting in and what the peripheral larger markets are.

That’s it.  Simple text.  Big font.  Black font with white backgrounds makes for faster reading.  Bullet points and not paragraphs also make readability better.  If a bullet point is too difficult, show it graphically.

After you create an email deck, the best way to test whether you’ve done a good job is to show it to someone – anyone – who knows nothing about your business for 10 seconds.  Then, have him/her rattle off information about the five points above and see what was missed.  If he/she cannot do this exercise well, you know that you need to go back to the drawing board.

You have just 10 seconds to get an investor meeting – make your email deck count.

Why I cringe when you say you’re raising a $1.5m seed round…

“We’re raising $1.5m.”

I cringe.  There’s nothing inherently wrong with raising $1.5m…UNLESS you have not thought about your raise strategically (99.9% of entrepreneurs I meet with).

Originally posted by drunkbroadway

Most entrepreneurs understand on some level that fundraising is all about messaging.  But, most people only think about this in the context of storytelling.  But, messaging how much you are raising and for what specific milestones are equally important.

Let me give you a concrete example.  Here’s a tale of two companies.  Same business but different raise-amounts.

Company A: 

  • Raised a seed round of $500k
  • Now raising another seed round of $2.5m to expand the business

Company B:

  • Raised a seed round of $2m
  • Now raising another seed round of $1m to expand the business

Should both companies successfully raise, they would’ve raised the same total amount of seed money – $3m.

BUT, Company B’s situation yells RED FLAGS all over the place.  As an outsider, it sounds like they burned through a hefty $2m and now are short of Series A milestones that they need another $1m to bridge them through.  And, no investor wants to sign up for a desperate situation like that.

Originally posted by cumayagittikgelecegiz

Company A’s situation sounds much more appealing.  They raised a small seed round – perhaps to get them to some initial milestones, flesh out the idea, get some initial customers.  And, now, they are ready to grow based on what they’ve learned.

Notice we know nothing about these businesses, but I’m already making assumptions about their scenarios.  Why?  Because this is commonly what you see in the trenches as an investor.  And even if Company B is truly growing quickly and is only just a couple of months away from gearing up for a strong Series A, I know lots of VCs who won’t even take a meeting with Company B to hear them out.  That’s just how it is.  Just poor messaging.

As an entrepreneur at the seed level, you need to think deeply about the signaling (and what to do) if you are not able to hit milestones for the next round.  If you are planning on raising $1m-$2m on this round, you had better hit your Series A targets (or get to profitability on this round).  In fact, I call $1m-$2m raises “No (wo)man’s zone”.  You should consider what happens if you fall short of Series A targets, because you will have a super tough time raising from external investors.  Do you ask your current investors to re-up?  Can they?  Can you bootstrap to Series A milestones?  Think about all this BEFORE you end up in a tough situation.

Seasoned entrepreneurs, you should be especially cautious.  As an experienced entrepreneur, the natural inclination is to think, “Oh I can totally hit any milestone – I’ve done this before.  No problem.”  I know – because I’m that person too and think that way too.  But, in my short time as a VC (just 1 year), I’ve seen multiple companies whom I met with at the beginning of my VC career already go out of business or take a terrible acquisition (or are about to), because they didn’t raise enough money to get to series A milestones and raised too much to raise another seed round.  In fact, many of them had businesses that were just beginning to take off, but because of poor fundraising strategy, their companies went under.  They could’ve been amazing businesses.

Originally posted by sizvideos

Additional things to consider:

  • Series A milestones go up ALL the time and are only going up – for example, I met with several B2B SaaS companies a year ago who were able to hit $1m runrate within a year on fast growth but died / were acquired for cheap because Series A milestones were higher than they had expected.
  • Spaces become competitive – when many companies enter a space, investors get very nervous about whether they are backing the right horse; so, you must show above-and-beyond traction to suggest you are the winner; it’s not just about hitting milestones if you’re in a competitive space

So, if you’re super early – i.e. still building product, very much pre product-market fit, don’t have a handle on your unit metrics, don’t know your customer persona inside and out, etc, you should strongly consider raising a smaller round (say < $1m) such that your next milestone is to hit post-seed milestones rather than a series A milestones.  Be strategic and message your raise well.

Dear elizy: How should I split equity with my co-founders? And how will that affect raising a seed round?

Dear elizy: I started a company in school with two co-founders.  Let’s call them Ada and Bob.  Ada is my professor. We are using her lab, and the company is based on her research, though the IP is assigned to the company.  Bob and I were her students and will be graduating this year.  We plan to incorporate and work on this company full time, while Ada will work on it part-time, as she is a full-time tenured professor.

We are trying to decide how much equity to allocate to each person.  I would like to split the equity equally, since it seems only fair.  But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool.  She argues that we are using her facilities and years of her research / work / experience, so therefore, she must get more!

But, we’re going to be doing all the work!  What would investors think of either arrangement? What would you suggest we do?

– Lab Woes in Austin

Dear Lab Woes: Unfortunately, this happens quite frequently with research that gets spun into companies.

I do you think your professor should get some recognition as a contributor, but since she will not be working on the company full-time, 33%-50% is WAY TOO MUCH.  Often professors overestimate their scientific contributions.  Honestly, what you have right now is a project, not a company.  You have to productize the research, build partnerships, sell to customers, etc. – presumably none of which you have done pre-incorporation.  Although there are no set numbers, your professor should be considered an active advisor or a co-founder who has left rather than a full-time co-founder.

First off, whatever you decide, you should implement vesting. At time of writing this post, standard vesting practices in Silicon Valley are 4 year vesting with a 1 year cliff.  This means that you earn your stock ownership linearly over a period of 4 years.  After 1 year, you earn 25%, and thereafter, you earn the remaining stock on a monthly basis.  If you leave before the completion of the first year, you own zero stock.  These days, I’ve sometimes seen 3 year vesting with a 1 year cliff, which would also be OK.  You definitely want everyone to earn his/her stock.

Secondly, even if you are OK with either of the arrangements you have proposed, it is a major red flag to investors to have much of the cap table locked up with dead-beat co-founders, professors, or advisors who are not working day-to-day on the company.  You will have tremendous difficulty raising money with this kind of cap table, and investors will make you restructure it.  To have so much stock locked up that could otherwise be allocated to serious contributors (including future employees and co-founders) is a bad sign.  In a startup, you don’t have many things to entice people to work for your company, and stock is one of those few things.

You will all be diluted considerably, so even if you are OK with 20-33% stake now, that is not what you will actually end up with if you raise a few rounds of funding.  You need to make sure that you are incentivized enough to work on this business full-time.

What would I suggest?  If you treat Ada as a former co-founder or active advisor, you’re really looking at, say, the 2-15% range.

  • 15% would be incredibly generous!
  • Super active, hands-on advisors are typically granted < 5%.
  • Non-active advisors are typically granted < 1%.
  • Former co-founders who have contributed about 1-2 years of vesting typically end up with ~10-15% equity since they didn’t vest their full potential.

An active former co-founder has contributed to the product, sales, BD, or something substantial to the company on a day-to-day basis for at least a year.  To me, it sounds like your professor is much more akin to an active advisor.

This will be a terribly difficult conversation, and you may need to move labs immediately.  But, if you want to raise money from investors, you really need to address this.  Additionally, you may also be able to use this fact as a forcing function for change.

Good luck!

The real reason why investors say your market size is small

Originally posted by kaliciawinchester

It’s super annoying when investors say your market size is small.  So, you do all this extra research – you look for Gartner’s excerpts and articles about projected market sizes, etc. – and you come back with research to argue that your market is much bigger.

Unfortunately, it’s ineffective.  The investor passes. And you walk away thinking he/she’s a dimwit.  This could be true, but it’s important to understand what is really happening here.

First, stop with the research.  It won’t help.

Here are the actual reasons why an investor passes when he/she says your market is small:

1. You are “in-between” multiple markets and are seemingly not addressing ANY market. 

Market trends change a lot, and sometimes a new market appears in between two existing ones.  However, because your company is early, investors don’t yet know if that market between markets will exist.

A good example of this is 500 Startups-backed Intercom.

When I first met them (when I was an entrepreneur), in the back of my mind, I was thinking, “Gosh, what are they actually addressing?  It’s a weird mix of customer service and marketing and sales.”

It turns out that a few years later, marketers were looking to build tighter rapport with their customers, and this tighter rapport really is a weird mix of marketing, sales, and customer service.  Now the company is doing really well! But when they first started, this was not clear at all.

In a situation like this, I commonly see entrepreneurs try to increase their market size by computing and adding the market sizes of all adjacent markets (e.g., the market size of marketing automation plus sales automation, and customer service software).

Found on Pinterest

In fact, what you really need to do is the opposite.  Pick just one market – say, marketing automation – and talk about the trend towards personalized marketing.  What helps with this is to go squarely head-to-head with an existing dinosaur product and say that you are going to overthrow that incumbent because of a, b, and c reasons.  For example, Marketo sucks because you need to spend 10 days learning their software only to spam non-personalized emails at your customers; we solve this by making 2-way communication easy within products themselves, which is the way of the future.

2. Your product / business does not sound differentiated enough / the investor doesn’t know anything about the space to discern differentiation.

Companies in certain verticals tend to have this problem more (e.g., ad tech, security tech, fashion, etc.).  Just as I, as a software investor, know nothing about solar panels or pharmaceuticals, not all software investors know most verticals well enough to understand what you’re talking about.

If you don’t need specialized knowledge to be able to see your company’s differentiator, then you need to practice and test your messaging on lots of people.

However, if you do need specialized knowledge to understand your differentiator, then you need to find the right investors to talk with.

A good rule of thumb here is that if you cannot visually show your differentiator to a random person on the street, you need a specialized investor.

Originally posted by 29only29

In the old days (i.e., 5 years ago or earlier), it was difficult to know which investors to approach because portfolios were not always online and there wasn’t a search engine for investors.  These days, AngelList can help you filter investors by category and look for investors in your space.

Now, the really hard part is if you are addressing a category that just doesn’t have that many investors.  Fashion and beauty, for example, is one that doesn’t have a lot of investors, though this is something we are actively changing at 500 Startups.  One of the best ways to navigate this is to talk to lots of entrepreneurs in your space who are further along than you.  Ask them for intros to their investors.  Ask them to meet other specific people in your space.  This may be a lot of work, but it is absolutely necessary.  Form tighter/deeper relationships in your space.

3) An investor doesn’t have conviction in you/your team.  

Lastly, a market size is “too small” is unfortunately often an explanation of what an investor thinks about you/your team.

This is especially true if you’re in a crowded market.  If you’re in a crowded market, you not only need to convey the point above well, but you also need to convince people that you’re a really solid leader.  Unfortunately, because of pattern matching, a lot of talented leaders who do not fit a typical mold really struggle with convincing investors of this.

Entrepreneurs who are introverts, of non-majority races, women, etc. tend to not fit these patterns and have to go above and beyond to convince an investor that they can win in a crowded market and that they have the right leadership abilities to win.

Keep in mind that “win” in an investor’s mind is not selling for $30M.  An investor is hoping its winners do 100x+ (obviously, this doesn’t happen most of the time, but this is what investors are looking for).  They are thinking about how you will become a $100m-$10B company, and at the seed level, the only thing they have to believe is if you and/or your team is the right person or people to get to this stage.

How to find email addresses to cold-email (for free)?

I’ve previously written about how to write cold-emails and why to cold-email people like Steve Ballmer.  But, how do you find Steve Ballmer’s contact information?

1) Use Rapportive

Cristina Cordova, who does Business Development at Stripe, writes about using Rapportive to guess a person’s email address.  Having tried this trick a number of times, it’s quite effective.


Ok, so let’s use this method with Steve Ballmer.  After a bit of quick guessing.,, etc, I hit gold.  But, let’s say this method didn’t work.

2) Message via LinkedIn 

Even using the free version of LinkedIn, you can often message people without being a first connection with them.  If you know who you want to email, check out his/her LinkedIn profile.  Find the groups he/she has joined.  Join those groups.  You can very often message people who are in the same group.

Even better is if a mutual contact feels comfortable introducing you over email or via LinkedIn.


Applying this technique to find Steve Ballmer’s email address, it appears he has 0 contacts on LinkedIn, so we have no known friends in common.  And, he does not belong to any groups.  So this method was a bust this time.

3) Search through online alumni networks

If you attended a school that has an online alumni directory, you can easily find contact information of alums.  Didn’t attend Harvard or Yale?  Beg and plead with a friend to help you look through his/her account.


Applying this technique to Steve Ballmer, who attended both Harvard and Stanford, I was able to find an email address and a phone number for him (not shown on screen).

But, let’s say we didn’t.  Moving on…

4) Search on Google

When in doubt, guess on Google.  These days, email addresses of high-level people, can be found on the web.  High-level people will often give presentations and post their slides on the internet.  It’s common to post contact information on the last slide.

But, beyond that, if a company has ever had a problem or an issue (all companies do), high level executives will often post their email address in forums asking unhappy or confused customers to email them.

You can use the same technique that Cristina uses with Rapportive to guess email addresses on Google.  Let’s guess Steve Ballmer’s email address.


You can see that he gave out his email address to the public at a Microsoft event on 2007.

So, 3 of 4 of these methods have successfully given us Steve Ballmer’s email address.  But, what if we still couldn’t figure it out?  You may argue that Steve Ballmer has a much greater web presence than perhaps an executive at a non-tech company.  This leads me to my last point.

If all else fails, guess

If we could not find Steve Ballmer’s address, I would try to look for other employees who work at Microsoft to see if there are patterns in the structure of their email addresses.  A lot of companies use a standard pattern such as or or etc.  I would then take my best guess and send an email to that address.

But, I would NOT email 7 different guesses like this:


This cold-email I received looked so desperate!  If you guess incorrectly and it bounces, you can try again with a different guess.  And, even if your email goes to the wrong person, it can still make its way to the right person.  I once guessed an email address incorrectly, and recipient replied to me and included the right person I wanted to reach on that email.

What methods do you use to find email addresses of people you want to reach?

Who is the best person to ask for an investor intro?

In my last post, I talked about how to write an email requesting an investor intro, but I didn’t talk about whom you should ask.

tl;dr – in order, the strongest referrals to investors come from:

  1. Portfolio founders who have raised recently from that investor (i.e. not enough bad stuff has happened at their company to make the investor disillusioned w/ the entrepreneur) OR past portfolio founders who have made the investor money
  2. Investors in your company
  3. Personal connections
  4. Other investors / founders / former colleagues of theirs (note: exercise caution here)
Originally posted by theweekmagazine

When I was raising money for LaunchBit and I wanted to reach investor John Doe, I used LinkedIn to see who knew him.  Very often, I was a 2nd degree connection to John Doe through a number of people including:

  • Investor Billy Bob – someone I’d just pitched; jury still out on whether he’d fund LaunchBit
  • Entrepreneur Sarah Smith – someone I’d known for years who is really nice
  • Entrepreneur Erlich Bachmann – a well-known entrepreneur whom I’d met once at a startup party
  • Investor Christine Tsai – an investor in LaunchBit whom I’d known for years and even worked together with at Google
  • Entrepreneur Jane Do – an entrepreneur whom I’d met a couple times before at various startup circles and had just raised money from John Doe

Who is best to ask for a referral?

Obviously, this situation wasn’t super ideal.  In an ideal world, my best friend would be a super successful entrepreneur who would know John Doe and could make an intro, but when you’re asking for potentially hundreds of investor intros – yes hundreds (more on that later), this is not going to be the case a lot of the time.

Originally posted by kaithebluh

The seemingly obvious person here is Christine Tsai because she’s known me for quite a while and also invested in LaunchBit.  I could ask her.  You certainly should leverage existing investors.  So, I’d ask Christine.

Investor Christine

But, Christine is also an investor and pings potential co-investors all the time about deals, so what is the weight of her recommendation?  In fact, to a certain extent, it’s her job to sell her companies to downstream investors…so will LaunchBit stand out to John Doe amidst all her other referrals?

I should probably also get a second intro in parallel in case Christine takes a long time to do this intro AND as a way to stand out once her email hits John’s inbox.  If he sees a couple of people mentioning my company, that would remind him about us.

Investor Billy Bob

I definitely shouldn’t pick Billy Bob.  Even though I’ve talked with him most recently, I don’t know yet what he thinks about LaunchBit.  I don’t know if he’d be an advocate, and I’m not sure if he’d recommend us.  In fact, if he and John Doe were to discuss the deal, they could both end up talking each other out of it, as often happens when investors get together.  Ideally, they should come to their own independent conclusions about my company.

Entrepreneur Sarah

I could ping Sarah, since she’s always been super helpful and nice to me.  But, I should find out first how she knows John.  Did she pitch John and did he say no to her company?  Just because John and Sarah are connected via LinkedIn, I’m not sure what John thinks of Sarah, so a recommendation from her may or may not be a positive signal.

Entrepreneur Erlich

I haven’t talked with Erlich in years and only met him once at a party.  Like Sarah, I don’t know what John thinks of Erlich and vice-versa.  Since Erlich is successful, chances are that John respects him professionally on some level.  However, I’ll need to pitch Erlich and sell Erlich first on LaunchBit before talking with John, and since it’s been years since I’ve spoken with him, that might be tough.  Erlich is probably not my first go-to person after Christine if I have a choice, but he could be a last resort.

Originally posted by glitterdwarf

Entrepreneur Jane

Finally, there’s Jane, who just raised money from John.  Based on that signal alone, I know that John thinks highly of Jane and is still really excited about her business.  Like Erlich, I would need to sell Jane first on LaunchBit so that she could sell John on meeting with me.  Note: you are always selling – even if someone isn’t an investor!  They can often help you sell your company to investors or other great contacts.  Even though Jane isn’t famous, she’s a much better person to get a referral from over Erlich because I already know that John not only respects Jane for her work, he’s so committed that he invested in her work.


In this situation, I would ping Christine and in parallel, also ping Jane to discuss with her briefly about whether she thinks it makes sense for me to connect with John about LaunchBit and whether she can help me with that introduction.

Getting investor intros is a game of hustle that often takes a long time.  Approach the best people who can help sell your company and whom an investor thinks highly of.  Approach multiple people.  And always be selling – even to people who are not investors.