Silicon Valley Code Camp 2012 was great!

Like last year I attended it again to learn from fellow developers and industry leaders on the latest in the tech & business scene in Silicon Valley. Silicon Valley Code Camp is a weekend (Saturday & Sunday) community event where developers learn from fellow developers. There are around 200 sessions over those 2 days on every hot topic in the tech industry and it pulled in around 2,500 attendees at Foothill College in Lost Altos. Impossible to attend every session but you get to pick before hand which lectures interest you the most. Then it is a matter of showing up.

So instead of covering the usual tech stuff in this post, like in my last year’s post, this time round I will focus on the most impactful presentation on The Art of Raising Capital for Technology Startup Leaders by Bruce Schechter from Band of Angels. If you are an active software engineer you are already capable of building products. The next step is how to turn that into a business with some acceleration in the form of capital. Having done it before (built an international business and sold it to a $1B silicon valley company), this presentation by Bruce was a nice reminder with more new knowledge (for me) on what it takes to validate a product and turn it into a business.

The Art of Raising Capital for Technology Startup Leaders

Everyone has ideas but few execute on them

The room was packed with attendees. At the start of the session Bruce asked the folks in the room to put their hands up who is thinking about an idea. Everyone raised their hands. Then to keep their hands raised if they have started working on it. A 30% drop. And then who has an MVP out testing the waters, a 85% drop. Yap, as we have heard it before from the likes of YCombinator, 500Startups and other investors.. ideas are dime a dozen in the valley.. Execution is where it’s all at! Using an ai photo generator can be part of that execution, helping quickly visualize concepts and bring ideas to life.

“I saw the angel in the marble and carved until I set him free” ~ Michelangelo

Inside an investors mind

When you get a chance to present to investors, the questions running inside their mind which you should aim to answer in your presentation are:

• Will I achieve a vast return?
• Is she capable of growing a business?

Fundraising Tools

Make sure you have the following ready in this order. Be prepared.

1. Elevator Pitch
   1. Email to investor via a trusted source.
      1. GDay from a friend of the investor introducing the company
      2. Who the team is and
      3. Ask whether exec summary can be forwarded
2. Executive Summary
   1. One pager – just text, no graphs.
   2. “People don’t buy what they don’t understand.”
   3. “Investors don’t fund products, they fund businesses.”
   4. Never tell what is good about your company (features) until you have fundamentally explained what you do = “foundation”.
   5. Preferred executive summary format
      1. Problem/Solution Overview
         1. Clarity of pain: credibility
         2. “must-have” not “like to have” in the eyes of the customers
         3. Tie solution back to pain
      2. Market Opportunity
         1. Total market and available market – reference data source.
         2. Narrative equation: “If we sell X to Y at $Z we’ll achieve $N”
      3. Competition
         1. Be honest and open
         2. Worst possible response: “We don’t really have competition.”
         3. Why are you better than your competitors?
      4. Business Model
         1. How do you make money?
         2. Define unit economics – individual transaction cost.
      5. “Go To Market” Strategy
         1. Customer Acquisition – direct sales, channels, word of mouth
         2. Key marketing tactics including Social media and Buy Backlinks. Work with marketing firms for lawyers if you are launching your own law office or practice. This will help you build a good online reputation and reach potential clients.
         3. Social Networking
         4. Advertising – find reputable architectural signs manufacturers
         5. Put strong focus on near-term.
         6. Gains on every level – company better be worth more in 1 year else I lost value.
         7. How to get the next/X customer – what is going on right now to get there? Want specifics of the early days.
      6. Progress, Milestones
         1. Brag about accomplishments up to now.
         2. Clear steps for the next 6-12 months.
         3. Traction is the watchword.
      7. Team
         1. Give everyone a title – backgrounds etc. Shows accountability.
         2. They fund the people – Question – “who is in charge here?”
            1. Lay out the roles early on inc equity shares so they don’t let it foster in case things don’t go as well.
            2. Evidence of “done it before” – and if they exited before is huge deal.
            3. List advisors with credibility or “brand”.
            4. Throw away the inactive advisors.
            5. Delayed fee structure to pay once you get series A. Or get a friend (lawyer) to set it up.
      8. Final notes:
         1. No diagrams, just words.
         2. Domain-specific language.
         3. Tiny fonts.
         4. Year 1, Year 2.
         5. CEO’s that have a plan. No “we hope” or “we plan”.
         6. Test Refine, Test Refine, Test Refine etc…
3. PPT (powerpoint/keynote) Deck
   1. Turn the Execute Summary outlines into slides.
   2. Migrate the 1 page sections into a Slide per section with diagrams.
      1. “Simplicity is the ultimate sophistication” – Leonardo da Vinci
      2. Guy Kawasaki – The 10-20-20 rule– No more than 10 slides, no more than 20 minutes (leaves 40 mins for talk) and no font then 30pts.
         1. ref: http://blog.guykawasaki.com/2005/12/the_102030_rule.html
      3. Learn from Steve Jobs– watch his presentations on how to present. The stories!
         1. How technology can engage customers in an emotional way.
4. Detailed Financials & DD (due diligence)
   1. If you are asking for money make sure you can show where that money will go. eg. additional engineering, marketing, sales team, and don’t forget to also look at the crowdfunding options, where can also raise a lot money.

Create emotional engagement through stories

“People are story tellers.”

In the old days before internet & TV people would sit around fires telling stories. Those that spoke and gathered a large audience are what is referred to as a “Leaders”. Leaders create an emotional engagement. This still applies today. Learn to create emotional engagement around your service and people are you selling to. Inc. the investors. Find out what you have in common with a VC before you deep dive into your business pitch.

In Review

1. Tell ’em how they’ll make a fortune.
2. Investors fund companies, not products.
3. They don’t fund what they don’t understand.
4. Watch & learn from Steve Jobs presentations. He is the master story-teller.

~ Ernest