Investing, Funding, and Pitching

An Introduction to Venture Capital

Alternatively known as,

How Not to
Fuck Up your
Pitch

WHAT
IS GOLDEN
GATE VENTURES?

Golden Gate Ventures

A Silicon Valley styled early-stage venture capital fund, for companies conducting
internet and technology related business in Southeast Asia
Its a secret, but trust us,
its a big number

600 employees in portfolio,

revs
30 investments across six countries

(forecasted)

HEADQUARTERED

SILICON VALLEY SATELLITE

ESTABLISHED

73B Duxton Rd
Singapore 089532

780 Valencia Street

San Francisco, CA, 94110

2011

Ranked globally Top 15% portfolio by

Based on traffic, downloads, inbound links, employees, & social media across 200,000 startups and 400 VCs
http://mattermark.com/app/benchmarking

GGV maturing the Ecosystem

Mentoring
Hands on
with our
Startups

Hosting
Events

Investor-Startup Dinners

Silicon Valley business

development visits

Walkabout

Judging Startup
Competitions

Target: High Growth Southeast Asian Economies

Hot Southeast Asian Markets

OVER

0.5

BILLION PEOPLE

650,000
NEW INTERNET USERS EACH MONTH

Country

Population

GDP growth

Indonesia

240 M

6.1%

Philippines

93 M

7.63%

Vietnam

87 M

6.78%

Thailand

69 M

7.8%

Myanmar

48M

5.5%

Malaysia

28 M

7.16%

Singapore

5M

14.47%
Source: World Bank, World Development Indicators

Did you know? Indonesia has the world's

2nd largest number of Facebook users and
the 3rd largest number of Twitter users!

Southeast Asia is Socially Engaged on mobile

Vietnamese perform

3 billion mobile searches/day

Filipinos send

1/2 billion messages/day

Malaysians spend online

5.3 min/session (mobile)

633 mobile pages/mo.

per person (highest in world)
Indonesians view

Source: Asia Digital Marketing Association Digital Yearbook

Southeast Asia accounts for

15% of Foursquare traffic

Raising Money in
Southeast Asia
A Primer

Singapore
Government
pouring billions
into technology
These initiatives, like all good
policy, is quantitatively
measurable, replicable, and
incredibly effective.
Theyre based, in large
part, off Israels own Yozma
Programme from the 1990s.
Source:

@goldengatevc

Why?

Because every self-sustaining

ecosystem needs investors
willing to write cheques for
the earliest companies
and founders.

So let me be blunt:

There is literally no better time

to be an entrepreneur in
ASEAN, and this is
especially true of
Singapore.

Venture Capital in
Southeast Asia
There is one rule of thumb.
You see this
area?

This area,
right here?

This is not Silicon Valley.

You are not in Silicon Valley.

Your startup, your market, and

your investors are not in
Silicon Valley.
SO DONT ACT LIKE IT.

DigitalOcean raised a $37 Million Series A!

Youre not raising that amount.
GlossyBox, the subscription for makeup,
validated the model!
Not in Southeast Asia, it didnt.
Silicon Valley is the centre of innovation!
That innovation is unbeatable!
Cookies-on-demand might be innovative,
but is it valuable?

(I wasnt kidding, by the way.

This is a real fucking startup that raised
real fucking money.)

This is not Silicon Valley.

And thats a good thing.

The best investors in the region arent

looking for Silicon Valley copycats.
The best investors arent investing like
theyre in the Bay Area.
The best investors arent screwing with
fads and flavours-of-the-month.

The best investors are investing in

startups and entrepreneurs that are
solving real, painful, universal
problems

Here
Because in Southeast Asia,
everyone is the 99%.

Uh, okay.
So now thats
settled
what is a startup?

This is actually a
very good
question.
Seriously.

Uber. Snapchat. Carousell. RedMart.

(Even fucking Doughbies.)

These are all referred to as startups.

So arent they the same?
No, theyre not.

And investors
dont treat them
that way either.

3 Distinct Stages of Startups

As explained by Dave McClure of
500 Startups, there are 3 stages of
startups
PRODUCT- Customer ValidationProblem-Solution Discovery (MVP); User
Experience/Usability, i.e. create cool shit
MARKET- Market Sizing; Campaign
Testing; Customer Acquisition Cost(s) &
Conversion, i.e. find out how to sell that
cool shit, and to whom
REVENUE- Expand Revenue and/or
Market Share; Optimize for profitable
revenue, i.e. sell that cool shit

(Protip: Follow him. Hes a prolific tweeter that

often gives very good advice for early-stage
entrepreneurs and startups.)

And how much you

raise, and from
whom, depends on
what stage youre in.
I told you it was a good question.

Different Investment Round Sizes

Investments round sizes are orders of magnitude smaller than SV
Ideation / Prototyping (Product) - usually no more than $10k to $15k SGD

Product

Stage

Pre-Seed (Product/Market) - $50k to $250k SGD for companies that have

passed their prototyping stage, the concepts are validated, and there is some
preliminary traction

Seed (Product / Market) - $250k to $1M SGD for companies with several
months traction, established marketing channels, and identifiable customers

Market
Stage

Series A (Market / Revenue) - $1M to $5M SGD for companies with at least
12 to 18 months traction, validated marketing channels, and growing customer
channels; unlikely to be cash-flow positive
Growth (Revenue) - $5M+ SGD for companies that need money to accelerate
Revenu
growth;
likely
to
be
cash-flow
positive
e

Are you ready for that

Series A?
Protip: No.
But thats not a
bad thing.

Raising the Right Amount

Before you begin,

Realistically determine

the stage

of your

company. Emphasis mine.

Then, calculate your monthly burn rate, not revenues. Your revenue
forecasts will be wrong. Not just wrong, but ha-ha, oh shit, how did I
get those numbers so wrong wrong.
Burn rate is the monthly aggregate of all your costs and
expenditure, i.e. product roadmap, marketing costs, team hires,
overhead, and so on.
Multiple that monthly number by 6 to 9 months if raising a pre-seed, 12
to 18 months for a seed, and 12 to 18 months for Series A.

Then raise that amount.

 From the Right People

Not all investors are created equal.

Ideation / Prototyping (Product) - generally obtained from educational or government
institutes as a non-dilutive grant
Pre-Seed (Product / Market) - angel investors or institutional funds that specifically
make pre-seed investment (Crystal Horse is a good one)
Seed (Product / Market) - small-size funds (~$10M) and some corporate VC arms;
NRF TIS-associated funds are a good benchmark (500 Startups and East.vc are king)
Series A (Market / Revenue) - mid-sized institutional funds, and most corporate VC
arms (~$50M); NRF ESVF-associated funds are a good benchmark, but there are
many, many more funds coming online now (Note: Golden Gate Ventures is in this
territory)
Growth (Revenue) - mid-to-large institutional funds (+$100M), government-related
bodies like GIC, Temasek, and IIPL

 Who Hopefully Will Help!

What investors are you closely connected to?

Which investors like your market?
Who invested in the competition?
What value can they bring?

Investor Expectations
Regardless of the size of the investment, investors care about
the following:
A strong founding team
Deep market knowledge and expertise
Large market potential
Execution
Scale

Or in other words

Three Key Tenets: Team - Market - Value

TEAM

MARKET

VALUE

Any pitch or presentation to investors must show in great detail why:

Your team is sufficiently equipped to solve this problem or
provide this service.
Your market is large enough to generate a sufficiently high return
for both the entrepreneurs and investors.
The value of your product or service is sufficiently clear and
valuable so that people are willing to pay or use it.

If you can prove this in your pitch, youre good.

BUT THE MOST

IMPORTANT
SLIDE?

TRACTION.

IF YOU ARE
AN EARLY-STAGE STARTUP
WITH GREAT TRACTION,
YOU WILL RAISE FUNDS.

The Term Sheet

also known as

Holy shit, these guys are

actually giving us
money.

Legal Jargon

Before I begin:
When in Doubt, Consult a Lawyer
When not in Doubt, Definitely Consult a Lawyer

Understanding Key Terms

On a fundamental level, term

sheets cover two things:
Economics
Control

Ownership
Valuation
Liquidation Preferences
Automatic & Optional
Conversions
Options (right to purchase
an existing share) &
Warrants (right to purchase
share to be issued)

Board of Directors
Executive Authority
Financial Control, inc. M&A
and Spending
Economic Rights
Information Rights
Representation vis-a-vis
outside parties

Typical Investment Structures - Southeast Asia

Investments typically come in two forms: debt or equity
Debt - debt financing is primarily done through a vehicle called a
convertible note, which is essentially an unpriced loan that
converts into preferred shares of a company at a
predetermined time
Equity - equity financing is literally the purchase of preferred
shares of a company; they are labelled preferred shares (as
opposed to ordinary) because of their unique economic and
controlling qualities
In Southeast Asia, equity is more common, but debt is arguably
better for an early-stage entrepreneur

The Economics Behind the Deal

Debt - A 20% discount off the upcoming round, capped at X,
with a 5% interest rate on the underlying principal
Example: S$50,000 with a 20% discount at 5% interest
with a S$1,000,000 cap. At the next priced (equity)
round, the S$50,000 will convert $1M or the round price,
whichever is lower. In the latter, the discount will apply.
Equity - Standard would be % ownership of a company with a 1x
non-participative liquidation preference
Example: S$50,000 represents approximately 20% of a
company, thereby valuing that company at a postmoney valuation of $250,000. If the next round values
the company at $500,000, those shares will be worth
$100,000.

Expected Dilution and Economics

Incubators

S$20-40k for 8% to12%

Pre-Seed

S$250-400k for 20% - 30%

Seed

S$500k-1M for 20% - 30%

Series A

S$1M-3M for 20% - 30%

But the market

always takes
precedence.

Required Fucking Reading

Venture Deals: Be
Smarter than your
Lawyer and Venture
Capitalist
By Brad Feld, Jason
Mendelson, and Dick
Costolo

Too much
information.
Make it stop.

One slide.
One great story of growth.

Thats genuinely all you need to

raise money.

But most of you wont have traction when you begin.

No worries, though!

You can still make

an awesome pitch.

For a Long. Long. Long time.

Getting Started on your Pitch

Begin with the Basics!

Include numbers. Dont say 100K; say, 100,000.
And name-dropping here is good: if you have big name
customers, reference them.

Focus on traction. Investors care about traction.

AngelList gives you the opportunity to talk it up.
Customers, revenues, virality, customer activity, whatever
it is, talk about it!

Increase screenshots and videos. Demos > everything.

Dont focus on press. Everyone gets featured on

TechCrunch, TechinAsia, and e27.

Getting Started on your Pitch

Gird Your Loins!

Know your target market inside and out. Understand trends,
growth, opportunities and obstacles.

Develop your Elevator Pitch. The little schpeel every entrepreneur

knows so well their eyes glaze over when they say it.

Write up your Executive Summary. Remember: Team, Market,

Value, and if you have it, traction.

The Pitch Deck. The most important document youll have open on
your computer forever.

Research. Find resources. Look at decks. Listen to pitches.

garage.com/resources has some good info to start, but Google will
be your best friend.

Getting Started on your Pitch

Understand the Pipeline

Angels
Warm Intro
Coffee
Deck
Due Diligence
Term Sheet

Angels can be a
cheap date: you
can figure out
where you stand
after one drink.

Getting Started on your Pitch

Understand the Pipeline

Venture Capital
Warm Intro with Analyst
Coffee
Pass to Associate
Coffee
Pass to Principal
Coffee
IC
Deep DueD
Term Sheet

Venture
capitalists, on the
other hands, take
a little more time.

PROTIP: Practice the One-Liner

An awesome one-liner achieves three things:

it explains what the company does;

it inspires curiosity;

and it helps the reader remember the company.

PROTIP: Specificity beats Generality

Making a general pitch

doesnt necessarily
make an idea seem big.
It just bores the reader
and leaves them
confused.

BAD

PROTIP: Beware Buzzword Overkill

Use your judgement, but

generally keep the language
simple and human.
Buzzwords alienate
readers.

NOT ENGLISH

PROTIP: ThisForThat Can Work (But its Lazy)

ThisforThat typically fails

because the metaphor isnt
strong, or the value is
overestimated.

Choose a startup that is

entering mainstream press,
with VC-backing.
To be safe, avoid
ThisforThat.

GOOD STARTUP.
BAD METAPHOR.

PROTIP: Lay Off the Marketing Schpeels!

An opening line is not a

tagline. Exclamations and
grand adjectives are
desperate, and a mismatch
for your likely audiences:
recruits and investors.

TONE IT DOWN.

Now
Comes
The Pitch

One Sentence, One Idea

Explain what your company

does in one sentence. Only.
one. sentence. If you cant
explain what your company
does in one sentence,
youve got other problems.

Open Strong

Immediately engage your

audience with a hook: a
great value proposition, a
huge market size, a universal
pain point, or best of all, a
clear indication of traction.
You need to get your
audience immediately
invested.

Be a Story Teller

Engaging the audience is

easier when youre
pitching a story, not a
company. Have us
envision being your
customer.

 and a business, man.

Once the audience is

engaged, dont forget
what youre here to do:
explain why this is a
viable, real business.
Dont lose sight of this
fact: investors want like
a story, but they invest
in a company.

Dont forget the revenue!

Business models and

revenue models arent
mutually inclusive. If the
revenue model isnt
realistic, neither is the
business.

Finish Strong!

Remember what a pitch

is for: to raise money for
your business. Close the
pitch by stating what you
need, for what, and most
importantly, why
investors should care
about you (hint: they
will make a lot of
money)

The Flow of Airbnb

What Pitches Should Look Like
1.
2.
3.
4.
5.
6.
7.
8.
9.

Problem
Solution
Market Validation
Market Size
Product
Business Model
Market Adoption
Competition
Competitive Advantages

$826 Million Dollars

in Funding

Airbnbs first pitch deck is an example of a

perfect pitch deck. It captured the three key
tenets: market, team, and value.

Some Final Thoughts

Be ready to fundraise. Know how much you need to raise,
have an investor deck ready, know what investors are looking
for, and understand the (admittedly complex) terminology.
Quantity matters. The more investors you are speaking to,
the better your chances at raising. That means you need to
be organised. Think of it as CRM for investment.
Get a decent sales funnel. Create a reasonable, local
investor hit list, through AngelList and email hacks.
Getting a lead investor can snowball into a round close.
Publishing that investment on AngelList can have a huge
affect on signal. Take that momentum and carry it through.

Still there?

AngelList Email Hack

Go to http://thilsted.co/2014/03/06/findinginvestors-by-hacking-angellist-3/

You must have a Linkedin account for this to

work.

This web application scrapes contact data

from AngelList and creates a simple
spreadsheet that can be used as a sales
funnel.

But wait!
DO NOT EMAIL BLAST. DO NOT COLD EMAIL. DO NOT ASSUME
ALL INVESTORS ARE THE SAME.
Do your research. What stage is the investor, what is their
investment thesis, what other startups have they invested in? Most
importantly, how are you connected to them?

If you havent culled your list down by at least 80%, then you are
doing something wrong.
Once your list is ready, start hustling. In order of preference: check
if you have any connection in common on Linkedin; check if you are
connected to any shared companies; ask a super connector; stalk
them (literally!); and finally, cold email them.

And dont be afraid to add to that list!

AngelList + FullContact
Download FullContact for Gmail

Head on over to bit.ly/name2email

This Google Doc takes the targets first

name, last name, and domain and generates
dozens of email variations. FullContact will
help you identify which ones are real.

AngelList + Zapier
Go to https://zapier.com/zapbook/angellist/

Zapier allows for the integration between AngelList and

hundreds of other web applications

For those of you already using Google Docs, Salesforce,

Trello, Evernote, or other applications, you can create
your own zaps with no software skills required

Zaps are predefined by the user, and can do things

such as create automatic email templates, task
reminders, and calendar updates

PEACE OUT!

QUESTIONS, COMMENTS, OR SUGGESTIONS?

EMAIL JUSTIN@GOLDENGATE.VC
OR TWEET @JVINNYHALL