George Zachary, Partner, Mohr, Davidow Ventures shares advice with teams presenting to venture capitalists and entering the $50K. 

Start-ups require capital in the form of cash, goods and services. The introduction to Pratt's Guide to Venture Capital Sources edited by Ted Weissberg provides an up-to-date overview of potential funding sources including sources other than venture capital. New ventures can build their organizations using a variety of funding sources including credit extended by suppliers and projects sponsored by customers or government. Additional funding may come from industry investors like Motorola and Polaroid, angel investors who are wealthy private individuals, personal relationships including family members, and venture capital firms.

Presenting to Venture Capital Firms: Running the Gauntlet

Notes from New Product and Venture Development Seminar on 12/2/97.
George Zachary, Partner, Mohr, Davidow Ventures shares advice with teams presenting to venture capitalists and entering the $50K.

Venture capitalists ("VCs") want to invest in businesses with huge,lasting potential. By current definition, VCs define huge potential as a company that can grow profits from $0 to $40 million in five years or market value (total value of their stock) to $200 million in five years. The customers of this company must be willing to pay for the product or service. VCs define lasting potential as a company with an unfair advantage -- a business model and/or proprietary technologies. The unfair advantage should last at least long enough to impede competition until the venture capitalist can cash in on its investment through an initial public offering or acquisition. An unfair advantage is NOT: 1) the team is smarter than its competitors, 2) the team can move quicker than its competitors or 3) the team was there first.

Winning a Chance to Meet with a VC

"Running the Gauntlet" Presenting to a VC

"Build Enthusiasm"

• Name of the Company and its Mission
• People behind the Company
  • Are there people on the team that the VC has worked with before? Are the team members superstars in their industry/area?
  • Are there exciting partners or potential partners?
• Description of the problem and an explanation of why it is a problem
  What is the problem? What is driving the problem - is it a vitamin or a pain-killer? Vitamins are optional, but people always buy pain killers.
• Who has this problem, how many people have this problem
  • Who has this problem? Be specific about types.
  • How many people need this solution? Don't base your market estimates solely on numbers from industry analysts. Support your estimates with bottoms-up estimate based on your contacts with potential customers.
  • How much money are people willing to pay for the solution to this problem.
• The company's solution to this problem (technology and business model advantages)
  Why is your solution the right one?
  Who are your competitors and why is your solution always going to be better than theirs? Educate the VC about the market space. VCs often view the presence of competitors as validation that this is an interesting market space.