As we plan for 2016, our team took a deep dive into our 2015 results. Here’s a glimpse into what our pipeline and deal pace looked like last year for our seed stage VC fund, and how we got to the 7 investments we made:
Top of the funnel: We saw about 2,900 companies in total. We have an open call on AngelList, which received about 2,000 applications in 2015. We also meet the bulk of our companies through our network, and we take meetings with between one half and one third of those companies that are referred to us. Plus, we speak with tons of startups through demo days and events, so we conservatively estimate these deal sources at about 900 companies.
Initial screening: From the 2,900 companies we screened from applications, referrals, demo days, and other sourcing, we met or had a phone call with at least 300 companies.
Investments: From those 300 companies, we made 7 investments in 2015. We met with lots of companies multiple times, and conducted diligence on many, to arrive at these investment decisions. The top referral sources of our 7 investments were: our founder network (2 companies), universities/ campus programs (2 companies), our co-investor network (1 company), and AngelList (1 company), with one company we pursued because we loved using the product!
We invested in roughly 2% of the companies we met with (and less than half a percent of those who came in the top of the funnel). So with every “yes,” we said “no” to 50 more. This investment analysis brought about three key insights. First, we strive for “nice nos.” With the bulk of our interactions not resulting in an investment, we hope that we’re able to share some helpful feedback with most companies we meet so that neither party feels their time was wasted. Several times, we passed on investing in a great startup that was doing well, but that just wasn’t a good fit for our Maven investment strategy. Second, to continue to be successful consumer seed stage investors we need to continue to cultivate a variety of deal sources. From AngelList to trusted co-investors, our money went to companies that came through a number of different channels. And third, in order to keep our quality high we have to keep our pace high. To invest at a similar rate this year, we plan to meet at least 1-2 new companies per day– and for each company we meet, we need to review and screen about 10 more. In addition to supporting our existing portfolio companies to help them succeed and grow, sourcing new deals in 2016 is a top priority.
We see hundreds of in-person pitches each year and coach our founders through hundreds more. As a result, the Maven team has put together our perspective on what we like to see in a funding pitch meeting. Each investor has their own approach and preferences; for instance, we often like to see a deck in first meetings because it helps structure the conversation and get most of our initial questions out of the way. Some investors would rather have a casual, less structured conversation. Research your target investors and ask around in your network to get a feel for their preferences.
There are already a number of great resources on pitch decks. Here are a few solid ones as a starting point:
The ideal Maven pitch deck has a lot in common with these, plus a few unique aspects given our focus. Here’s the structure we like to see:
- Vision Worth Fighting For
- Problem Statement
- Traction (if you have)
- Market Opportunity
- Distribution (Customer Acquisition)
- Business Model
- The Ask
- Milestones: What are you going to do with the money?
In addition to the structure, we encourage founders to keep the presentation very visual without too much text. You should never read directly from a slide. If you’re sending the deck ahead of time, it might be appropriate to have a bit more text if the visuals don’t stand on their own – but always strive to trim as much text as possible.
You should be able to cover your ~10 slide deck in about 20-25 minutes, leaving at least 10-20 minutes for questions. If interrupted during your pitch, address the question or concern and then get back to the deck. When you first sit down with the investor, make sure you ask how much time they have. Often, investors allocate an hour for the meeting but like to end 10 minutes early to debrief or make notes before their next meeting. Sometimes the day is running behind and you might have an abbreviated 30 minute meeting. Make sure to ask and tailor your speaking accordingly.
Finally, small talk before diving into the deck can be key. An investor-startup relationship will hopefully last many years, and is bound to experience ups and downs. Start by building a personal relationship and trying to find shared interests or experiences. Often an investor will make a decision of how engaged they will be during the meeting in those first few minutes.