11 Fundraising secrets from 1600 startups

ELIZABETH YINPARTNER

#saastrannual

11 Funding Secrets Learned from 1600 Startups

11 Funding Secrets Learned from 1600 Startups

#saastrannual

ABOUT ME• Partner at 500 Startups

• Have seen 20k+ pitches in ~2 years

• Co-founded / CEO of LaunchBit (acq BuySellAds)

• Raise $1m+

11 Funding Secrets Learned from 1600 Startups

#saastrannual

HOW MANY OF YOU HAVE RAISED MONEY?

• Seed round?

• Series A?

• Series B?

• Series C or above?

11 Funding Secrets Learned from 1600 Startups

#saastrannual

1) INVESTORS DON’T NEED EVERY STARTUP TO WIN IN ORDER TO MAKE

MONEY

• Approximate breakdown of 500 Startups seed program batches

• Sample size: 30-50 companies per batch

• 2011-present

Estimated as of 1/31/2017 based on the General Partners' current valuations of portfolio companies who completed the seed program across 500 Startups funds in line with the 500 Startups Valuation Policy.

11 Funding Secrets Learned from 1600 Startups

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2) WINNERS MUST WIN BIG

• ~10% of portfolio are breakout companies

• Investors make money ONLY if breakouts are BIG breakouts

• E.g. 50-100x vs 5-10x

Estimated as of 1/31/2017 based on the General Partners' current valuations of portfolio companies who completed the seed program across 500 Startups funds in line with the 500 Startups Valuation Policy.

11 Funding Secrets Learned from 1600 Startups

#saastrannual

3) IN FACT, WHICH BATCH IS DOING BETTER?

Estimated as of 1/31/2017 based on the General Partners' current valuations of portfolio companies who completed the seed program across 500 Startups funds in line with the 500 Startups Valuation Policy.

11 Funding Secrets Learned from 1600 Startups

#saastrannual

4) THIS IS WHERE THE UNICORN OBSESSION COMES FROM

Unicorns are companies that

• Have raised money at $1B+ valuations

• Have exited for $1B+

Img credit: clipartfest.com

11 Funding Secrets Learned from 1600 Startups

#saastrannual

5) HOW DO YOU BECOME “FUNDABLE”?

You

• Are in a hot space

• Have a “hot” team

• Are growing above-and-beyond-quickly

• Have built a really difficult technology

• …

11 Funding Secrets Learned from 1600 Startups

#saastrannual

6) BUT MOST STARTUPS DON’T HAVE THESE CHARACTERISTICSThe best entrepreneurs get funded because…

They execute their fundraising process well

11 Funding Secrets Learned from 1600 Startups

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7) CREATE FORCING FUNCTIONS

How to create urgency the right way with concrete timelines

• “I’m moving into 3 all-partner meetings next week on Sand Hill”

• “I’m taking 4 investor meetings per day”

11 Funding Secrets Learned from 1600 Startups

#saastrannual

8) WRONG: THIS DOES NOT CREATE URGENCY

How NOT to create urgency

• “My round is closing next week”

• “We have lots of investor interest”

• “I need the money now”

11 Funding Secrets Learned from 1600 Startups

#saastrannual

9) THIS MEANS YOU NEED TO LINE UP ALL YOUR INVESTOR MEETINGS

TOGETHERCondense your fundraising meetings to

• Create urgency

• Drive up your valuation / create competition

Start scheduling these meetings 4 weeks in advance

• Do your research / build a list

• Investors have busy schedules - set your meetings up in advance

11 Funding Secrets Learned from 1600 Startups

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10) DRIVE MEETINGS FORWARD AND CLOSE

Get a concrete next step

11 Funding Secrets Learned from 1600 Startups

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11) KNOW WHERE YOU STAND

Rough SaaS fundraising metrics

• Revenue:

• Seed: $100k ARR

• Post seed: $500k ARR

• Series A: $2M ARR

• Growth:

• 10-30% MoM

• Churn:

• 1-3% Monthly

11 Funding Secrets Learned from 1600 Startups

#saastrannual

THANKS (& READ MY BLOG ON FUNDRAISING)

• blog.elizabethyin.com• @dunkhippo33