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E860: Angel Investor Elad Gil (Airbnb, Coinbase, Square) & Operator (Color Genomics, Google) shares masterclass on fundraising timeline & process, landing & optimizing investors, notes & equity terms/trade-offs, common mistakes & more @ LAUNCH Incubator
This Week In Startups: http://twitter.com/twistartups
01:20 - Elad gives a brief overview of his history as an entrepreneur, investor, and author, then warns that there is no good generic startup advice: all aspects of the lecture are contextual and should be viewed through each founder’s own lens. Not all companies should raise money.
02:47 - Round structures: Covers the traditional Series A and the party round, noting the differences in investor versus founder control, what’s required of founders, the role of a lead investor, more. Also covers different types of investors and how they function as an extension of the company’s team.
07:46 - Elad covers the timing of rounds - both the best/worst times of year and the timing in terms of a company’s progress. Where a company stands in terms of a prototype or product will have an impact on how long a round lasts. Seeds generally run from two weeks to four months. He also covers strategies for pre-seed and seed.
A, B, and C rounds can take two weeks to six months because of due diligence. Terms are more complicated. Elad talks about negotiating larger rounds.
12:47 - Jason thanks sponsor Blinkist, a micro-learning app. Visit blinkist.com/twist to start a seven-day free trial.
14:49 - Elad covers the ideal pitch deck, including company mission, the problem, the solution, the market, competition, the team, financials, more. He answers a class question about teaser decks versus meeting decks.
16:28 - Elad covers investor introductions and the proper way to respond, including scheduling, relevant information to cover, etc.
18:05 - Elad talks about how founders can recognize when investors are truly interested versus fishing for information or just wasting founders’ time. He says VCs are easier to read than angels, who are often extremely busy. He covers angels versus VC taking board seats. He also says founders shouldn’t worry too much about conflicts of interest as they are rare.
20:44 - Common mistakes in fundraising: Elad covers asking for too much money, accepting too high a valuation, getting too complicated with terms, not qualifying advice, not finding the right investor match, more.
22:57 - Elad covers SAFEs, convertible notes, equity, option pools, more.
24:37 - Jason thanks sponsor Netsuite. Visit netsuite.com/twist for a free guide on crushing the five barriers to growth.
26:22 - Elad speaks about deal terms, including super-voting shares, advisory discounts, more.
27:34 - Elad covers investor interaction post-deal, including monthly updates, regular communications, more.
29:19 - Elad answers a class question about key indicators of marketplace growth: organic traction, growth rate, etc. For early companies, it’s more about potential market and path.
30:52 - Elad answers a question about presenting figures for monthly versus annual SaaS accounts, and about onboarding costs.
32:49 - Elad answers a class question about realistic founder visions and how they change over time. Also expands on organic traction.
35:13 - Elad answers a question about the pros and cons (from an investor perspective) of an early company becoming cash-flow positive.
36:24 - Jason thanks sponsor Campaign Monitor. Visit campaignmonitor.com/twist and create a free account. TWiST listeners get a free shirt.
39:38 - Elad answers questions about leads in convertible note and equity rounds. Also covers anchoring, terms, pressure, negotiations, looking for the right partner, note conversions, more.