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    A Kleiner Perkins Partner Explains What VCs Want To See in The Pitch From An Early-Stage Startup Markets Insider

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    A Kleiner Perkins Partner Explains What VCs Want To See in The Pitch From An Early-Stage Startup Markets Insider

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    71 views9 pages

    A Kleiner Perkins Partner Explains What VCs Want To See in The Pitch From An Early-Stage Startup Markets Insider

    Uploaded by

    Jason Miles

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    A Kleiner Perkins partner explains what VCs want to…

    Saved to Dropbox • Nov 29, 2019 at 1:02 AM

    A Kleiner Perkins partner explains


    what VCs want to see in the pitch
    from an early-stage startup
    Benjamin Pimentel
    Nov. 28, 2019, 08:49 AM

    Kleiner Perkins

    Kleiner Perkins Partner Mamoon


    Hamid, who was an early investor in
    companies such as Slack, Box and
    Yammer, explains the fine points of
    pitching to venture capital firms for
    early-stage startups.
    The key is to find "an alignment
    around the end-market that the
    founders are pursuing and our
    belief in those founders to go
    actually do it," he told Business
    Insider.
    "With Series A, there are not a lot of
    numbers to talk about," he said.
    "With Series A, I'm thinking a lot
    about the vision, the team, the
    market that they are going into. In
    Series B, it's really about execution
    since the Series A -- how developed
    is the product? Is it in the hands of
    customers? What is the sales cycle
    like?"
    Click here for more BI Prime
    stories.

    A startup's early years can be the toughest,


    especially when it comes to financial
    matters.

    That's why founders and entrepreneurs


    typically turn to venture capital investors
    as they look for their initial big
    investments: The Series A investment
    round that gives the startup the cash to
    really establish the business, and then the
    crucial Series B follow-up round that can
    add more fuel to the proverbial fire.

    Mamoon Hamid, managing director at


    Kleiner Perkins and one of the early
    backers of such companies as Slack, Box
    and Yammer, boiled down for us what VCs
    like him are typically looking for from
    startup founders and entrepreneurs in both
    rounds.

    Investors will generally be looking for "an


    alignment around the end-market that the
    founders are pursuing and our belief in
    those founders to go actually do it," he told
    Business Insider.

    Series A to Series B
    In a Series A round, investors will be
    focused on your vision, your game plan and
    if it's addressing a key need — and less so
    on financial metrics, since the expectation
    is that the company is still really just
    establishing itself. By the time the Series B
    rolls around, though, that should probably
    be swapped around.

    "With Series A, there are not a lot of


    numbers to talk about," he said. "With
    Series A, I'm thinking a lot about the
    vision, the team, the market that they are
    going into. In Series B, it's really about
    execution since the Series A — how
    developed is the product? Is it in the hands
    of customers? What is the sales cycle like?"
    The biggest mistakes startup founders and
    entrepreneurs make in pitching to VCs is
    failing to turn the spotlight on key areas
    that investors would be interested in in
    each round, he said. In all cases, he said,
    what you're trying to do should ideally
    match what the VC investors are looking to
    add to their portfolio.

    "The blunder is not highlighting the right


    thing at the right time," he said.

    Having deep expertise in


    solving a problem
    In all cases, too, you need to demonstrate
    that "you're solving a problem, that you
    have deep domain expertise and you have
    thought about it probably more than
    anyone else and you have come up with an
    elegant solution," he said.

    "You've either built the product already, or


    you will be building the product and your
    prior credentials make us believe that you
    will build that product," he added.

    Many startups founders and entrepreneurs


    make the mistake of pitching an old or
    otherwise unoriginal idea with what VCs
    would see us a weak or sloppy game plan,
    he said.

    "It's been done or it's been tried slightly


    differently," Hamid said. More
    importantly, you may be taking aim at "a
    hard market" and your game plan for
    taking it on clearly won't work — or you're
    not able to convince the VCs that it can
    work.

    'Seeing around the


    corners'
    That's not to say that the idea is inherently
    doomed. It might just mean a trip back to
    the drawing board.

    "It's just that you haven't seen around the


    corners yet," he added.
    In many ways, it's about being able to tell a
    compelling story based on a solid, well
    thought-out plan. For example, it may be
    an old idea, but maybe you've found a fresh
    approach.

    "For early stage companies, there are a lot


    of unknowns," Hamid said. "Things that
    couldn't have been possible five years ago
    may be possible today. You don't want to
    take yourself too seriously by saying, 'It
    was done before and it can't be done today.'
    Well, maybe times have changed and
    maybe the time is now."

    The key is being able to demonstrate what


    VCs and entrepreneurs refer to as
    "product-market fit."

    "What that means is you built a product


    that now customers are saying, 'This is
    useful for me. I will pay for it,'" Hamid
    said. "You've identified a pain point for
    them that they are willing to take out their
    credit card."

    Identifying that pain point can take a lot of


    effort and precision. Hamid cited the
    experience of Moveworks, which just raised
    a $75 million Series B round led by Kleiner
    Perkins, ICONIQ Capital and Sapphire
    Ventures.

    Moveworks uses AI to help businesses


    automate the processing tech support
    issues and problems faster. To develop its
    product, the startup did its homework by
    interviewing many CIOs to figure out the
    scope of the problem and what they
    needed.

    "They do a lot of customer interviews and


    ask a few questions before even going into
    a company," Hamid said. Moveworks
    reached out to companies that "had
    forward-thinking IT CIOs" and "had a
    priority list of things that mattered."

    All that work helped Moveworks stand out,


    he added: "They really just pulled ahead
    from the rest of the competition. It's just a
    lot progress since their Series A."

    "I think it requires a high level of precision


    and having that point of view to get it
    right."
    Got a tip about startups and tech
    companies? Contact this reporter via
    email at bpimentel@businessinsider.com,
    message him on Twitter @benpimentelor
    send him a secure message through Signal
    at (510) 731-8429. You can also contact
    Business Insider securely via SecureDrop.

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