how vc investors evaluate startups & why
TRANSCRIPT
How VC Investors Evaluate Startups (Before Investing £1-5m)
@fogeldavid
6 Years 12 Years
Head Of Acceleration @Wayrauk
Talk
Not Going to Talk about
And not about
1. Things 2 Consider Before Approaching VCs
2. How do VCs Think & Why Risk Market Team Traction (AARRR)
Before Approaching VCs
1.
Do you
Need to
Raise from
VCs?
Up to 30%!?
2. Why are VCs doing This?
2 Make Money
Don‘t need
Lots of money to
Create Great
Games
3. Are You What VCs are Looking For?
This is where VCs Play
Source: Startup Genome Report 2012
2 Types
Don‘t need
Lots of money to
Create Great
Games
Vision
Execution
Which is Better
How Do Investors Think?
Taking Risks
Investors Hate Big Risks
Mitigating Risks
Hugh Market
Huge (addressable)
Market
Why?
10% $1bn
Awesome Execution (After 5 years)
Huge Market
$100m Potential Annual Revenue
$100m
Annual Revenue
$500m Potential Company Valuation
5x
Revenue Multiple
20% $500m
VC’s Share of your Company (After 5 years)
Potential Company Valuation
$100m Potential VC Return
10% $1bn
Awesome Execution (After 5 years)
Huge Market
$100m Potential Annual Revenue
“It’s all About the Team”
Don’t Be This Guy
Traction
What is good traction
AARRR
AARRR
Pirate Metrics
Acquisition 1000 100%
Referral 70 10%(out of Active)
Activation 700 70%
Revenue 14 10%
Retention (Day 1) 140 20%
Avoid Vanity Metrics
Referral 70
Activation 5,000,000
Revenue 14
Retention (Day 1) 140
Vanity Metrics
Now What?
#2
Average
6 Months
There is Always
That 1 Guy….
Long Journey
