What's Below in Issue #73:
📰 - Choosing between a VC firm's brand and the partners at a firm
📊 - Relocating could boost your valuation by 60%
🎙️- Podcast #41 w/ Shane Newman, exited-founder turned angel investor
💵- Premium startup resources
🆓- Free startup resources
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Your Pitch Deck Probably Sucks...
For most first-time founders, the idea of a pitch deck sounds easy, but I often get decks with "v43" in the filename, implying it's the 43rd iteration of a deck 😖
Don't be this founder. Collaborate with active VCs on your deck and pay a professional designer to eliminate the guesswork and make a strong first impression when you're ready to pitch to investors.
I use DECKO for my clients to ensure I'm getting the expertise we need to get a great deck turned around quickly. They're a group of active VCs who help founders with their decks, you can't go wrong. And you get 10% off with the link below.
Give them a try.
Upgrade Your Pitch Deck with Decko
------------------------------------------------------------------------------------------------------------------------------------------------------------There was a discussion amongst venture-backed founders who sold their companies in a group I’m part of where they debated whether you should take venture money from the firm or from the partner...
Now, you’re probably looking at me like 😕Money is green, ain’t it?
So, what does it mean to choose the partner over the firm or vice versa? When it comes to taking venture capital, smart founders know the relationship comes with more than just money. Let’s unpack this, assuming you have two competitive term sheets that are equal: one from a top firm with a mediocre partner as your lead and the other from a lesser-known firm with an amazing partner.
Let’s start by breaking down the differences:
There are VC firms and there are partners at those firms. The firm represents the collective brand and work of the partners as a whole. The partner is the individual you build a relationship with, who will often provide value, make connections, and sit on your board.
Choosing the Firm Over the Partner
Choosing the firm means you’re choosing the brand name of the firm. For example, just saying you raised from A16Z, Sequoia, or YC gives you instant credibility. You’re accepting money from a brand name VC, often referred to as “Tier 1 VCs.”
Why should you take money from a Tier 1?
When should you not take Tier 1 money?
In my opinion, take the money from a Tier 1 if you’re given the opportunity and you really want to go big. But remember, raising from a Tier 1 firm doesn’t equal success. Look at FTX, Bolt, and countless other startups that are in trouble or have disappeared. 😨
Choosing the Partner Over the Firm
There are times when you get a great partner at a Tier 1 firm—a slam-dunk situation. However, some amazing VCs run solo firms or have lesser-known brands but stellar individual reputations and networks. These are often partners with specific domain expertise and experience as former founders themselves.
These VCs compete against Tier 1s not by offering higher valuations but by demonstrating their value over time, building trust, and establishing a solid 10-year partnership. Most successful VC-backed startups are in the game for 7-10 years together.
When should you choose a partner over a firm?
When should you not prioritize picking a partner over a top firm?
Final Thoughts
When you’re in high growth mode and things are lining up for a successful capital raise, the answer might seem obvious when you see the term sheets. You might lean towards the biggest firm name with the highest valuation. But take a minute to reflect on the relationships you’ve established with all interested investors and ask yourself:
Who do I want in the trenches with me when things aren’t going well? Are they going to fight alongside me or bail or stab me in the back?
Make sure you have a confident answer to that question. Remember, you’ll be living with that decision for 7-10+ years, and it could make or break your company.
-------------------------------------------------------------------------------------------------------------------------------------------------------------Data Corner
Moving From San Diego or Miami to SF/Boston/NYC Could Bump Your Valuation 60%!?!?
Worried about dilution? Maybe consider moving to a top VC city like SF, Boston, or NYC. Your zip code could increase the value of your company by 60% or more. Why is that?
It's because talent and investors/capital are concentrated in those markets which increases your chances of succeeding and increases your operating costs. So it's normal for investors in these markets to increase the valuation to accommodate.
Is it worth relocating just for valuation? Definitely not IMO. But it's worth considering the pros and cons of moving to a Tech Hub if you're looking for investors and talent.
-----------------------------------------------------------------------------------------------------------------------------------------------------------Listen to Why Shane Newman Is Your Ideal Angel Investor on Episode 41
In this episode, Shane Neman, an angel investor and founder, shares his entrepreneurial journey from starting businesses during the DotCom bust, facing failure on his initial tech venture, to selling his companies and transitioning to investing.
As an investor, he looks for game-changing ideas and founders who don't necessarily need the money. Neman provides tips for founders on standing out in a crowded market, getting in front of investors, making good impressions, growing their businesses, and raising money. He also covers the challenges of getting out of deals and generating returns.
This story can inspire founders to look beyond traditional paths and explore how their unique capabilities can address unmet needs in diverse sectors.
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Free Fundraising Resources
🤓 - Free pitch deck reviews - Submit your deck
💸 - Access working capital fast - Explore options for free
😍 - Free list of AI Recommended VCs - Apply for free
👨💻 - Free fundraising coaching session - Schedule 15 minutes with us
📝 - Playbook for Negotiating Term Sheets - Download it Here
💽 - Playbook for Setting Up and Sharing Your Data Room - Download it Here
✉️ - Playbook for Sending Investing Updates - Download it Here
Premium Resources
Your pitch deck built by VCs and designers
🗓️ - Book a one-hour private capital strategy call - Book Now
💫 - Pitch deck design services for founders by VCs - Decko
💼 - Startup Legal Services - Bowery Legal
📚 - Startup Friendly Accounting Services - Chelsea Capital
Download Your List of Targeted Investors:
-------------------------------------------------------------------------------------------------------------------------------------------------------------
Let's stay in touch: