Pitch the way VC thinks ๐ง | Learnings from Twitch Series B financing๐ฐ| Time to product-market fitโณ
Here is the best of my research.
Welcome to Explore, your weekly Startups and VC podcast. ๐
This is a summary of all my research from the week.
Podcast of the week ๐ง
This week, I released an episode with Alex Brees, the founder and CEO at un:hurd music, a music marketing startup supporting artists' growth.
Listen on ๐ Substack, onย ๐ขSpotify orย ๐ฃApple Podcast.
Pitch the way VC thinks ๐ง
![](https://substackcdn.com/image/fetch/w_720,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fbc95bc6b-2cfa-423c-88a8-40c531f0e0f4_3000x1688.jpeg)
![](https://substackcdn.com/image/fetch/w_720,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F600a77c3-1a4c-437e-b445-455f133262a7_3000x1688.jpeg)
![](https://substackcdn.com/image/fetch/w_720,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8f7fbdec-689c-42e9-b968-90347b924e80_3000x1688.jpeg)
![](https://substackcdn.com/image/fetch/w_720,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fc994ec12-f77f-4d4d-85ff-2b3e2c8c37c5_3000x1688.jpeg)
I watched the 1-hour Pitch the way VCs think session so you don't have toย ๐
This presentation was full of amazing advice.
Here are my key takeaways:
โค ๐ง๐ต๐ฒ๐ฟ๐ฒ ๐ถ๐ ๐ผ๐ป๐น๐ ๐๐๐ผ ๐ฒ๐บ๐ผ๐๐ถ๐ผ๐ป๐ ๐๐ต๐ฎ๐ ๐ถ๐ป๐๐ฒ๐๐๐ผ๐ฟ๐ ๐ณ๐ฒ๐ฒ๐น๐. Fear that things could go wrong, and greed that things could go right. You role is to address their fear and fuel their dream.
โค ๐๐ป๐๐ฒ๐๐๐ผ๐ฟ๐ ๐บ๐ฎ๐ธ๐ฒ ๐ฎ๐ป ๐ฒ๐บ๐ผ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฑ๐ฒ๐ฐ๐ถ๐๐ถ๐ผ๐ป๐ ๐ฎ๐ป๐ฑ ๐ฐ๐ฟ๐ฒ๐ฎ๐๐ฒ ๐ฎ ๐ฟ๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น๐ฒ ๐๐ผ ๐ฒ๐ ๐ฝ๐น๐ฎ๐ถ๐ป ๐ถ๐. Make sure that there is enough proof point in your pitch to support the rational but that it conveys enough emotion to convince them.
โค ๐๐ป ๐ฎ ๐ฝ๐ถ๐๐ฐ๐ต, ๐ถ๐ป๐๐ฒ๐๐๐ผ๐ฟ๐ ๐ฎ๐ฟ๐ฒ ๐ท๐๐ฑ๐ด๐ถ๐ป๐ด ๐๐ผ๐ ๐ป๐ผ๐ ๐๐ผ๐๐ฟ ๐ฑ๐ฒ๐ฐ๐ธ. Rehearse your pitch, practice it in front of friends, you must look confident and natural.
โค ๐๐ป๐๐ฒ๐๐๐ผ๐ฟ๐ ๐ฎ๐ฟ๐ฒ ๐น๐ผ๐ผ๐ธ๐ถ๐ป๐ด ๐ณ๐ผ๐ฟ ๐๐ต๐ฒ ๐ป๐ฒ๐ ๐ ๐๐ป๐ถ๐ฐ๐ผ๐ฟ๐ป. You must convince them that there is a probability (not certainty) that you will be the one startup we still talk about in 7-years.
โค ๐ฌ๐ผ๐ ๐ต๐ฎ๐๐ฒ ๐ณ๐ถ๐๐ฒ ๐ฝ๐ถ๐๐ฐ๐ต ๐ด๐ผ๐ฎ๐น๐ (see slide above).
This will get you to the next meeting with investors.
1. Make sure investors know what you do in 60s.
2. Show why it's awesome
3. Show market is big enough
4. Show you can figure out PMF
5. Show the team is worth backing
โค ๐ง๐ต๐ฒ ๐ฉ๐ ๐ถ๐ป ๐ณ๐ฟ๐ผ๐ป๐ ๐ผ๐ณ ๐๐ผ๐ ๐ถ๐ ๐๐ผ๐๐ฟ ๐๐ฝ๐ผ๐ป๐๐ผ๐ฟ ๐ฎ๐ ๐๐ต๐ฒ ๐ฉ๐ ๐ณ๐ถ๐ฟ๐บ, other people will need to give their approval, engineer the conversation to help your sponsor write his email to his team (see slide above).
โค ๐ฅ๐ฒ๐๐ถ๐ฒ๐ ๐๐ผ๐๐ฟ ๐ฑ๐ฒ๐ฐ๐ธ ๐๐ถ๐๐ต ๐ฝ๐ฒ๐ผ๐ฝ๐น๐ฒ ๐ป๐ฒ๐ ๐๐ผ ๐๐ผ๐๐ฟ ๐ฏ๐๐๐ถ๐ป๐ฒ๐๐. Remember that you've been deep down in your startup for months but investors are new to it.
โค ๐๐ฒ ๐ฝ๐ฟ๐ฒ๐ฝ๐ฎ๐ฟ๐ฒ๐ฑ ๐๐ผ ๐ฎ๐ฑ๐ฑ๐ฟ๐ฒ๐๐ ๐ถ๐ป๐๐ฒ๐๐๐ผ๐ฟ๐ ๐ณ๐ฒ๐ฎ๐ฟ๐. When pitching in person, add appendix that contains risks associated with your business. If investors ask questions, go there and show them that you thought through it.
โค ๐ช๐ฟ๐ถ๐๐ฒ ๐๐ผ๐๐ฟ ๐ฑ๐ฒ๐ฐ๐ธ'๐ ๐ต๐ฒ๐ฎ๐ฑ๐น๐ถ๐ป๐ฒ ๐ณ๐ถ๐ฟ๐๐, ๐ฑ๐ฟ๐ฎ๐ณ๐ ๐ฐ๐ผ๐ป๐๐ฒ๐ป๐ ๐น๐ฎ๐๐ฒ๐ฟ
Headline should be a message not a title and should tell an emotional narrative that convince investors (see slide above).
โค ๐ง๐ถ๐ฝ๐ ๐ณ๐ฟ๐ผ๐บ ๐ฉ๐ถ๐ป๐ผ๐ฑ: test your idea with VCs that are not in your top list, gather objections and come ultra-prepared for your meetings with VC in your target list.
You can listen to the 1-hour session here.
Learnings from Twitchโs financing๐ฐ
Here is 3 learnings from Twitch Series B financing.๐ฐ
For context: Twitchย was founded in 2011 as a livestreaming platform for content spanning gaming, entertainment, sports, and music. ๐ป
What can we learn from the memo?
If youโre a hot startup, investors will fight for you
โคท "We have been selling hard against the other proposal"
โคท "We are competing against another firm which has agreed a $90M pre-money valuation"
Great products will be used no matter what
โคท "Over 150k gamers stream content on Twitch each month despite the need to install complicated software."*
Creating a market is a tricky process
โคท "Inherent risks: market size has yet to be defined"
โคท "Twitch faces competition from game publishers that could build live functionality into their games"
Twitch was acquired from $1BN by Amazon in 2014.
Great job to the team and to BVP! ๐
Here is a link to the full document.
Time to product-market fitโณ
Wondering how long it will take before feeling Product Market Fit? โณ๐
Here is a great visual by Lenny Rachitsky to help you benchmark against successful startups.
What does the graph tell us?
Most companies got a product live in 6 to 12-months
โคท Learning: ship fast and iterate later. Don't wait to build the perfect product.
From product to first customer in couple of months
โคทย Learning: your first believer will get you to PMF
From first customer to PMF in 6 to 12-months
โคทย Learning: create fast feedback loop with customers to accelerate time to PMF
How does it feel when you achieve PMF?
This is not binary. PMF is a feeling that things are moving in the right direction.
It's an always going process of:
โคทย refining your offer and product
โคทย attracting new customers.
YouTube generated billions of views monthly and still felt they didn't have PMF because they were trying to target new audiences.
Lenny provides a great framework to PMF:
1. Get one company to love your product
2. Get one company to pay for your product
3. Expand love and pay to more than one company
4. Notice a shift from push to pull, and organic growth
Keep growing consistently. That's what PMF feels like.
Thanks for your support! ๐
Share the newsletter with your friends and family if you liked it.
P.S. by sharing the newsletter you can earn some rewards.
Support the podcast by giving it 5 โจ and a follow on your podcast platform.
Hugo ๐