Pitch the way VC thinks 🧠| Learnings from Twitch💰| Time to PMF⏳

Hey everyone and welcome to Explore, your weekly Startups and VC podcast. 📈

I’m Hugo Rauch, the writer of this newsletter and my goal is to help founders accelerate their growth, successfully fundraise and find inspirations in stories from investors and startups. I always love to discuss any startup topic with my audience, feel free to reply to this newsletter or ping me on LinkedIn! 💬

Find below a summary of my research from the week.

Podcast of the week 🎧

This week, I released an episode with Lauri Kokkila , a partner at Inventure , a venture capital fund focused on seed and Series A investments across the Nordics and Baltics.

Listen on 🟠Substack, on 🟢Spotify or 🟣Apple Podcast.

Pitch the way VC thinks 🧠

I watched the 1-hour Pitch the way VCs think session so you don't have to 👇

This presentation was full of amazing advice.

Here are my key takeaways:

➤ 𝗧𝗵𝗲𝗿𝗲 𝗶𝘀 𝗼𝗻𝗹𝘆 𝘁𝘄𝗼 𝗲𝗺𝗼𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗮𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗳𝗲𝗲𝗹𝘀. Fear that things could go wrong, and greed that things could go right. You role is to address their fear and fuel their dream.

➤ 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗺𝗮𝗸𝗲 𝗮𝗻 𝗲𝗺𝗼𝘁𝗶𝗼𝗻𝗮𝗹 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗰𝗿𝗲𝗮𝘁𝗲 𝗮 𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹𝗲 𝘁𝗼 𝗲𝘅𝗽𝗹𝗮𝗶𝗻 𝗶𝘁. Make sure that there is enough proof point in your pitch to support the rational but that it conveys enough emotion to convince them.

➤ 𝗜𝗻 𝗮 𝗽𝗶𝘁𝗰𝗵, 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗮𝗿𝗲 𝗷𝘂𝗱𝗴𝗶𝗻𝗴 𝘆𝗼𝘂 𝗻𝗼𝘁 𝘆𝗼𝘂𝗿 𝗱𝗲𝗰𝗸. Rehearse your pitch, practice it in front of friends, you must look confident and natural.

➤ 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗮𝗿𝗲 𝗹𝗼𝗼𝗸𝗶𝗻𝗴 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗻𝗲𝘅𝘁 𝘂𝗻𝗶𝗰𝗼𝗿𝗻. 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.

➤ 𝗬𝗼𝘂 𝗵𝗮𝘃𝗲 𝗳𝗶𝘃𝗲 𝗽𝗶𝘁𝗰𝗵 𝗴𝗼𝗮𝗹𝘀 (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

➤ 𝗧𝗵𝗲 𝗩𝗖 𝗶𝗻 𝗳𝗿𝗼𝗻𝘁 𝗼𝗳 𝘆𝗼𝘂 𝗶𝘀 𝘆𝗼𝘂𝗿 𝘀𝗽𝗼𝗻𝘀𝗼𝗿 𝗮𝘁 𝘁𝗵𝗲 𝗩𝗖 𝗳𝗶𝗿𝗺, other people will need to give their approval, engineer the conversation to help your sponsor write his email to his team.

➤ 𝗥𝗲𝘃𝗶𝗲𝘄 𝘆𝗼𝘂𝗿 𝗱𝗲𝗰𝗸 𝘄𝗶𝘁𝗵 𝗽𝗲𝗼𝗽𝗹𝗲 𝗻𝗲𝘄 𝘁𝗼 𝘆𝗼𝘂𝗿 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀. Remember that you've been deep down in your startup for months but investors are new to it.

➤ 𝗕𝗲 𝗽𝗿𝗲𝗽𝗮𝗿𝗲𝗱 𝘁𝗼 𝗮𝗱𝗱𝗿𝗲𝘀𝘀 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗳𝗲𝗮𝗿𝘀. 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.

➤ 𝗪𝗿𝗶𝘁𝗲 𝘆𝗼𝘂𝗿 𝗱𝗲𝗰𝗸'𝘀 𝗵𝗲𝗮𝗱𝗹𝗶𝗻𝗲 𝗳𝗶𝗿𝘀𝘁, 𝗱𝗿𝗮𝗳𝘁 𝗰𝗼𝗻𝘁𝗲𝗻𝘁 𝗹𝗮𝘁𝗲𝗿 Headline should be a message not a title and should tell an emotional narrative that convince investors.

➤ 𝗧𝗶𝗽𝘀 𝗳𝗿𝗼𝗺 𝗩𝗶𝗻𝗼𝗱: 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 Twitch’s financing💰

Here is 3 learnings from Twitch Series B financing.💰

For context: Twitch was founded in 2011 as a livestreaming platform for content spanning gaming, entertainment, sports, and music. 💻

What can we learn from the memo?

If you’re a hot startup, investors will fight for you

⤷ "We have been selling hard against the other proposal" ⤷ "We are competing against another firm which has agreed a $90M pre-money valuation"

Great products will be used no matter what

⤷ "Over 150k gamers stream content on Twitch each month despite the need to install complicated software."*

Creating a market is a tricky process

⤷ "Inherent risks: market size has yet to be defined" ⤷ "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! 👏

Here is a link to the full document.

Time to product-market fit⏳

Wondering how long it will take before feeling Product Market Fit? ⏳📈

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 ⤷ Learning: ship fast and iterate later. Don't wait to build the perfect product.

From product to first customer in couple of months ⤷ Learning: your first believer will get you to PMF

From first customer to PMF in 6 to 12-months ⤷ 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: ⤷ refining your offer and product ⤷ 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.

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Hugo 👋