There is a seed funding bubble in the Bay Area they keep telling me. I wanted to get a glimpse of what these startups are pitching. Plus learn a little about what questions investors ask of them.
An opportunity presented itself with my March 2015 US trip to attend a Startup Pith Day & Mixer event with VCs, Angels and Entrepreneurs. It was organised by foundersspace.com and hosted at Morrison & Foerster LLP on Market St, San Francisco. After networking a little, I decided to grab a seat. Glad I did, as it was standing room only really. The venue was at capacity.
The format of the event was a five minute intro by the founder about their startup, followed by a Q&A session with investors. I’ve forgotten the exact number that pitched but there were maybe a dozen or more.
Before that started, each investor in the room, was invited to give a brief overview of themselves or their fund with 1 or 2 questions from the audience. I was surprised that a number of mainland Chinese VC funds were in the room. There were a few entrepreneurs of course, asking leading questions to see if they could entice them to invest now in their ventures. It was all done with good humour.
Each five minute intro started with a teaser about the business concept or vision that led into the person stating his/her name and company. Further explanation of the concept was then given. No slides or visuals were used. It was just the entrepreneur standing up and talking. A facilitator then invited questions from the investors panel.
This was the part that interested me, “what would these investors ask?”. I had gathered from their introductions, that there was a mixture of Angels and VCs on the panel. With some of the VCs, now favouring smaller funds.
The startups were on the whole consumer focused and largely mobile apps. It appeared that the majority were from outside the US. Some of them were looking to take their initial success in home markets and use that as the basis to expand into the US.
So the investors, were mainly asking questions about how the entrepreneurs understood US market fit with their offerings. It was that simple. I suppose with the limited time they had, they couldn’t ask much more. I don’t think I heard any questions about their team and ability to execute. Nor, what it was, that the entrepreneurs were looking for, from an investment perspective to see if there was a match with the investor’s investment thesis. In hindsight, I suppose these startups, were coming out of an incubator/accelerator, so there would be a range, that they could guess.
These guys and gals had obviously been coached well. Except in a few cases, they confidently answered the investors questions. Sometimes, they restated the investors questions, such that it fitted their answers they had prepared.
I did ask myself, would I invest myself in any of these startups? Or would I want to find out more information about the startup? One would assume, if you approached them there would of been an opportunity statement that they would of given out.
It was an eye opening event for me as nearly everyone that presented had market traction (somewhere around the globe). But from my perspective, I had trouble valuing what that market traction was worth!