VC trick questions, 3-case model building, B2B sales coaching • Zoo House News
- December 9, 2022
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I have nothing against the investor class, but sitting in a room with several VCs while trying to sell them my billion dollar idea sounds very stressful.
When an investor inevitably asks founders about their valuation expectations, that’s a trick question of the highest order. If the response is too high, it’s a red flag, while a weak number undervalues the company.
“We’ll let the market price this round” is a confident response, but it’s only appropriate if you’ve actually gathered significant data points from other investors — and can hit back with a few questions of your own, says Evan Fisher, founder of Unicorn Capital.
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“If that’s all you say, you’re in trouble because it can also be interpreted as ‘We have no idea,’ or ‘We’ll take what’s given,'” Fisher said.
Rather than going cold, he advises founders to pre-advise investors for their next round and use the insights from those conversations to shape current valuations.
In the article, Fisher provides example questions “that you should ask every VC you speak to” along with other tips to help “when they ask the assessment question.”
A pitch is a business meeting, but in a way it is also a game where investors hold all the cards and always win. In order to create a level playing field, founders have to think one step ahead.
Thank you for reading,
Editor-in-Chief, Zoo House News+
Twitter Space: Does Tech Media Bring Out “Charismatic” Founders?
Larger-than-life entrepreneurs are nothing new, but technology has taken this to the next level, often with the support of the news media.
Tuesday, December 13 at 1:00 p.m. PT, Builders VC investor Andrew Chen will be joining me in a Twitter space to discuss the role that technical reporting plays in shaping ecosystems, narratives and expectations.
This should be a lively conversation, so please bring your comments.
The climate start-up guide to the Inflation Reduction Act
The Inflation Reduction Act goes well beyond reducing costs for American consumers – Congress committed $369 billion to fight climate change, creating new opportunities and incentives for thousands of entrepreneurs.
In an in-depth post examining the IRA’s impact on green fintech, electrification, carbon capture and other areas, investor David Rusenko and Floodgate Fund CEO Leeor Mushin share their “understanding of the regulatory implications of this monumental bill.”
To prepare for a downturn, create a three-case model
Startups that develop case models are better equipped to deal with potential setbacks. Accurately visualizing how potential market shifts may affect your business is a great way to prepare for the unexpected.
A three-case model attempts to predict best-case, down-case, and base-case scenarios, writes Matt Barbieri, senior partner at auditing firm Wiss & Co.
“Typically, the base case falls somewhere between the extremes. For example, in financial modeling, you could say that Peloton has seen both its “best case” and “down case” scenarios within a year.”
In uncertain times, B2B sales teams must focus on value
At a time when companies are looking for ways to reduce their SaaS spend, sales teams need to focus on ROI and value, says Ketan Karkhanis, EVP and GM of Sales Cloud at Salesforce.
In a post for TC+, he shares tactics used by successful B2B sales teams to coach prospects through the sales funnel while building relationships through personalized interactions.
“Many customers feel lost,” he writes. “They are confused by economic volatility and overwhelmed by a deluge of information.”
“Acting as a coach, bringing personalized, relevant information to the right stakeholders without pushing for quick closure is key to building trust.”
Pitch Deck Teardown: Rootine’s $10M Series A Deck
In 2018, Zoo House News reported that health and wellness startup Rootine was preparing to enter the US market after attracting “1,500 paying customers in Europe.”
Four months ago, the company, which sells a $70-per-month subscription to multivitamins, announced it had raised a $10 million Series A.
If you want to read all 29 unresponsive slides, click through to our latest pitch deck teardown.
Dear Sophie, How do tech layoffs affect PERM and the green card process?
I handle human resources and immigration at our technology company. We applied for a PERM for one of our team members for her EB-2 green card about five months ago and we are awaiting approval from the Department of Labor. We are preparing to launch PERM for another employee.
Will the layoffs in the tech industry affect the PERM process for EB-2 and EB-3 green cards? What happens to my team members’ green cards if our company has to quit?
— Thinking in People Ops
Use growth as a differentiator to attract investors
Despite the sinking and darkness, investors are still encountering founders looking for places to park their money. Skillful storytelling is good, but it’s not enough: once you’re in the room where it’s happening, making the most of everyone’s time is crucial.
To make investor buy-in more likely, Jon Attwell, lead of Seedstars Growth Track, advises teams to create metric-centric customer journey maps that capture “all the mini-processes that customers go through and the paths that they go through, describe in detail. ”
Growth projections are nice, but showing concrete plans for onboarding and retaining investors, fighting churn, and addressing other growth factors will help show how well you understand your market.
“It’s a rare treat for investors to experience an obsession with the granular metrics of a customer journey,” writes Attwell.