Harvard i-lab | “Mastering the VC Game: How to Raise Your First Round of Capital” with Jeff Bussgang

Jeff Bussgang presented a Skillshare class entitled “Mastering the VC Game: How to Raise Your First Round of Capital” at the Harvard innovation lab on April 3, 2012. Jeff is a Senior Lecturer in Entrepreneurship at HBS and a General Partner at Flybridge Capital Partners.

Students learned about the startup financing landscape, how to find investors, how to pitch them, how to understand term sheets, and other tips for raising a first round of financing.

The seminar was intended to address questions like:

You’ve been working on a big idea and need financing to get it going: but how do you go about raising your first round of funding? What’s the difference between angel, seed, and VC investors? How do you go about valuing your company and deciding on equity?

19 Comments on “Harvard i-lab | “Mastering the VC Game: How to Raise Your First Round of Capital” with Jeff Bussgang”

  1. Such a shame the audio is so bad, it's barely understandable.. was really interested to watch this as well.

  2. The Idea is the nucleus of every business there is to much focus on who you know and what you "know" concerning jargon or procedure… The Idea/product and team should hold the most weight… most of the time fluff and gate keepers control funding

  3. Some notes that may help: warning, they're not cleaned up though:

    Harvard i-lab | "Mastering the VC Game: How to Raise Your First Round of Capital" with Jeff Bussgang

    Harvard i-lab | "Mastering the VC Game: How to Raise Your First Round of Capital" with Jeff Bussgang

    1. Do a check in, am I on track with what you want to hear, and is there an interest
    2. Warm introductions – none off cold
    3. Referrals – first priority is to a referral from anyone who has made them money
    4. Quality introduction – three introductions to John Doehr in a week
    5. "Investors like to invest in movies, not short cuts." – ask for feedback, tell them of plans, execute plan
    a. Underpromise over deliver, continue to execute
    6. Be explicit about risks, VC shouldn't be uncovering risks
    a. This will fail if the following things happen, here's my plan to mitigate those risks
    7. If you can't get to me other than through a cold email, it's almost like an intelligence test
    8. The moment you feel like you're ready to engage someone in a relationship and have something compelling to talk about and can reflect yourself well, then you should take advantage of office hours
    9. You would not hire a cofounder without knowing how they do well when things are going well and when things are going poorly
    10. On seed investing, It's very easy for a VC to walk away from a 200k check
    11. VCs like optionality and will wait for the last second, more time gives them more information
    12. As an Entrepreneur, time is your enemy: you want faster turnover, move fast, shorter cycle time, lack of clarity, team loses focus, As a VC, time is your friend, can see things progress, more information and optionality.
    13. They only do two or three deals and see 300 = 300 500, if you're not one of the most important things they are doing, you are relationship building and not in a process
    a. Are they calling you, are they setting up meetings for you, dog in eat, being proactive, doing work
    b. Show me your pipeline, tell me about your team, give me your references
    14. Entrepreneurs don't ask enough questions; about how they make their decisions, etc
    15. VCs: Ideas are a dime a dozen, they want to see some type of team and leadership; looking for a magnet for talent
    16. Do not exaggerate on background, on opportunity, etc
    17. We grade a company, seven factors, network effects, competition, etc, quality of team, good inter personal communication, ability to recruit, pain point, issues, unique technology
    18. What is it about you that gives you an edge against competition, your history, your network, etc
    19. Sequence it, create a competitive dynamic, use a sequence of events, had John Doehr
    20. Find ways to give them more data and more information
    21. Is this a fit for you and are you interested? Desperation sells poorly, have options
    22. Fund raise 6 months before you need it, takes 3-4 months
    23. Be ready to give 3 customers, have the customers prepped, etc.
    24. Option Pool: Term sheet with 20% option pool, then they are saying they need a CEO
    25. Jeff Bussgang – how do you figure out who the really compelling entrepreneurs without a track record,
    26. Down the road, they will due do dilligence on their technology, market size analysis, call team, three customers read as references
    27. If you only have one VC in your angel round who does follow on investing, you are giving them huge leverage
    28. Create 0 or two or more, if only one and you really trust follow on will be there, one thing you can do is prenegotiate price and milestones.
    29. Pre money is worthless, post money is worthless, option pool is meaningless. The important numbers is the "Promote"; your percent ownership after post money valuation; end of day, 10 million post money valuation, 10% ownership. As an entrepreneur
    30. Convertible Note w/o Cap, typically with a discount:
    ○ When you're not sure about valuation
    ○ Raise 1 million today, 20% discount to convert in the next round
    ○ Raise 1 million at a 10 million, they get at a 800k
    31. Understand Control: Voting thresholds, blocks, etc.
    32. Document Milestones, agree what you will achieve with that capital with your investor
    33. You're always raising capital as an investor, as soon as you're done,
    34. Summary: Control the process; Ask questions and demand transparency; Get Warm Intros; Think of it as a Process; Get different options
    35. Expected to Last 12-18 months for seed, 18-24 for the rest

  4. Is the deck available?  The presentation was great, but the slides weren't visible very much.

  5. What about investing outside the US? Do You know if Jeff Bussgang is making such a investments? What are the main differences between investment inside US and outside?

  6. Hi,
    I'm not 100% familiar with the funding processes in general, and would like to ask what do they mean by "having the term sheet" (54:00 ->) What is the importance, in here, of having the term sheet whilst negotiating with the VCs? I know it is a necessity but would like to have some knowledge on the matter.
    Thx!

  7. Thanks for reading back the questions as we can't hear them on the audio feed – some great questions, love this series!

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