TechCrunch virtually sat down with venture capitalist and Cleo Capital managing director Sarah Kunst at our latest Early Stage event last week. Kunst joined us to chat about preparing for raising capital in today’s frenetic fundraising environment, digging into the gritty mechanics for the audience.
Cleo Capital invests $500,000 to $1 million into early-stage startups, with portfolio companies that include mmhmm, Cameo and StyleSeat, among others.
Next, a few favorite excerpts from the chat, starting with Kunst’s notes on how to make a killer pitch deck. Questions from the audience helped direct the conversation, so I’ve tried to select themes that came from y’all. We’ll also explore advice regarding incorporation, how to find a co-founder and when startups are too large to join an accelerator. (Quotes lightly edited for clarity.)
Before we get into key points from the conversation, here’s a rundown of links that Kunst discussed that I promised to include in this post:
- Guy Kawasaki’s 10 slide deck
- Where to pitch Cleo Capital
- Stripe Atlas
- CooleyGo
- Y Combinator’s documents hub
- LunchClub with Kunst’s invite code attached
- Kunst’s Twitter account
How to make a great pitch deck
Here’s the thing about decks: Don’t be ugly. Don’t be ugly. Don’t be ugly.
The good news is it is free and easy to make a non-ugly deck. It is not 1999. You do not have to use clip art. You can go to Canva. You can go to plenty of websites that give you very basic, very cheap — if not free — very simple decks. Just use one. It doesn’t have to change the world. But it can’t be ugly. No Comic Sans font, unless you’re a deeply ironic meme-driven company. And even then, the odds that that joke will land are infinitesimal. So, just don’t have an ugly deck.
What should be in your deck? Again, this will be a link that we’ll have later, but I love for really early-stage companies to use Guy Kawasaki’s 10-slide pitch-deck format. Do not send me something that is a video. Do not send me something that is a one-pager. Do not send me something that’s 100-pager. [I want] 10 slides. Don’t make me download anything. Attached as a PDF, use DocSend.
Make it really, really, really simple and really easy to read and digest who you are, what the problem is [you are tackling], what the solution is, why you’re the right team to do it, what your traction is, how much you’re raising, [and] maybe a product slide. That’s it. That’s all I need to know. I’ll take the meeting or I won’t. And I say that on behalf of every other VC and angel in the world.
This advice is clear and should help you avoid some common pitfalls. Everything that she said not to do, I promise she’s had sent to her. Don’t be the next thing that gets deleted. Do what she said.
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How to find a co-founder
Look back through everybody you know. This is sort of the same [as] when we get to the friends and family part of fundraising. Really go back and say, Who do I know? Not, Who are my best friends, or who was at my wedding. Take a much broader look. And think about the intern you always sat next to who was an engineer — what are they up to now? Your college roommate’s boyfriend or girlfriend who was a great compsci major. What are they doing now? Tweet about it, reach out on social media, reach out on LinkedIn. I’m obsessed with LinkedIn. If you keep your network up to date, you can literally go search who do you know who’s a computer scientist? First-degree, second-degree connections [are great]. Then just reach out to people and say, Hey, we’d love to chat with you.
This comment underscores the power of human connection even in the tech and startup world; who you know may matter as much as what you know. And as Kunst hints early in the quote, the same skillset and network will pay dividends when you need to raise money. In that sense, the process of finding a co-founder is a warmup for the later work of raising capital.
How to incorporate your startup
Be a C Corp, be a C Corp, be a C Corp. If I could get that tattooed on my forehead! I won’t, because that’d be terrible. But I would for you guys so that you know to be a C Corp.
You can’t be an LLC. Why can’t you be an LLC? Because LLCs have flow-through tax benefits that every single venture fund investor, myself included, legally cannot invest in. Because then the people who invest in us get tax bills about your company, even though it’s five times removed. And they cannot do that. We’ve promised them [in that] 100-page legal document that we would not do that. Sometimes I’m like, I don’t like x kinds of companies because I’m in a bad mood. When a VC says they don’t like an LLC, they literally mean they are definitely allergic to peanuts, and you are a bowl of nuts.
Don’t do it. Don’t do it. Be a Delaware C Corp. You can use Stripe Atlas, you can use Clerky. There’s tons and tons of great documents around this. But be a Delaware C Corp. I just saved you so much time, energy and stress. You’re welcome.
I included this response here because it yielded some interesting conversation; but the entire back and forth with the audience really boiled down to a single point: Be a Delaware C if you want to raise money, and if you have to move mountains to pull that off, you’d best get tugging.
How big is too big to apply to an accelerator?
Let’s play my favorite game called open your banking app. How much money is in your bank account? Do you need $100,000? That’s, on average, what accelerators give you. If you need $100,000 and you get into an accelerator, you should take it. Also did you get into an accelerator?
Kunst’s answer went on from here into an analogy about dating, and how to save time applying to multiple accelerators, but this is my favorite bit from the riff. Do you need the money? That is just about the best answer to this question I’ve ever heard, as it cuts through all the bullshit and noise. Do you need the money? There you go, question answered.
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