Sarah Kunst on Fundraising: Cleo Capital Insights

Navigating the Current Fundraising Landscape with Cleo Capital’s Sarah Kunst

During our recent Early Stage event, TechCrunch had the opportunity to engage in a virtual discussion with Sarah Kunst, the managing director of Cleo Capital. The conversation centered around the practical aspects of preparing to secure funding within the fast-paced environment of today’s startup world.

Cleo Capital focuses its investments on early-stage ventures, providing between $500,000 and $1 million in funding. Their investment portfolio boasts successful companies like mmhmm, Cameo, and StyleSeat.

Key Insights from the Discussion

Below are selected highlights from the discussion, focusing on advice provided by Kunst. The themes were largely driven by questions from the event attendees. We will cover topics such as crafting a compelling pitch deck, the timing of incorporation, strategies for finding a co-founder, and the point at which a startup may outgrow accelerator programs.

All quotes have been lightly edited to enhance clarity and readability.

Resources Mentioned by Sarah Kunst

As promised, here is a list of resources that Kunst referenced during the event:

• Guy Kawasaki’s 10 Slide Deck: A framework for building effective presentations.
• Cleo Capital Pitching Information: Details on how to submit a pitch to Cleo Capital.
• Stripe Atlas: A service designed to help startups incorporate quickly and easily.
• CooleyGo: Legal resources tailored for startups.
• Y Combinator’s Documents Hub: A collection of legal and business documents for founders.
• LunchClub: A platform for connecting with industry professionals, including an invite code provided by Kunst.
• Sarah Kunst’s Twitter: A platform for following her insights and updates.

Kunst emphasized the importance of a well-structured pitch deck, noting that it should clearly articulate the problem a startup is solving and the proposed solution. She also discussed the benefits of incorporating early to protect intellectual property.

Finding the right co-founder was another key topic. Kunst advised looking for someone with complementary skills and a shared vision. She also addressed the question of when a startup becomes too mature for the benefits of an accelerator program, suggesting that companies with significant traction may be better served focusing on scaling independently.

Crafting a Compelling Pitch Deck

The following guidance is straightforward and designed to help you circumvent frequently encountered errors. Every piece of advice offered regarding what not to do is based on actual submissions the speaker has received.

Avoid becoming another discarded presentation. Heed the recommendations provided.

Key Considerations for Pitch Deck Success

A successful pitch deck requires careful attention to detail and a clear understanding of what resonates with investors. Many presentations fail simply because they replicate mistakes that have been repeatedly observed.

Avoiding Common Pitch Deck Mistakes

• Irrelevant Content: Ensure all information directly supports your business proposition.
• Poor Formatting: Maintain a clean, easily readable layout.
• Lack of Clarity: Articulate your value proposition concisely and effectively.

By focusing on these core principles, you significantly increase the likelihood of capturing and maintaining investor interest. Remember, the goal is to present a persuasive and memorable case for your venture.

Prioritize delivering a presentation that demonstrates thorough preparation and a deep understanding of your target audience. This will differentiate your pitch and improve your chances of success.

Locating a Suitable Co-founder

The significance of interpersonal relationships is highlighted, even within the technology and startup sectors. Your existing network and the individuals you are connected to can be just as crucial as your technical expertise. As Kunst suggests, possessing a strong skillset and network will prove beneficial when seeking funding.

Consequently, the search for a co-founder can be viewed as preparatory practice for the subsequent task of securing investment capital.

Leveraging Existing Connections

Building a strong network is paramount. It’s not solely about technical prowess; the people you know can open doors. This principle extends beyond initial formation and into the crucial phase of fundraising.

The Co-founder Search as Preparation

The process of identifying and vetting a co-founder serves as valuable experience. It hones skills directly applicable to attracting investors and building relationships with stakeholders. Consider it a practical exercise in relationship building and persuasion.

Incorporating Your Startup: A Key Consideration

The following information is presented due to a recurring theme observed in discussions with founders. A central takeaway consistently emerges: if seeking investment, establishing a Delaware C-Corporation is generally the preferred structure.

The Importance of Delaware C-Corps for Funding

Throughout numerous interactions, the core advice remains consistent. For startups anticipating external funding, forming a Delaware C-Corporation is often essential.

Should achieving this structure necessitate significant effort, proactive steps should be taken immediately. Delaying this process can potentially hinder future fundraising opportunities.

Understanding the Implications

The preference for Delaware C-Corps isn't arbitrary. It stems from familiarity and legal precedent within the venture capital ecosystem.

• Investor Preference: Most investors are accustomed to dealing with Delaware C-Corps.
• Legal Clarity: Delaware corporate law is well-established and predictable.
• Flexibility: The structure allows for various equity arrangements.

Therefore, prioritizing the formation of a Delaware C-Corporation is a crucial step for startups with ambitions for growth through investment. Addressing any obstacles to this formation should be a high priority.

Determining Accelerator Application Appropriateness: Size Considerations

During a discussion, Kunst offered a compelling perspective, illustrated with a dating analogy, regarding the efficiency of applying to numerous accelerators. However, the most impactful takeaway from his commentary centers around a single, direct question.

Is funding a critical necessity for your venture? This concise inquiry, in Kunst’s view, effectively bypasses extraneous factors and provides a clear assessment of whether an accelerator program is the right fit.

The simplicity of Do you need the money? offers an immediate and honest answer.

A complete transcript of the Otter recording is available here.

Further exploration of all sessions from Early Stage 2021 is encouraged.