Fundraising Like a VC: Insights from Norwest's Lisa Wu

Founders as VCs: Insights from TechCrunch Early Stage

During last week’s TechCrunch Early Stage: Marketing and Fundraising event, Lisa Wu of Norwest Venture Partners presented a compelling perspective. She detailed how startup founders can adopt a venture capitalist mindset throughout their operations.

The similarities between the roles of successful investors and founders are striking. Both must be able to prioritize effectively amidst distractions, thoroughly assess opportunities, and persuasively communicate their vision.

Key Parallels Between Founders and VCs

Wu, whose investment portfolio includes companies like Plaid, Calm, and Ritual, illustrated her points with real-world examples and interactive exercises.

• Focus Through Noise: Both founders and VCs must identify crucial signals from the constant stream of information.
• Due Diligence: A rigorous evaluation process is essential for both parties, whether assessing a potential investment or a new market opportunity.
• Conviction in Pitching: The ability to articulate a compelling narrative is vital for securing funding or gaining customer traction.

One memorable technique Wu shared was the “eyebrow test,” a quick method for gauging the immediate reaction to an idea or proposal. This highlights the importance of intuitive assessment alongside data-driven analysis.

The session was noted for its practical advice and engaging delivery, offering attendees actionable strategies for improving their business acumen.

Pitch Deck vs. Concise Pitch Summary

Founders seeking funding frequently utilize pitch decks as a visual narrative of their venture – detailing its inception, the potential market size, and key performance indicators. Despite its effectiveness, the sheer volume of pitch decks received, particularly during periods of high investment activity, can make differentiation challenging.

Recently, insights were shared regarding reactions to unsolicited pitch decks and suggestions for founders to consider alternative approaches.

While direct messaging with a pitch deck is sometimes welcomed, it’s been suggested that this method doesn't always allow founders to fully control their narrative.

This observation prompted discussion about the fundamental necessity of pitch decks. The current, highly competitive venture capital landscape has influenced preferences, leading to an increased interest in what could be likened to a private beta phase, but applied to fundraising efforts.

Key Takeaways & Alternative Strategies

• Avoid submitting unsolicited pitch decks; instead, explore the use of video pitches.
• Refine your language by eliminating eleven common words and phrases from your venture capital pitch.
• Examine the successful Series A pitch deck of Retail Zipline, which resonated with Emergence Capital.

The evolving dynamics of fundraising necessitate a reevaluation of traditional methods.

Founders should prioritize strategies that maximize their storytelling capabilities and capture the attention of potential investors.

Navigating Discrepant Investor Guidance

Founders often face a challenge when investors offer opposing recommendations – one suggesting a particular course of action while another advocates for its opposite. According to Wu, this situation, while potentially stressful, ultimately tests a quality she prioritizes in all potential investments: sound judgment.

Securing investment from a compatible source isn't always straightforward, particularly given the lack of diversity among many investors. A participant in a recent discussion shared a scenario where their startup is nearing the end of its funding runway.

An investor with a concerning history related to the #metoo movement has offered financial support. The founder directly inquired with Wu regarding the ethical implications of accepting these funds.

Key Questions Raised

• In an environment where non-disclosure agreements are common, can increased transparency assist founders in recognizing potential conflicts of interest?
• Is the confidentiality traditionally associated with Y Combinator (YC) absolute?

The complete discussion transcript is available for review here.

Successfully managing conflicting advice requires founders to carefully evaluate each perspective. It’s crucial to weigh the potential benefits against the associated risks.

Ultimately, the decision rests on the founder’s ability to discern the most appropriate path forward for their company. This demonstrates a critical skill for long-term success.