Three Things VC Look For[in 10 Minutes]

Steph PalmeriSoftTech VC @stephpalmeri

Aging 2.0May 23rd, 2013IDEO SF

Proprietary & Confidential

One of Silicon Valley’s most active Consumer Internet early stage investors, and one of the first “micro-VC” funds

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Startups Funded

Follow-On $ (60+ Companies)

Exit Considerations (28 Companies)

Funds (I, II, & III)

STVC III Fund Size$55M140+

$1.25B+$1.00B+

Our Three Asses Rule

“3 Ds”– Development: Build, Scale, Fix– Distribution: Market, Sell, Lead – Design: UI/UX

How Many Founders?– ≥ 1 and ≤ 4– Co-founders join pre-funding,

afterwards they are employees– Equity is not always equally

distributed

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And that means…– Founder’s deep passion

– “Aspirin, not Vitamin”

– Initial customer development/validation

– Understanding the user funnel/economics

– Monetization potential

– Differentiation

– Metrics

– Ability to scale

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Big Enough Stress Test:– Greater than $1B market

opportunity– Company, not feature– How does your startup get to

$100M in revenue?• 10% of $1B market v. 50% of

$200M (unrealistic!)

– By raising capital, you commit to match return expectations

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3 AssesTeam +

Product + Market

Portfolio Fit & Construction

Follow-on Potential Syndicate

RisksCompetition

Diversification

Portfolio Conflict

AccessGeographic

Exposure

Hiring Issues

Optionality Timing

Existing Pipeline

Tip of the Iceberg

Everything* Else

Trusted Referrals Users Traction

Path to Monetization

Returns

* And lots of other sh%t too