In my previous posts in this series I outlined a few personal insights on searching for startups; now I feel ready to jump to the other side of the table, and discuss about prepping up for pitching to an investor.

Feeling ready?

Before starting your hunt for capital, you should answer a fundamental question: “Does my business really require VC investment?”. This seems trivial, and if you are reading this the answer is probably yes, but do not take it for granted. If you do not feel ready to:

  • Build something that will grow beyond yourself
  • Ride the emotional rollercoaster of having to interact with external people and investors

then I strongly advise against looking for VC.

In all other cases, before trying to reach an investor, you should get ready.

Ready for what?

You must be ready to shoot your best shot. And the best shot includes you and your team (aim for the best), your project and the material you prepare to present it to investors. I am not going to discuss the “you” and “your project” part of this (I might write a separate post for this), but be aware that the typical investor wants to invest in a great team and in a great product/opportunity.

Let me jump for now to the materials part. I personally have three items I love to see and discuss. If you don’t have them, I’ll ask for them, so have them always at hand.

  • Pitch
    • There are countless resources about preparing a pitch. Use them. You should take a look at Guy Kawasaki, Dave McClure and the other excellent investors out there who have produced tons of great advice.
    • Prepare the speech. Try it a few times until you are not embarrassed of yourself. Try it with your team members, your parents, your friends. Always be pitching, remember?
    • Do not discount the pitch as a pointless exercise. On the contrary, it is the most important piece of documentation and the starting point of all your reasoning. (I stand by Kawasaki’s approach of preparing the pitch first and, if needed, the business plan starting from it).
    • Let me stress a point: you will never think enough about your customer, your market and about your marketing strategy. Do not focus all your attention on the product.
    • Show & be ready to discuss your relevant metrics.
  • Roadmap
    • Show that you know what you’ll be doing in the short term, in particular regarding customer & product development efforts.
    • Set deadlines for yourself and for your team.
    • If you can, put together roadmap & funding needed for the major milestones, in order to pave your way to a tranche-based investment. This can be a good or a bad idea, it depends: YMMV.
    • Agile / Lean methods can help setting the right priorities here.
  • P&L
    • Inevitably, the investor will ask you for a P&L and/or a cash-flow statement. Do not tell the investor it is completely bogus (he’ll know it is) and do not, EVER, say anything about it being “conservative”.
    • Make it monthly with a 12 to 18 months forecast. Anything beyond that can be grouped by quarters or years. Get to the classic 3 to 5 years forecast in this way.
    • It is needed for showing your expectations of the future of the company and the market.
    • Metrics, metrics, metrics!! Clearly show & know your key drivers! (e.g. CaC, conversions, LTV, retention, etc..).
    • As a matter of fact, this is mostly about educated hypotheses, not just about raw numbers. I sometimes see plans where the HPs for conversion rates or CaCs are completely out of this world. The Internet is full of references: even if you have never spent a cent on advertising, take the time to check keyword prices on AdWords and scout for articles about key metrics for established companies and markets.
    • Take a look at the financials of listed companies (mostly in the USA, but there are exceptions). Understand that an 85% EBITDA in year three of a “conservative” plan just means you probably have no idea what you are talking about.
    • Do not pay a consultant for writing your financial forecast. If you have to, pay one to check that your plan contains no serious mistakes. If you feel you have no competence for doing this exercise, you probably lack a skill in your team.

Take your time and learn your numbers.

Good luck with that investor meeting!

Every now and then, I pick up one of Peter Drucker’s books, and I read a few passages looking for inspiration. They are so brilliantly written that I could cry.

This passage from “Innovation and Entrepreneurship” just caught my attention. And I cannot refrain from sharing it:

Entrepreneurship is ‘risky’ mainly because so few of the so-called entrepreneurs know what they are doing. They lack the methodology. They violate elementary and well-known rules. This is particularly true of high-tech entrepreneurs. (…) (Entrepreneurship) needs to be systematic. It needs to be managed. Above all, it needs to be based on purposeful innovation.

Dramatic, but he does make an interesting point there.

[Read here my previous post in this series].

This post is about looking for the right investor. If you are an entrepreneur fund-raising for the first time, you are probably thinking that I am a fool, because “all money is good money”. In this case, you should review your fund-raising priorities, for at least two reasons:

  1. Do not waste time with investors that will clearly NOT invest in your project;
  2. Do not go after investors you DO NOT want to have as your shareholders.

Looking for gold nuggets

As an entrepreneur, you should be aware that not all investors will invest in every possibile project, as promising as it may look. Scrupulous investors tend to decide well in advance which markets they will be after*. In addition, VC funds (as well as experienced angels) will probably have set in advance a few rules of thumb regarding their type of intervention, e.g.

  • How many investments to close with the current fund (rule of thumb: fewer than 10 for each general partner; and the later the investment stage, the lower is the number).
  • How much money to allocate for the average investment (angel money vs seed money vs early stage money).
  • The type of investment (equity in either minority or majority proportion, convertible debt, and so on..).

Keep in mind these points when you start out your fund-raising efforts.

How to look for the perfect investor?

Once again, Mark Suster has just released a great post on this topic: read his post, then come back, if you please.

As a rule of thumb, please remember that the investor will choose you, not the other way around. You can, however, have a say in this process, by attracting attention and getting in touch with the investors you DO want in you captable. Here a few points:

  • No matter what, PITCH. TO. EVERYONE. The more you pitch your startup, the more feedback you receive and the better you get at pitching. For those fearful of idea-theft, pitching does not mean unveiling all your secret ingredients for success.
  • Do your due diligence for each single investor you meet: check its website and the VC partners background (use AngelList, Linkedin,, VC news sites, Try to understand whether one of the partners has a background in your market and try to meet him. Even in the negative case of a resounding “no”, you will get much valuable feedback from the meeting.
    • Remember to check the rest of the team, too. You will have to meet and convince associates and directors who will work on your investment case.
    • Make sure the fund is active and investing.
    • Check the fund investment history. Look for competitors or potential partners for your project. Be ready to discuss and be challenged.
    • Try to meet current or former CEOs backed by the fund. They tend to be open to interesting chats with other entrepreneurs. In case they like your project, they may even provide a good referral (see my previous post about VCs deal flow). You want to understand how to approach the meeting: ask them for the three most important aspects you will have to pinpoint when meeting the VC.
  • As Mark Suster says in his post, look for the right “value addition” from the investor; this will usually come down to:
    • Money
    • Pressure to execute
    • Support in fundraising for further rounds
    • Introductions to prospects and to job candidates
    • Ability to work with board of directors and with companies

As with everything related to VC and fund-raising, internet is full of useful posts. I’ve collected a brief selection here.

(*) But do not completely rule out gut-investing! ;-)

Read my previous post in the series

Difficult to catch

This post could have remained in my “mental repository for drafts” for a long time, but thanks to Mark Suster and his great post on proprietary dealflow for early stage investors and to David Teten for his work on deal flow origination I finally decided to take it out of the drawer. Last, but not least, thanks to Stefano Bernardi for his series of posts (in Italian) on being an angel investor. You should check all of them out for a wider and more complete view on the subject.

Scouting for entrepreneurial projects and startups is part art and part science. The balance between the two is quite variable, but it definitely means:

  • being knowledgeable,
  • having the ability to network (I suck at this one), but also
  • having a highly quantitative spirit.

There are several channels a scout can tap into to get to deal flow, and I’d like to outline a few ideas about the main ones. For each single investor relative weight might vary (but not that much), while many have strong opinions about specific sources of deal flow (e.g. Mark Suster will not attend a Demo Day). Here we go:

  1. Personal network: probably unsurprisingly, personal network is possibly the best source for quality projects, and also the most difficult to build. From this source you will receive two types of proposal: business ideas from direct connections, and business intros from direct connections. A scout should build&train carefully his network, in particular if he has previous experience in the industry, as this will highly influence the quality of projects he receives. In doing so, the scout should be open as to what is of his interest, and should keep his network up-to-date on what he is doing.

  2. Personal standing and visibility: this source of dealflow is just for the few. By visibility I don’t mean being featured on Forbes, but I do mean being a recognized thought leader in a certain segment (e.g. on entrepreneurship, SaaS, big data or on given technologies). Questions and ideas get to those who are thought to be able to answer/react to them.

  3. Primary Research: this one needs real action. In short: it means getting out of the office. Attending events, reaching out to people, following startup communities and “showcase” sites such as or to see what’s trending. Mark Suster has a great point on talking to professionals (such as lawyers) who are known to work with early stage enterprises. Scouting for great projects is hard work.

  4. Wait in front of email client: don’t. At the seed stage, I rarely see great projects getting directly to my inbox (though it’s probably my fault, in primis not being anything like my point #2 above).

If you are an entrepreneur planning to meeting investors, the bullets above should be quite relevant: attend events where you know investors will attend, tap into their connections, use your own network, but most of all create a great startup that everybody would like to invest in (e.g. by bootstrapping or getting FF&F money). Traction will attract investors to your project, while the opposite in not necessarily true. Do not, please do not start your fundraising activity by sending e-mails to [email protected]

In the next post, I will write about getting to the right investor.

Looking for great projectsInternet is full of useful information for entrepreneurs and investors alike. Nonetheless, I still see a lot of questions floating around on how an entrepreneur should contact and interact with an investor. It sounds enough for me to add my 2 cents on the internet and give birth to this brief series of posts on the interaction between venture scouts and entrepreneurs.

As I feel I haven’t really introduced myself here, in this initial post I will just set some perspective about who the hell am I and why should I have any authority on the venture scouting subject.

I am a computer engineer by education, which means I’ve always had a sweet tooth about technology. After a few years in consulting and corporate finance, I joined dPixel as a venture capital associate in 2011. Since then, I have been on the front line reading pitches, BPs and (guess!) meeting (aspiring) entrepreneurs. Between dPixel’s own deal flow and a few initiatives we have been involved (one above others: Telecom Italia’s Working Capital), I’ve had between my hands no less than a couple of thousand startup ideas.

The Barcamper Diaries

Enter the Barcamper, the latest scouting initiative by dPixel: a “mobile scouting unit” (i.e. an actual caravan) where entrepreneurs can come and pitch their ideas. Live. No prep, no pre-screening. This program has turbo-charged our ability to meet face-to-face with entrepreneurs (more than a thousand met since summer 2012). And it is an incredible gym for thinking on the spot and providing useful feedback. Hopefully, for the pitcher, it represents also a formative experience. Wanna come on board? Keep your eyes on this page(Italy only, for the moment).

In all of this, I managed to close a few investments in great teams, and I have the luck of collaborating with a few very good (and quite brave) entrepreneurs as board member, board observer or advisor. Not to speak about dPixel’s awesome team. Limitless opportunities to learn.

Yeah mate, why should all of this matter?

Hopefully it should, as I have been thinking for a while about the venture scouting process, and about the interaction between the scout and the entrepreneur. My goal is to create a short series of posts on the subject of setting the right expectations between who is pitching and who is receiving the pitch (at the minimum, all of this is going to be relevant when pitching a project to me!).

In the next post, I’ll talk a little bit about the venture scouting approach.

May the series begin. Have fun!

Rails girls This past weekend I’ve been involved in RailsGirls Milan, a two days workshop where girls can learn to code with Ruby on Rails (and make friends and party a bit!). It was a great experience meeting >60 enthusiast women willing to learn to code (and an honour to be the coach coordinator). The event was organized by the great team of Girls in Tech Italy, in particular kudos to Gaia and Anna - they even managed to involve two Github developers (who flew in directly from Silicon Valley: thank you Rachel and Mu-An!). Finally, I have to thank the team of coaches: they were simply great. I am already looking forward to working with them again.

We need more events like this one, where real, hands-on experience meets great enthusiasm and passion.

Maker Faire Europe

This is the first time that the Maker Faire comes to Europe, and we are fortunate enough to host it in Rome, from the 3rd to the 6th of October. This is going to be a great opportunity to showcase both Europe’s and Italy’s best and greatest technologists, hobbyists and professional makers. More than 150 exhibitors have already signed up to showcase their projects… and there will be a great 3D Printing Exhibition.

dPixel will be present to showcase the work we have been doing during last Spring and Summer, travelling around Italy with the Barcamper: on the 4th of October the Maker Faire will host a Techgarage with the best projects we met. We are quite proud of the teams, so if you are around Rome during that week, do not miss out the event.

NicoMy name's Niccolò Sanarico.

I am an Oxford MBA and a software engineer with a passion for innovation and startups. Still playing around with code. I currently work with Primomiglio SGR SpA, a venture capital firm based in Italy, previously in dpixel. Everything you can find here is my opinion alone. You can follow me on Twitter. Find more about me on Linkedin.