Who’s Australia’s most interesting VC company? Anyway, thought some of you might find this informative. From Sequoia, who have a list of what they look for when funding startups:
Sustainable CompaniesStart-ups with these characteristics often foretells the success of a business and the likelihood of it becoming a sustainable, enduring company. We like to partner with companies that have:
Clarity of PurposeSummarize the company’s business on the back of a business card.
Large MarketsAddress existing markets poised for rapid growth or change. A market on the path to a $1B potential allows for error and time for real margins to develop.
Rich CustomersTarget customers who will move fast and pay a premium for a unique offering.
FocusCustomers will only buy a simple product with a singular value proposition.
Pain KillersPick the one thing that is of burning importance to the customer then delight them with a compelling solution.
Think DifferentlyConstantly challenge conventional wisdom. Take the contrarian route. Create novel solutions. Outwit the competition.
Team DNAA company’s DNA is set in the first 90 days. All team members are the smartest or most clever in their domain. “A” level founders attract an “A” level team.
AgilityStealth and speed will usually help beat-out large companies.
FrugalityFocus spending on what’s critical. Spend only on the priorities and maximize profitability.
InfernoStart with only a little money. It forces discipline and focus. A huge market with customers yearning for a product developed by great engineers requires very little firepower.
FormattingWe like business plans that present a lot of information in as few words as possible. The following format, within 15-20 slides, is all that’s needed:
- Define the company/business in a single declarative sentence.
- Describe the pain of the customer (or the customer’s customer).
- Outline how the customer addresses the issue today.
- Demonstrate your company’s value proposition to make the customer’s life better.
- Show where your product physically sits.
- Provide use cases.
- Set-up the historical evolution of your category.
- Define recent trends that make your solution possible.
- Identify/profile the customer you cater to.
- Calculate the TAM (top down), SAM (bottoms up) and SOM.
- List competitors
- List competitive advantages
- Product line-up (form factor, functionality, features, architecture, intellectual property).
- Development roadmap.
- Revenue model
- Average account size and/or lifetime value
- Sales & distribution model
- Customer/pipeline list
- Founders & Management
- Board of Directors/Board of Advisors
- Balance sheet
- Cash flow
- Cap table
- The deal
From Sequoia Capital – who funded lots of interesting companies.
We like being the very first investors. In recent years companies such as YouTube, Plaxo, Cast Iron, and Mark Logic, have spent their formative months working in our office. Long ago Electronic Arts and PMC Sierra both developed their original business as our guests. We do not have an E.I.R. program. Ours is just for E.I.A.s – Entrepreneurs in Action.
And who said size doesn’t matter?
We want to be contributors to companies that have the chance to become very significant. This requires us to cut cloth according to circumstances because companies require different amounts of capital at various stages. Bear in mind that the very best seed and early stage companies evolve into great growth companies. As a result, Sequoia Capital has had the good fortune to be an investor in a long list of growth stage companies. Here are some very general guidelines about the amounts we invest at different stages.
Seed Stage $100K – $1M Early Stage $1M – $10M Growth Stage $10M – $50M
Other bits of info:
As the “Entrepreneurs Behind the Entrepreneurs”, Sequoia Capital has had the privilege of being the first investor and business partner in companies that make-up 10% of the NASDAQ’s value. Here are some of the people who have chosen us as partners:Steve Jobs, Apple ComputerLarry Ellison, OracleBob Swanson, Linear TechnologySandy Lerner and Len Bozack, Cisco SystemsJerry Yang and David Filo, Yahoo!Jen-Hsun Huang, NVIDIADan Warmenhoven, Network ApplianceMichael Marks, FlextronicsLarry Page and Sergey Brin, GoogleChad Hurley and Steve Chen, YouTube
Sic friatur crustum dulce (that’s the way the cookie crumbles). Have a good weekend.