VC Investment Competition: Before We Take on the Grand Finals
Thinking back to a week ago about MANGO CAPITAL's (I love our team name!) experiences from winning the regional round of the annual VC Investment Competition*, a few highlights stand out. Highlights that I will be sure to bring into the finals next month.
Tailor your interaction to the maturity of the startup and always show empathy.Focus the questions depending on the stage of the startup and entrepreneur. We were given very early stage companies and so after meeting the first startup, where we were too focused on 'getting the numbers', we decided to change our tone to instead get at what the founders believed was their company's 'secret sauce'. From there, we then progressed incrementally to understand how the founder was thinking about /addressing some of the challenges we saw.
- Know how to summarise your term sheet into 3-5 key items in simple, clear English. We only realised at the negotiation table that the entrepreneurs were not given our term sheets and so we were forced to draw out the key points on the spot and to translate VC jargon into an understandable language for the entrepreneur. If you cannot explain what 'preferred shares' or 'liquidation preference' means to an early stage entrepreneur in a few sentences, you better work on it.
- Be clear and strategic about how the fund is a great fit for the entrepreneur. Founders are always thinking 'what can this fund give me that the others cannot?". Be sure to answer that question by sharing relevant connections and experiences. What worked really well for us was also that we successfully enlarged the founder's vision of where we believed the company could go by describing some of our fund's future plans for his company. 'Dreaming together' was an excellent way to get the founder excited about partnering with us.
- Understand the constraints of the fund. We had a fund that was 70% invested and one year away to being closed. We had to be able to substantiate how we thought we would exit within such a short time or justify why we should roll-over. Teams were marked down if they did not take those limitations into consideration.
- Awesome VC teams can be girls too!
In a male-dominated world, MANGO's team of four girls and one guy sure proved that :)
*The VCIC is the world’s largest venture capital competition with over 70 universities competing. VCIC is the only place where students get to be VCs for the day. During the competition, students assess REAL startups, develop due diligence questions and term sheets, negotiate with the founders, and present the proposed deals to an 'Investment Committee'. It is organised by the University of North Carolina's Kenan-Flagler Business School. 2017 finals will be held on 7-8 April @ UNC Chapel Hill.
Author: Sarah Wong, MBA'17J
Find out more about Sarah and her experience in insurtech and health tech at https://linkedin.com/in/swongx