Clinching series A pear

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Clinching the Series A

Mar Hershenson, Managing Partner Pear

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You’ve just raised your Seed Round

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Raising an A round is much harder

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Completely Different Landscape

Seed Series A

4

100s angels, seed funds ~20 target A funds

Quick, simple

Hope

Slow, not as simple

Data

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More Funds in Seed

NumberofAc,veSeedFunds

2010 2011 2012 2013 2014 2015

236

150

112

654233

Source:CBInsightshttps://www.cbinsights.com/blog/past-present-future-micro-vc/

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InvestorsRegisteredonAngelList

502,500

18,000

30,057

More Angels

Source:Techcrunch,HarvardBusinessReview,AngelList

2/2010 12/2011 6/2013 11/2016

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Seed Rounds with Follow-on As

0%

10%

20%

30%

40%

0

750

1,500

2,250

3,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

Total Seed Deals Series A Follow-on % of Follow-on

Source:Pitchbook,Q22016VCReport

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.. but people do climb Everest

1- Figure out where you are going

2- Make a plan, execute, iterate

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Figure out where you are going

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What company will I be at Series A?

Revenue AudienceTechnology Founder

Our Focus

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Word on the Street

E-commerce

$500k-1M MRR 20% m-o-m growth

SaaS

$100k-200k MRR 100% y-o-y growth

Consumer

50k DAUs 25% m-o-m growth

Source:Equityzenblog

Marketplace

$500k-1M GMV 25% m-o-m growth

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Little Single Metric CorrelationSaaS MRR-Valuation

0

45

90

135

180

20 35 50 65 80

MRR

($M

)

Post Money Valuation ($M)Source: Thomas Tungunz, Redpoint

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Growth is not Enough

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VCs question future success

How do I know if revenue will reach $10M? $100M?

Are sales scalable, profitable?

How do I know if that enterprise deal going to

expand? Repeatable?

How do I know if it will reach 10M

active users? 100M? Will the

CAC scale?

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VCs look for predictors of future success

Engagement

Daily Active Users Product Quality

Activities per User

Retention

New, churned and resurrected users/accounts

User Quick Ratio

Unit economics/Margin

Life Time Value Customer Acquisition Cost

Cost of sales

Growth/Scale

Organic/Inorganic growth Recurring Revenue

Cash burn

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Growth Quality (Quick Ratio – Added MRR/lost MRR)

Source:DiligenceatSocialCapitalPart1.Medium

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Cohort Analysis - RetentionCohort

Size0 1 2 3 4 5 6 7 8 9

110 Jan 100% 33% 21% 16% 14% 13% 12% 12% 10% 12%

186 Feb 100% 31% 21% 14% 13% 12% 11% 11% 9%

184 Mar 100% 29% 18% 16% 14% 12% 10% 9%

225 Apr 100% 35% 29% 22% 20% 17% 15%

231 May 100% 42% 37% 34% 24% 21%

209 June 100% 44% 37% 33% 25%

240 Jul 100% 42% 38% 31%

271 Aug 100% 45% 40%

248 Sep 100% 51%

243 Oct 100%

2,147 Total 100% 39% 30% 24% 18% 15% 12% 11% 10% 12%

Source:DiligenceatSocialCapitalPart2.Medium

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Super-Fans(Completed Key Actions/Week/Active User)

0

13

25

38

50

1 2 3 4 >5

Completed Key Actions

% A

ctiv

e U

sers

SuperFans

Source:JoshElman,GreylockPartners

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Good Metrics Not Enough

MARKET SIZE MARKET DYNAMICS

CHEMISTRYTEAM

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Plan Execute

& Iterate

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Make an Ops Plan

Q1 Q2 Q3 Q4

Revenue $1MARR

New Hires

Product

Cash @ end

$100kARR100leads

1DemandGen 1Sales

Rev2.0

1CustomerSuccess

3Engineers

MVP

1Sales1QAEngineer

18months 15months 10months 4months6months

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“What gets measured, gets done”

Georg Rheticus, Astronomer 1514-1574

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Display Dashboards to Team

100 Leads

50 Demos

20 Conversations

10 Closed

MRR TIME TO CLOSE

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Keep Iterating

Plan

Execute

On track? YESNO

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1/3 Seeds do a Second Seed

2007 2009 2012 2014 2016

13%15%

17%19% 18%

21%

25%

29%32%

34%

Source:Pitchbook,Q22016VCReport

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Climb down Mount Everest

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The actual raise

Build First

Rational ask

Time it right

Target list

Practice the pitch

Run the process

Speak data

Diligence investors

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Climbing Everest is Hard!

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… but Possible

Get help from a sherpa

Plan & work

Re-plan (if needed)

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Questions?mar@pear.vc