The CEO of Eventbrite outlines how to get funding from investors like Sequoia
Eventbright founder and CEO Kevin Hartz just finished his keynote address at Vator Splash, which has drawn in 400 attendees. As someone who has received funding from Sequoia Capital for two of the three companies he founded (Xoom and Eventbrite), Hartz gave the audience some advice on how to get funding from Sequoia and investors in general. He also used his experience as the CEO of Eventbrite to outline some of the ways entrepreneurs can extract funding from investors.
Here are some of the highlights from his address:
--His first tip was a fairly basic life-lesson: find people who are great mentors and are talented and stay close to them.
--Hartz also sees great value in being in a "stagnant" market where there is little change.
How to raise funds from Sequoia:
--Sequoia looks for those who are not well known and they look for those who are "unbound by the heritage of the past." They also look for entrepreneurs who are looking to do things in new ways. Additionally, they look for younger entrepreneurs who are on the forefront of fresh, emerging technology.
--They're looking for entrepreneurs who are going to think big and do big things and in effect, change the world.
--Think "macro" and "micro." On the macro side, you should think about the actual idea and how it will revolutionize the market. On the micro side are the details and the wrinkles that need to be worked out. He used his own experience with Eventbrite as an example. On the macro side, Eventbrite out to revolutionize ticketing and how you do business. On the micro side, we're thinking about the details. We want our customers to have a "double rainbow" experience, he mentioned--referring to the viral YouTube video. It's the macro and the micro that the investor needs to see--thinking big, but also executing on the details.
--Startups are like organisms. You need to be a highly efficient organism to survive in the harsh environment of the ecosystem around you. Again, using Eventbrite as an example, Hartz mentioned that the company set up a business model with zero customer acquisition cost, allowing their customer base to grow organically.
Hartz also presented some basic qualities that investors look for in companies.
--Adaptability: A company has to be able to pivot when something isn't working. YouTube is an example: they started out as a video dating site on Craigslist, paying women to post videos to draw in male customers, but they noticed that people were more interested in posting their own videos and sharing, so they took advantage of that.
--Differentiation: Netflix is an example of a company that has successfully differentiated. By setting up sophisticated fulfillment centers that can turn DVDs around quickly, they satisfy customers and cut down on customer acquisition costs, which differentiated them from companies like Blockbuster.
--Extreme seasonality: The market is swinging from very harsh times to the opposite direction. Competition for employees is picking up, and companies need to stay focused and level-headed in the market as it heats back up. Investors are looking for companies that can stay afloat in the flood and thrive in times of drought.
Hartz also presented several goals for companies when approaching investors and developing pitches:
Goal #1: Build something meaningful first. Reach out early to investors. It's very hard to make a quick decision in a competitive environment and if you can develop a relationship ahead of time it will benefit your company.
Goal #2: Get a meeting. Develop a concise 12-15 point powerpoint presentation deck. Have visuals, keep your audience engaged.
Goal #3: Drive a full Partnership presentation. Research each partner to figure out where the "Achilles Heel" is in the group. Make sure that your presentation stays under 20 minutes--but if you're being interrupted with questions, that's a promising sign. It means they're interested. If the room is silent and you're the only one speaking, you should be concerned.
Final Goal: Partner Presentation. Practice your presentation, make sure you work all the kinks out ahead of time, show up early, set up, and test. Tip: Stand to the left of the screen--the eye reads from left to right and if the speaker is standing off to the right, the eye is going to drag back and forth from the speaker to the screen in an unnatural way.
He also took a couple of questions from the audience:
What advice can you give to someone at an early stage in their development?
A: Look around and keep learning but recuse yourself from a lot of the activity going on in the valley and hone in on a specific problem or pain. Julia (his wife and co-founder) and I spent a lot of time in the conference room focusing on providing a need for our customer. I believe it's very challenging to start a company as a single founder. You need a balance of someone to share ideas with and bounce things off of.
How do you find a co-founder?
A: I was lucky to find people who were phenomenal and I stuck by them. It's not something you can advertise for on craigslist. You really have to have solid people in your background.
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Eventbrite is the world’s largest self-service ticketing platform, and enables people all over the world to plan, promote, and sell out any event. The online event registration service has helped organizers process over 130 million tickets in 179 countries, and makes it easy for everyone to discover and share the events with people they know. In this way, Eventbrite brings communities together by encouraging people to connect through live experiences. Eventbrite's investors include DAG Ventures, Sequoia Capital, T. Rowe Price, Tenaya Capital and Tiger Global. Learn more at www.eventbrite.com.