Uri Levine: evaluation

Transcript context

…It's like Space Mountain. Yeah, sort of. And one of the reason is that this is a different ballgame and you don't know how to play at the beginning. I would say a few things about raising capital for the first time. Number one, I spoke with many investors and one of the conversations that I had that they really, really resonate with me was when I spoke with one of the leading VC in Israel and asked their partner, "How long does it take you to decide if you like the entrepreneur or not?" And he asked me, "Do you want the right answer or the real answer?" Say, "You know, I heard the right answer so many times, give me the real answer." And we were sitting in a small meeting room, so the guy is looking at me and then looking at the door and looking at me again and say, "It's before they sit down." Say, "Oh, no, no, no. Say that again, right?" That's the first impression. Now we all have first impression. How long does it take you to decide if you like a candidate or not? Second, you go on a date. How long does it take you to decide if you like the date? Seconds. And then maybe there are a few more minutes that you allow yourself to either change your mind or let that first impression solidifies. Now if this is the case and you're looking to raise capital, start with the strongest point at the beginning. Whatever it is, and I don't care if this is the size of the problem. This is the faction that you have. This is the team that you have built. I don't care what it is, start with that, because by the time you'll get there, they might be already setting up their mind. Then start with the strongest point at the beginning. And by the way, finish with that as well. So this is the first conclusion. The second conclusion is that I spoke with early stage investors, those that invest the first money in. So company has a story to tell. That's about it, right? No traction, nothing yet is built and so forth, and I asked him, "Why did you decide to invest in this company and this company and this company?" And I spoke with many investors, and what I heard was actually pretty consistent. I like the CEO. I like the story. That's it. I like the CEO. I like the story. Now if this is the case, then there are two immediate conclusions. The first one is that the CEO goes alone to the meeting. I need the headlight on me. I don't need any distractions. I don't need my team members. I don't need anything else in the room, just me. Because if I bring other people, then at the end of the day they might say, "Yeah, I like the team, but the CEO was not specific, right? Was not unique. Was not jumping out of the pages." So CEO goes along and tell the story. The other part is that they need to tell a good story, and good story is not about facts. It's about creating emotional engagement. It's about creating the sense that the listener would like to be part of this story. And for investor, it's two things. ry, and good story is not about facts. It's about creating emotional engagement. It's about creating the sense that the listener would like to be part of this story. And for investor, it's two things. Number one is that they want to believe that this is usable, and number two, they want to believe that you can build it and this is the story that you need to tell. Now, I would say always start with the problem, right? Because guess what? Investors are also users. If they don't think that they're going to use it, so it's relevant for them, and they don't think that they're going to use it? They will basically dismiss that. They will basically say the market is not there. So these are two main things. The third thing is it's a different ball game, right? So if you have product and you tell the story to potential customers, the right order of magnitude is that about one third of the listeners will buy. So in a more mature company, their pipeline is going to be three eggs in order to sell at the end of the year one eggs. One third are going to say yes. In investors, it's 1%. Not one third, 1%. So you're going to hear a hundred times no until you hear one yes. And that a hundred times no is something that you need to understand from the beginning because that's really discouraging, right? You go and speak with investors and they tell you... I call that they open up the big book of excuses why not. But in general, they are not going to invest, right? Now you look at it from the other side, a venture capital partner is likely to see between a hundred and 200 companies a year and invest in one or two. That's it. So if this is the case, then it's going to be the same case for you. One out of a hundred. If you want to increase the likelihood, learn how to tell a good story, start at the strongest point at the beginning, remember that they are users, too, so their emotional engagement is going to come through the usage, the use case, and not through how big the business is.…

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