At the seed stage, we’re looking for a crazy idea that may have a significant chance of working. These may be “science or innovation experiments.” We want good teams. We look for “A” teams and founders – entrepreneurs who know what they know (and are the best in the world at it) but also know what they don’t know and are open to building strong teams to fill in those knowledge gaps. We invest more in people than in a specific plan, because plans often change. We don’t need complete teams or even complete plans, but the key technology risks of your approach—and the economic and market benefits, if it is successful—need to be identified. From a seed perspective, planning for risk elimination at the lowest possible cost is the key variable. Your seed plan should validate your hunches about the market and help you decide what market segment you want to enter.
What is the problem you are trying to solve?
Do you have a scientific breakthrough, intellectual property, business-model innovation or a unique partnership? Why is now the right time? If your plan is successful, what economic or market benefit will the technology convey?
Address the innovation in significant detail—think science and engineering, not marketing. Explain the principles of the technology. What, if anything, has been proven? How far is this from commercial scalability? What risks remain to be proven? What are the three major things that could go wrong? Have theoretical models been created or validated? What external third party has validated your models and experimental results? How long will it take to validate the viability of the technology, through experiments or otherwise?
Who are you, and why are you qualified to lead this opportunity? What skills do you bring to this problem? What technical skills will your team need to add? Do you envision yourself as the long-term CEO or in another role? The focus is mostly on you, your goals and your technical team. Address why you are uniquely qualified to solve this problem. People, who are key to your innovation, matter to us.
What is the role of every member of your current team? Are they all working toward mitigating your primary risks, or are they working on non-critical development that can be addressed later? Are they the best possible people for meeting your current milestones? Are the founders thought leaders or associated with thought leaders in the field? What critical people, who could address your key risks, are missing, and where can you find them?
It is important to understand your path to mitigating the technical risks you face. What technical milestones will this financing help achieve? What are your future milestones, and how much capital will you need to achieve each? What is the company status and burn rate at each of these milestones? What are your contingency plans if things don’t go well? Is the amount for which you’re looking in line with the risk-removal milestones you have outlined? What is your total and operating cash burn (the amount you’re spending) per month, in case months stretch into years?
Do you have a good understanding of the competitive landscape? Are you comparing your company against technology competition in areas that matter to the end customer? Are you comparing your future product to your competitor’s current product or to their future product? Is your innovation addressing a need in a large enough market (over a billion dollars)?
How significant a step forward is represented by the technology or innovation? What impact will it have on the competition? Why can’t a competitor replicate your plan tomorrow? Why have other players in the field missed out on the technology?
What doesn’t matter?
“We project $XXXM in revenue in 2019.”
Your five-year marketing financials and revenue projections are a shot in the dark. All forecasts are wrong (including ours). Instead, focus on your burn rate and your path toward achieving milestones rather than false precision at this stage.
“We expect to grow from 50M to 150M users in x-time frame.”
We’re more interested in how you acquire your initial customers and how you keep them. Plans often fail to explain how the founders will bootstrap themselves in startup mode. How will you get to a large customer base in the first few months or quarters? Details matter more than broad, unsupported assumptions. If you have indicators or solutions to the bootstrapping risk, that is important to us.
“I have the next Facebook / Google / Twitter.”
If your business plan is built on copying what existing companies are already doing, you are unlikely to succeed. Instead, explain to us why you are the first in your field. A better social network than Facebook will receive substantial skepticism, but we have occasionally climbed past this skepticism. We will keep an open mind, but another “me too” product with slightly better features is seldom our cup of tea.
“I have a complete business plan; I just need funds to make it happen.”
Unfortunately, experience has led us to disagree. If you are looking solely for funds as opposed to help in building a business, we are probably not your best option. It is important to us to understand what help you need and how open you are to this help.