Look around, listen to others, look for yourself: 10 tips for the first year in the Valley
Venture investor Pavel Cherkashin came to Silicon Valley in 2013, and in the first year he only looked around, listened to others and looked for himself. Then he went to the Indian shaman and to Burning Man, founded the investment company GVA Capital, and now tells what to do to an entrepreneur who just arrived in the Valley.
Look around, listen to others, look for yourself - and 7 points on the way to the cherished SAFE.
Learn to listen
One of the main skills I gained here is the ability to listen. This is something that many entrepreneurs lack. It is clear that I want to talk about my product, but as a result, people each talk about their own. I trained this skill at special courses - I learned to listen without interrupting; started from one minute, gradually increasing the time. When you know how to listen, asking clarifying questions, new horizons open up, and people treat you more trustingly. Not so in Russia: from 20 minutes that I have to meet, I spend 15 to somehow establish a dialogue.
A real example is a company that has 50 million customers, unexpectedly declares: “Think of any way that will reduce the number of calls and at the same time increase the quality of service.” Or Intuit - this is such a local "1С" with a base of tens of millions of customers - reports that small businesses do not have enough qualified personnel: grassroots processes are automated, and management analytics - not yet, and who will come up with how a robot can replace an expensive specialist, ready to invest (and in the future - to buy). Or, the airline asks you to figure out how to entertain passengers in flight, because the films, it turns out, are few.
B2b-startups often solve problems that lie on the surface, not paying attention to real problems - while companies themselves are often ready to talk about them. To find out the pain of business, you can, for example, read the road maps of corporations and look for what decisions they are willing to pay. Or talk over a bottle of whiskey from some head of the department - let him tell you how badly he lives, what problems he faces in his work.
When my children went to the local school, I noticed that no one was spying them for their unlearned lessons. Here everything is always “OK”: I didn’t do homework - “OK”, I’m tired of sitting at the desk - “OK”, I get hungry - go for a snack Children from such ofigel and the first six months did not study in principle. I asked my friends how, with such an approach to learning, someone generally enters Stanford, and they explained to me: in high school, the pressure is such that it is simply impossible to bear it if the study is not pret. Therefore, the task of the elementary and secondary schools is to make the child take the toll from his studies (or make him understand that he does not need Stanford).
The same thing happens with startups: people from all over the world come here who, in what they do, see the meaning of life. If you are not rushing, there is no chance of success. It is these people - who are burning with their idea and their business - are looking for investors. Understanding why you are here, explaining it to yourself is the first step towards a breakthrough.
Learn to build a network
Suppose you need to meet someone, and you write me a letter asking for mediation. The first option: “Paul, hello. Introduce me to a cool investor in the Valley. ” Probability of response to such email - zero, because I do not know with whom to introduce, how, why should I do this at all. The second option: “You have contacts in LinkedIn there is john smith. Judging by his TechCrunch articles and posts on TWitterhe will be interested in becoming our advisor. Can you send this letter to him? ” If I have a normal relationship with this John Smith, I will forward this letter to him without any problems — also with my recommendations. All this is already warm contact.
Networking works if you invest your time in preparation - write a quality text, find on LinkedIn the right person and the contact through which you can reach him.
Arriving here, I began to go through the funds and ask what it takes to sell a startup. Everyone said the same thing: no one buys an unknown startup; The first and most important thing is to get to know about you.
I heard Yuri Milner from DST Global He said: he came to the Valley with a few billions to invest - but he could only enter the local community and be considered not just a stranger with money after he agreed with And Combinator and started giving $ 150 thousand to each graduate.
We bought a church - in the center of San Francisco, for a quarter of the value of the land on which it stands. We are still trying to get the final permission to operate the building, but from the point of view of our recognition, the purchase has already paid for itself. Thanks to this project, we have become known in the market, have received many new connections and reputation.
Find a lawyer and advisor
The first to whom you go to sell - oddly enough, lawyers. A good lawyer is an asset: it will save a lot of money, time and access to good contacts. Lawyers here are good because most (if not all) work on credit; Someone may want to invest in you, someone will take an option. It is easy to come to a lawyer, it is easy to convince him. If you are not able to sell your idea to a lawyer, then you will not be able to sell it to anyone.
Lawyers are followed by people from the industry who can become your advisors. If a business could not find an expert who is ready to spend his time on it, then something is wrong with the business. The adviser will definitely not want to invest money, but the louder his name, the easier it will be to attract investments. The phrase “We are supported by such and such, we are advised by such and such” immediately brings relations with potential investors to a new level.
And a couple of investors
The investor is more willing to invest money, knowing that he is not alone - there is always the risk of screwing up, and it is more pleasant to realize that the five largest funds of the Valley have screwed up with you. Finding several investors sometimes helps “shuttle diplomacy” when I say to the founder: “I like the idea, but I don’t like that there is no one in the co-investors. Let me give you term sheet (agreement on the basic terms of the transaction - Inc.), you can tell other investors that Cherkashin has already invested. If you agree with someone, I will invest, if not - I'm sorry. "
Such a procedure can be useful to the project at any level - although more often at an early level. If the project needs $ 1 million, it will take $ 50 thousand from me, from the second investor, from the third - and then someone large will see that the pool of angels has gathered, and will give the missing amount.
The main source of deals for any investor is other investors, they constantly bargain: “I will let you into my best deal if you let me into yours”. Good deals are currency: if they let me into a big deal, I can use it to communicate with other investors.
Convince investor in the viability of the project
Suppose I invested $ 1 million in 10 projects, only one of them fired. In order for me to at least return my money, this single successful project must grow no less than 10 times. The work of an investor is a constant reduction of two functions: risk and return. Investments are more likely to receive projects that are on the verge of a surge in capitalization.
It became obvious that the topic would take off in principle - even if it is not yet completely clear how the risk is organized, how the product will be sold. When it only became clear that the world needs a project, this is the most delicious situation for an investor.
Create a sense of urgency
For an investor to miss a cool deal is worse than investing in a project that falls apart. On this you can play. I review up to 10 projects a day, to make a decision on each one in just a few seconds. Either I see that the project is cool and we need to urgently do something, or “in principle, it is interesting, but it will wait until tomorrow.” How not to fall into the second category? Convince the investor that this is the last chance. “We have several investors, a good adviser. Only $ 100 thousand is left - either you give them or someone else ”; "We are negotiating with Facebookthey are ready to buy our business, an interview in a week. ”
Once we discussed one project, but did not dare to enter it. Another fund invested 3 million, and when I asked why, I was told: "You see, the guy came to the meeting in a butterfly." - “So what?” - “This is the position: until he takes his company to an IPO, he will always and everywhere go to the butterfly. He is determined, because we invested. " It is difficult to explain, but all successful founders are a little without a tower. I do not know what is the cause and what is the effect, but there is a direct correlation between the degree of the founder’s recklessness and its success.
Crazy is different. Recklessness in a good sense - these are fundamental actions: no one knows what consequences they will lead, but if a person is willing to risk his reputation for an idea in which he believes, it inspires respect. In addition, the investor sees hundreds of people, at some point they all look the same - a crazy guy in a butterfly has a better chance of being remembered.
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