What’s the Secret Success of MINT.com? The Real Numbers Behind Aaron Patzer’s Growth Strategy
Aaron Patzer, CEO of MINT.com, dropped by The Funded and Vator.tv‘s Juice Pitcher tonight to share some secrets of the company’s success. (Just in case you don’t plug the TechCrunch feed directly into your brain stem: MINT is the wildly successful, soon-to-be-acquired-by-Intuit, #1 personal finance site…and oh yes, full disclosure that First Round Capital is a thrilled investor.)
The Best VC Meetings are Debates not Sales
This is part of my blog series “Pitching a VC.”
I’ve sat through a lot of VC pitches and having been CEO of an enterprise software firm for many years I’ve also sat through many customer meetings with sales teams.
The worst time to join a startup is right after it gets initial VC financing
One things I’ve noticed over the years is that equity grants given to new employees soon after Series A financings are generally a bad deal for those employees on a risk/reward basis. (By a Series A financing I’m referring the first round of funding by VCs, where the amount raised is roughly $2M or more).
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The problem with taking seed money from big VCs
I recently met an entrepreneur who was raising money for his startup. Six months prior, he had raised seed money (<$1M) from one of the increasingly popular seed programs big venture firms are offering (big venture firms = roughly $100M fund and larger). As a potential investor, the first question I asked him is “is the big venture firm following on?” The answer was no. What this means is the entrepreneur is going to have a *really* tough time raising any more money at all, because what all potential investors think is “if this top VC that has hundreds of millions of dollars and knows this company the best doesn’t want to invest, why would I?” What the entrepreneur didn’t realize is that when you take any money at all from a big VC in a seed round, you are effectively giving them an option on the next round, even though that option isn’t contractual. And, somewhat counterintuitively, the more well respected the VC is, the stronger the negative signal will be when they don’t follow on.
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Raising Angel Money
This post is part of a series of posts called “Pitching a VC” that explains how to get access to VC’s, what to say when you get there and what will happen afterward. The series outline is Getting Access to the Old Boys’ Club (how to approach a VC)
Many VC websites have a tab that will tell you that you can submit your business plans to enquiries@vc_company.com or some similar generic email address. But does it really work? Can you really send your business plan over the transom and expect to get a positive response? The short answer is “no” – don’t waste your time. I know some VCs would take issue with this and somehow I’m sure that there are some success stories with this method but trust me this is worst way to approach a VC.
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Free Online Term Sheet Generator
If I didn’t see it with my own eyes, I wouldn’t believe it, but Wilson, Sonsini, Goodrich, and Rosati, one of Silicon Valley’s dominant law firms (as in Apple, HP, etc), has created a free, online term sheet generator. This is the site’s description of the tool: