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This Is how you Find Funding for your Startup or… 500 Startups

Interview with Elizabeth Yin, a partner at the prestigious Silicon Valley accelerator 500 Startups

500 startups
As a women in a male-dominated business it hasn't been easy to emerge. But Elizabeth Yin has earned a position in the Silicon Valley and from there she gives advice to startuppers: contact as many investors as possible, have a carefully prepared pitch on hand, and do not just answer questions

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Powerful young Silicon Valley women like Elizabeth Yin, are setting an inspiring example. I first met Elizabeth, who runs the prestigious Silicon Valley accelerator 500 Startups, when she was a panelist at an event for women and minorities in technology held in Los Angeles.  I remember that I was there with a fellow woman entrepreneur from Senegal and we were both impressed by the very practical way she addressed the topic of startup fundraising. Charmed, I asked her for an interview.

What does it mean to be a woman in tech?

“I grew up in the Silicon Valley and that’s how I decided to become an entrepreneur. I first learned about startups when I was in high school: I was a teenager during the DOT.COM boom and I had interned in a lot of different startups during that time. At 28 I started an adtech company called Launchbit with my best friend from High School, Jennifer Chin.  Soon after we became part of Batch number 2 at 500 Startups from which we raised just under $1 million in a Seed round, and 2 years ago we were acquired. Both Jennifer and I have technical backgrounds: I studied Electrical Engineering at Stanford and she has a PhD in Material Sciences and Engineering from MIT.”

Have you ever come across unusual reactions as women founders?

“Once, I went to a MEETUP with Jennifer and I was telling somebody about our site when he asked me: “Who built it?” I told him that I built it along with my co-founder.  He was really surprised: “Oh you girls built it?” and that was sort of a common response for us. In the beginning, I didn’t think much of it, but since we got that reaction a lot, I started thinking that an all-women engineering team must have been a real oddity.  Another time, at the end of a meeting with an Angel investor I asked him what he thought about my presentation and he said: “I don’t’ want to say the wrong thing and call you a meek Asian woman but I wonder how you would lead a team of 100 people” I was totally shocked, no one had ever said anything like that to me before. Obviously, it was totally inappropriate but it made me wonder whether there were other investors who thought the same thing and just did not say it out loud.”

How did you respond to that?

“My first thought was: “Did he just call me a meek Asian woman?” Then I told myself: “I better come up with a response right away otherwise I would seem a Meek Asian woman.” So at that point, I sat up in my chair, whereas I was slouching before, I looked at him square in the eye and said pretty loudly: “I don’t think that would be a problem at all.”

Do you think a white guy would raise similar reservations?

“Yes, for sure. I think one’s ability to have presence in the room during a presentation actually does affect people’s opinion about his leadership skills. Even white men, if they are introverted for instance, could face a similar reaction although there are excellent business leaders who are introverts.”

What’s the best way to identify the right investors?

500 startups“I always suggest that you contact as many relevant investors as possible.  Try to compile a list of 100 to 200 angels and VC’s because fundraising is a numbers game. Also, I would not target a particular gender; all investors in my startup were men. I presented my project to many women, but none of them funded it. Generally, women tend to be more conservative with their money.”

Did you find a difference between interacting with angel investors and venture capitalists?

“At the end of the day they are all investors, but angel investors have a lot more flexibility about what they can invest in and their decision-making is a lot faster. I met some who basically decided after a quick conversation whether or not they wanted to do the deal. Venture capitalists have a process: first you meet one or two of them and then maybe you get bumped up to someone at a level higher and you have another meeting. If it goes well perhaps you meet with the whole firm. So it could take a really long time to get funding from a venture capitalist.”

What type of material do entrepreneurs need to introduce their startups to investors?

“First of all, you should have a minimum of 2 pitch decks: a short one to email investors with the goal of getting a meeting, and another one, much longer, to use during the meeting. The short pitch deck should have 5 slides that highlight the problem you are trying to tackle, your unique and differentiated solution, any traction or key performance indicators, a slide about why your team is qualified to do this and, lastly, a slide on market size. Investors should be able to read it in 10 seconds and decide whether or not they want to meet with you. Then you need a longer set of slides with a lot of the details about your startup.  You will walk investors through this deck during the meeting. Do not email it in advance because it is very easy for investors to get lost in all that information, and misunderstanding your project could jeopardize your chances to make a good impression.”

What do you think is best to wear for the firs investors’ meeting?

“For women it is more difficult to choose what to wear than for men. However I recommend dressing conservatively, nothing revealing. Just choose something comfortable but not too casual.”

What’s the most effective way to make a pitch presentation?

“When I first started fundraising and people were talking about giving a pitch, I thought that you’d go to an office, stand up in front of the room and give your presentation, but that’s not how it works.  What happens is that you sit down at a table and you have a conversation. I also didn’t realize that the point of the conversation is not to answer all the investors’ questions as they ask them, otherwise the presentation will go all over the place and it won’t be effective.  In fact, I learned it the hard way at the very beginning of my fundraising efforts: after I met with a group of investors, one of them who was actually my advocate and really wanted to do this deal, pulled me aside and asked me how I thought the meeting went. I told him that I felt it went very well because I had answered all their questions completely, but, to my surprise, he said: ‘I think the meeting went horribly because you didn’t control it.  You do not need to answer all their questions, you have to manage the conversation’. You control the meeting by having a logical conversation where at first you talk about let’s say “Team”, and you cover everything people would want to know about it, then you go on to the next topic, but you don’t jump from one topic to the other and back trying to address everybody’s questions right away.  Otherwise your presentation becomes very confusing and unsuccessful. Going forward, whenever an investor started asking me a question that was totally off topic I would say: ‘That’s a good question, let me get to that in a second. But let me finish this thought’. And that’s the way I did it.”

Should entrepreneurs disclose their startups’ confidential information?

“For most software ideas there is little you can do around Intellectual Property, patents won’t help you in most cases.  That’s not true for other verticals. As per other confidential information such as key partners and key customers it is very important to make sure that they will allow you to talk about them in the investors meetings.   Signing an NDA that forbids you to mention them to investors, is a problem to try to avoid.”

Are freign enterpreneurs welcome at 500 Startups?

“At 500 Startups we fund several international founders.  Our 4-month program ends with a Demo Day and it allows foreign entrepreneurs to get plugged into the Silicon Valley network very quickly. Regardless of nationality, we are looking for entrepreneurs who can demonstrate that they have been working on the business, and traction is probably one of the best ways to show that. A lot of people apply to 500 Startups with just an idea but they haven’t done anything.  If they can demonstrate that they are progressing with their business that will be very valuable during the selection process.”

Do foreign founders need to move to the United States?

“No, the ideal scenario for us is that they come up to the Bay Area to go through our accelerator program where we help them raise a round.  If they raise a small seed round that money won’t go far here, so they should back home where these funds will go further because the cost of living in Northern California is very high. Conversely, for some international founders who raise larger rounds, it might make more sense to stay here in order to scale faster. For example, an Italian startup called Timbuktu Labs, founded by to two women, has gone through the acceleration program at 500 Startups and then it has decided to stay in the US.”


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