Joshua Reeves is the CEO of a startup that raised a $US6.1 million seed round from big Silicon Valley names.
His list of early investors reads as a who’s who of Silicon Valley:
Yelp CEO Jeremy Stoppelman, Dropbox CEO Drew Houston, Yammer CEO David Sacks, Box CEO Aaron Levie, YouTube co-founder Jawed Karim, SurgarCRM CEO Larry Augustin, Zuora CEO and former Salesforce CMO Tien Tzou, Facebook VP of Partnerships Dan Rose, Gmail creator Paul Buchheit, and more …
Reeves is also an angel investor himself.
Reeves’ company Gusto, which was formerly called ZenPayroll, began as a cloud-based payments tool that makes it easier for small businesses to pay employees. We asked him how he got such a rock star lineup to invest.
Reeves says it took him two weeks to raise the $US6.1 million round. Each day was packed with eight or nine meetings. He started the process by reaching out to people he knew. It helped that he was going through Y Combinator, a notable startup accelerator program that has a strong alumni network. Reeves also had connections from Stanford, where he got his electrical engineering degree, and from Zazzle, a startup he joined as an early employee that now has hundreds of people.
Aaron Levie, for example, was a prior contact. Box’s office used to be right next door to Zazzle’s. Levie invested in a company called Karma; now Karma’s CEO is one of Reeves’ investors. Reeves also met Yelp CEO Jeremy Stoppelman through Levie.
Once Reeves found potential investors, he still had to sell them. Reeves and his co-founders have attractive backgrounds; they have each started companies before and Reeves’ last company was bought. Reeves also used a compelling pitch deck to help share his mission with investors.
“I’m a big fan of having a deck,” says Reeves. “Especially at the seed stage. It’s how you present your story. You want to have a logical connection between different pieces of information.”
Reeves also asked investors a lot of questions during the meetings. He says he interviewed them as much as they interviewed him to make sure they’d be a good fit for his company.
Finally, it’s important to have a product that solves a pain point investors can relate to. ZenPayroll was a cloud-based payroll solution that was cheap for small businesses to use and easier to navigate than ADP or Paychex.
“The people we raised money from invested because they want to vicariously fix this industry,” says Reeves. “You could tell which of them had experienced the payroll pain themselves. That’s the heart of why angels invest even when they are still doing their own startups.”
So, how can other startups have the similar success nabbing star angel investors?
Reeves offers the following pitch deck to other entrepreneurs when they’re raising their first round of financing. It’s the template ZenPayroll used to raise $US6.1 million.
“Each meeting is an opportunity to describe your vision, paint a picture of the future, share your progress so far and the quality of your team,” he says.
Before you create your startup’s pitch deck, here’s a general formatting tip:
Reeves recommends having a 2-5 word tagline for your company and a strong quote on the opening slide.
The vision should stand out on a slide of its own. It’s the most important message a young startup can convey.
Show you’re going after a big market and have data to back it up.
Don’t ignore competitors. You need to prove you know the landscape.
What problem are you trying to solve?
How do you plan to solve it?
Show who’s already using your product. Preferably a chart that goes up and to the right.
How will you make money?
How will you get even more users?
Add a team page and explain why you’re all fit to run this business.
Remind them again why they should care.
And how much money you’re looking to raise, as well as other people who have already committed.
End with your contact information and that same great quote you opened with.
Above all, be authentic.
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