{"id":14964,"date":"2023-09-22T15:50:52","date_gmt":"2023-09-22T15:50:52","guid":{"rendered":"https:\/\/mysourcefunding.com\/startups\/how-to-raise-corporate-venture-capital\/"},"modified":"2023-09-22T15:50:54","modified_gmt":"2023-09-22T15:50:54","slug":"how-to-raise-corporate-venture-capital","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=14964","title":{"rendered":"How To Raise Corporate Venture Capital"},"content":{"rendered":"
\n

By Nathan Beckord<\/em><\/strong><\/p>\n

If you can remember back as far as I can, you might remember the good old days of raising capital. You\u2019d load up your 10-slide pitch deck and visit numerous two- or four-story buildings on Palo Alto\u2019s Sand Hill Road, hitting multiple potential investors in one day.<\/p>\n

That\u2019s how it was for Sterling Pratz\u2019s first venture, Autonet Mobile. But as times have changed, Sterling takes another tack when pitching investors today. Not only does he craft pitches differently, but he approaches different targets: strategic investors.<\/p>\n

With his latest venture, Car IQ, Sterling wants to simplify transactions around the \u201cbig five\u201d for cars: fuel, tolls, parking, service, and maintenance. Car IQ currently works with fleet vehicles to prove product-market fit, as they have the greatest need for transactional efficiency. For example, instead of each driver needing a company credit card, the car could pay for its gas.<\/p>\n

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This time, rather than knocking on traditional VC firms\u2019 doors, Sterling has found greater synergy working with strategic investors and corporate VC\u2014companies that benefit most from Car IQ\u2019s advances. The company\u2019s strategic investors, like State Farm, Visa, Circle K, and Avanta Ventures, know the value of automotive-driven data and how to use it.<\/p>\n

Having funded his own prototype with Car lQ co-founder Sagar Apte, and after raising a seed round, Series A, and Series B, Sterling has plenty of advice for founders looking to raise with corporate VC.<\/p>\n

In this article, Sterling and I take a trip down memory lane, recalling raises past and discussing what\u2019s changed. We also talk about how Car IQ works with strategic investors, and he shares his top tips for pitching today.<\/p>\n

The changing fundraising landscape: pitching to corporate VCs<\/strong><\/h2>\n

Sterling and I go way back. I was with him when he raised for AutoNet. At the time (pre-2008, pre-iPhone), we relied on standard pitch decks for most of our pilgrimages to Sand Hill Road. Now, after a successful exit from AutoNet, Sterling has a more effective way to pique investors\u2019 interest. Here are the steps he uses today.<\/p>\n

1. Give them the “movie trailer”<\/strong><\/h3>\n

Many startups still use the standard 10-slide deck, and there\u2019s nothing wrong with that. But Sterling likes to break it down into even smaller bites.<\/p>\n

Build the first pitch as if you\u2019re creating a movie trailer. Sterling recommends no more than three or four slides; the total pitch time should be four to six minutes. Like a movie trailer, you\u2019re telling a story\u2014from the customer\u2019s perspective. This approach gives the investor an experience, not just a presentation, and helps them digest your offering.<\/p>\n

2. Put yourself in a box<\/strong><\/h3>\n

Set this goal for that first meeting as well. If your product fits into more than one category, clarify which category is most relevant for that investor. For example, Car IQ could fit into fintech, automotive, or telematics.<\/p>\n

A clear category is critical in Zoom pitching, where an investor is less likely to interrupt you to ask for more detail than they would in person. Get your own story straight so they don\u2019t have to.<\/p>\n

\u201cEvery entrepreneur\u2019s challenge is how to succinctly tell their story so [investors] know what box to put you in,” Sterling explains. “If you don’t do it right, the venture capitalist sitting across the table will spend all their time scanning for what box you fit in, and they’ll miss the importance of what you’re doing.\u201d<\/p>\n

3. Provide more detail<\/strong><\/h3>\n

If the investor likes what they see and wants to hear more about your startup, you can give a more detailed pitch. Sterling says, \u201cIf they really like that, you come back with more of a partner meeting. That’s when you get into a more technical approach.\u201d<\/p>\n

In that meeting, you can give your financials, as well as more information about your product or tech\u2014and research on your competition.<\/p>\n

More articles from <\/strong>AllBusiness.com<\/strong>:<\/strong><\/p>\n

How to work with strategic investors and corporate VC<\/strong><\/h2>\n

Sterling sees a significant advantage to pitching strategic investors or corporate VC over traditional venture capital. Strategic investors are already intimately familiar with the challenges of your industry because they\u2019re in the same one. You don\u2019t have to explain the problem to show the solution’s value. With traditional venture capital firms, getting them to understand your industry and its unique problems can be half the battle.<\/p>\n

There\u2019s also a balancing act that goes along with working with multiple strategic investors. Sterling hasn\u2019t had anyone ask for an exclusive in their term sheet. In other words, Circle K hasn\u2019t mandated that Car IQ can\u2019t work with any other convenience store chain. \u201c[Strategic investors] tend to be very good about not only not putting a bear hug on you but also about not asking for confidential information from competitors. There’s definitely a wall there. It makes my job easier at a board meeting level,\u201d he says.<\/p>\n

But while strategic investors are motivated, they might need more time to move a project forward. Often, they know they need<\/em> to be in a particular space, but they might only be there to learn from you\u2014and test a few ideas\u2014at first. Sterling recommends being open with strategies and simply asking them where they stand. On top of that, he looks to the customer first, letting client demands decide which projects get done.<\/p>\n

Here are four additional tips from Sterling on how to work with corporate VC:<\/p>\n

1. Check your alignment<\/strong><\/h3>\n

Will you help them grow and vice versa? Are you and the strategic investor working toward the same goals? It\u2019s important not to force a fit where there is none. If they\u2019re going in a different direction than you planned, it\u2019s okay to walk away. But if everyone\u2019s compass points in the same direction, see where your paths overlap.<\/p>\n

\u201cYou have to make sure you’re aligned with the challenges or the areas they want to grow,\u201d Sterling says. \u201cGrowth is really important to strategy, not just fixing a problem.\u201d<\/p>\n

2. Make sure you\u2019re talking to the right people<\/strong><\/h3>\n

It might seem obvious, but often the venture arm of a company has a different focus than the company itself. Set your meeting with the venture folks, not just the corporate players. The goals of the venture arm are typically more growth-minded than operational.<\/p>\n

3. Solve their problem<\/strong><\/h3>\n

Your company might be able to solve myriad problems, but when you\u2019re meeting with a strategic investor, focus on their specific situation.<\/p>\n

\u201cDon’t try to boil the ocean,\u201d Sterling says. \u201cFocus on them. Let them dive in deeply. Let them understand how this helps them with their company, and let them come along on their own terms. Don’t try to force them.\u201d<\/p>\n

4. Keep an open mind<\/strong><\/h3>\n

Sometimes a strategic investor meets with you to get ideas. That can feel threatening, particularly if their company is considering a project similar to yours. Sterling advises not to get your hackles up just yet.<\/p>\n

\u201cI did have one major strategic [investor] who came in saying, ‘I just want to learn about the market.’ <\/em>They said, ‘We may build our own, or we may use you; we don’t know.’<\/em> Their openness encouraged me to just be open with them,\u201d he says. \u201cAnd lo and behold, they became an investor.\u201d<\/p>\n

Treat every meeting as a potential investor, and you won\u2019t miss out on big opportunities.<\/p>\n

Don’t oversell yourself to investors<\/strong><\/h2>\n

It\u2019s tempting to promise 50 people 50 different things when trying to get funded. If Sterling could give his younger self one piece of advice, it would be this: \u201cDon’t oversell your business when you’re talking to VC. Just let them know what you’re doing.\u201d<\/p>\n

He also says to understand why<\/em> you\u2019re doing what you\u2019re doing, not just what <\/em>you\u2019re doing. There\u2019s a subtle difference, but the distinction is important. The why<\/em> keeps you from driving into the weeds and focuses your journey so you can find the very best support for your success.<\/p>\n

Article is based on an interview between Nathan Beckord and Sterling Pratz on an episode of Foundersuite’s <\/em>How I Raised It<\/p>\n

About the Author<\/strong><\/p>\n

Nathan Beckord is the CEO of <\/em>Foundersuite.com<\/em>, which makes software for startups raising capital. Nathan is also the CEO of <\/em>Fundingstack.com<\/em>, which is a new platform for VCs and investment bankers to both raise capital and assist clients and portfolio companies. Users of these platforms have raised over $9.7 billion since 2016.<\/em><\/p>\n

RELATED: <\/strong>A Step-by-Step Guide to Meeting With Potential Investors<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Nathan Beckord If you can remember back as far as I can, you might remember the good old days of raising capital. You\u2019d load up your 10-slide pitch deck and visit numerous two- or four-story buildings on Palo Alto\u2019s Sand Hill Road, hitting multiple potential investors in one day. That\u2019s how it was for […]<\/p>\n","protected":false},"author":1,"featured_media":14965,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[77],"tags":[],"class_list":{"0":"post-14964","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-startups"},"yoast_head":"\nHow To Raise Corporate Venture Capital | Brandiary<\/title>\n<meta name=\"description\" content=\"By Nathan Beckord If you can remember back as far as I can, you might remember the good old days of raising capital. 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