Rebekah is Co-Founder and CEO, Hey You. Prior to Hey You, Rebekah founded Scorpio Music, one of Australia's most successful music companies. She is chairperson of community organisation Chapel By The Sea, a director at grassroots political organisation Campaign Action, an advisory board member for non-profit Kidpreneur and a columnist for the New York Times.
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What it's like to pitch in Silicon Valley
I'm writing this week from the University Cafe in downtown Palo Alto.
It became famous in The Facebook Effect book as the team's regular hangout when they moved to Palo Alto.
It's an unremarkable cafe, often packed with people like me, in town to try to convince VCs (venture capitalists) to invest in their start-up idea. Looking around I can see 11 other Mac laptops and four guys pitching to a VC over coffee.
Palo Alto is an odd mix: Old, small-town charm filled with people who work in technology. The Apple Store is a main street landmark, there's Wi-Fi everywhere and even the hummus deli asks customers for feedback on their beta site. It lives and breathes start-ups.
It's a privilege to pitch here; I'm proud to have successfully raised investment from this town. I've been here four times over the past year, spending my time meeting VCs and presenting my PowerPoint deck. It sounds like a romantic journey and in some ways, it is.
Not always. So I'll share my experience of raising money in Silicon Valley.
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Most of the VCs I've met with are in one of three areas: Mountain View, Palo Alto or on Sandhill Road.
Mountain View and Palo Alto are small towns about an hour south of San Francisco, fifteen minutes’ drive from each other, with Sandhill Road about ten minutes from Palo Alto. Top firms like Sequoia, Kleiner Perkins, Benchmark, Andreessen Horowitz and Greylock are all on Sandhill Road along with hundreds of others.
When I first imagined Sandhill Road, I pictured a bustling city centre. What I found resembled a country road in the Hunter Valley.
The buildings look like ski lodges separated by long, neatly maintained garden driveways. The road has no cafes or restaurants, just lots and lots of VC firms and a posh hotel for visitors. Not start-up entrepreneurs like me – we can't afford it.
When I arrive to pitch at one of these firms a receptionist offers me a bottle of water, then ushers me into a boardroom with a big screen at one end. She helps me connect my laptop to the projector, then asks me to wait until the VC arrives.
The whole game so resembles the way I used to pitch bands to record companies, I sometimes kick myself to check I haven't slipped into some parallel universe.
In music, record company foyers all display pictures of their current top artists; in VC firms, they often display screens starring their top entrepreneurs.
In music, boardroom walls are packed with gold and platinum records, the VC boardroom walls are crammed with framed IPO certificates or records of the exit prices of their companies.
The pitch is similar too: instead of sitting back and playing a CD or music video, I perform live with my PowerPoint deck as the instrument.
VCs are nearly all men. I've met more than 100 people here and, so far, only two have been women. They're quite similar in style – genuinely nice people who I might want to hang out with, passionate about the industry and the companies they're involved in, and super smart.
This makes the next step – delivering the presentation – much less intimidating than you might expect.
I search for something in common – perhaps someone we both know, a sport we both follow, or perhaps they've been to Australia. Then I launch into my pitch.
Some days, I've driven from meeting to meeting delivering the same presentation eight times. Everyone is so nice; it's hard to know when a meeting has gone well.
When people ask challenging questions to which I don't have a good answer then I'll leave the meeting feeling deflated. Every time I receive a follow-up email saying this isn't for us it's like a little kick in the stomach.
The excuse is that we're too early or too late, not raising enough money from their firm or too much. I don't often get a straight reason why someone didn't invest, which is annoying as I could learn a lot from this feedback.
When I head back to my cheap hotel room at day's end, it's easy to feel defeated. This is when I think it would be nice to have a co-founder with me to talk things through and pick each other up.
Fortunately, my days in music hardened me to pitching and hearing 'no', or worse still, hearing nothing. I remember spending months in the US and UK pitching bands to record companies. I learnt something from every rejection and each raised my determination to make the artist a hit.
More than 90% of my bands went on to have highly successful music careers, a real sweetener when I've worked hard and faced a lot of rejection. When someone says “no” to Posse, I remind myself of this.
Many more investors say “no” than say “yes”. I walk out of almost every meeting having learned something from a question asked or by being inspired by an idea triggered from someone's comment.
I love it when someone picks apart the whole idea and strategy as this helps me refine my presentation – how our product differs from the competition, our unique market insights, and why we'll win.
Every pitch is stronger than the last. I often find that the people who ask the toughest questions are the ones who end up investing. Or perhaps it's just that I won't let unbelievers go until I've convinced them!
The good news is that the first round of meetings is the hardest and the first round of capital takes the longest to raise. With people like Bill Tai or Simon Rothman on board, there's a snowball effect and others want to join.
Their involvement helps us develop better strategies, leading to a better product, leading to better metrics. Fundraising grows easier and quicker every time. I'm here in the US this time for two weeks and I'm expecting to wrap up another $1 million raise before Christmas.
In my next blog I'll share some tips for raising money in Silicon Valley for anyone who's game enough to try.