The New Entrepreneur’s Guide to Startup Funding
At Pithia, we want all entrepreneurs to understand how to work with Pithia to get the best deal possible, as painlessly and as quickly as possible.
As with any VC, the evaluation of a business and the due diligence materials required vary with the round and size of investment. This document covers how we work with “Angel” and “Seed” rounds.
What You Need for All Rounds
We invest in two types of companies: those upon who the blockchain depends, and those who depend on blockchain, i.e.:
1. Those providing enabling technologies and services without which, the blockchain ecosystem will not thrive; and
2. Those for which a blockchain is core to their DNA, and their use of the blockchain provides a meaningful distinction to approaches without blockchain.
A company can be in both categories, e.g., with identity and wallets. However, since crisp focus is important to all stages of corporate growth, a tight focus within a single category is better than a loose focus on both.
While we understand that many of our investments may launch their own app or market token, an investment needs to depend on blockchain’s immutability, distribution, and resiliency; the use a token is not qualifying for us on its own.
The Three Angel Fundamentals
For an angel round investment, we do not need to see a formal corporation or even a complete team. We can help you with both challenges. We do want to know that you will be able to make significant progress with an initial investment.
What we will want to see are three fundamentals for every business:
1. A great idea;
2. A team competent to begin executing your idea; and
3. A few paragraphs about why your idea provides value to your chosen market segment.
The Seven Seed Fundamentals
For a seed round, you should have the Seven Seed Fundamentals, which are the three Angel fundamentals listed above, plus these four:
1. Validated Value Proposition:
a. Clear value proposition for a specific set of customers
b. Something – data, a demo, a deal, or a competitor you can beat – that validates the financial or social value of proposition
2. Initial Market Research, Including:
a. Description of the total market
b. Understanding of what market segments are addressable bv your business
c. Clear path from the initial validation to the broader markets
d. Names of key competitors and your positioning relative to them.
3. Financial and Equity Plan:
a. Outline of likely customer acquisition costs
b. A simple financial plan showing the required outlays on development, marketing (if any), and expansion of the management team
c. Current and planned equity ownership of management team and seed backers
4. Management Team
a. Key staff with a history of succeeding at current or related roles
b. An understanding of what gaps in the management team exist, and a plan for how to address them
c. At least one external advisor with experience demonstrating they are competent to help guide the management team
How Our Funding Process Works
We use a simple, three-step process:
1. Work with a partner at Pithia to hone your pitch
2. Present to our full team
3. Respond to due diligence and get your check!
For new entrepreneurs, the longest step is typically honing your pitch. We hope the above guidelines make this as easy as possible. While deals can take longer, we try to work the entire process in less than 6 weeks.
Why Pithia? Our Team’s Experience Makes You Smarter!
Your upside can be limited by who you took money from and whether they are going to continue to believe in your technology and your team. There are some truly amazing VC firms, but there are many more others who perhaps didn’t make their money the hard way. Not knowing what it takes, they can’t help you succeed when you need help the most.
You want real-world experience on your side; someone who has lived the life of an early technology entrepreneur. That’s us. We’ve been there, and we’ll be there with and for you.
Our Team’s Technology Wins:
• Early high-speed and interactive Internet applications
• Discover Card – Design of Merchant Systems and NOVUS network
• Unified Model Language (UML)
• Industry recognized loyalty systems for Safeway, The New York Times, Discover
• Re-engineered Dun & Bradstreet core systems
Our Team’s Cryptocurrency Wins:
• We started in the 1990s, back with Motorola's first gen cryptocurrency
• Founding members of RChain
Our Team’s Startup Wins:
• Founded and sold the core enabler of Sony’s PlayStation Network
• Previously backed or launched 20+ startups
• Public and private board experience