Raising Money: 12 Slides (VC) vs. 343 Pages (Federal Government)

money

Mixpanel, a private sector company, just raised $65M with this power point deck. It’s 12 slides long.

Of course, they didn’t raise the money because of the deck. They raised the money because of their company’s potential for profits, which they were able to capture in twelve slides.

From what I gather about private sector investing, VCs are mostly looking at the talent of the founders and the potential for outsized profits (VCs make most of their money on 10% of their bets). 12 slides and solid diligence can be enough.

Compare this to Race to the Top applications, where the average winning application length was 343 pages.

In my experience, non-profit fundraising is somewhere in between. Major asks require 20-30 slides and maybe a twenty page written support document.

Reflections

1. Government is a Different Beast

Because of the potential for corruption, I understand why government wants a lot of documentation in order to justify its investments. That being said, I do think the RTTT program would have been strengthened by a more sober analysis of states’ ability to implement. But, again, paperwork is probably an unavoidable tax of government investing.

2. VCs are More Accountable than Foundation Staff

VCs go out of business if their investment portfolio fails to deliver enough profits. This is generally not the same with program officers. Depending on the the foundation, there may be some results based accountability on staff, but the ultimate accountability of foundation staff is in pleasing the founder or board of the foundation. This creates different incentives than those of a VC.

3. Foundations Vary A Lot

In my experience of foundations, I’ve seen a wide variety of diligence processes, some better than others. I’d be curious to see a researcher (paging Rob Reich) try to figure out why this is. Some guesses: (1) whether or not the founder is alive (2) the quality of the executive director (3) the ideology of the foundation.

4 thoughts on “Raising Money: 12 Slides (VC) vs. 343 Pages (Federal Government)

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