Here’s the eShares pitch deck used to raise their $6.8m series-a from venture capitalists Spark Ventures and Union Square Ventures. They were founded in 2012 by Manu Kumar and Henry Ward. In total they have raised $25.8M in 4 Rounds from 22 Investors. Their most recent funding was $17M Series B on August 13, 2015.
eShares is an SEC-registered transfer agent for private companies that enables seed-stage to pre-IPO companies to manage equity electronically with the participation of their shareholders, employees, auditors, and legal counsel. It digitizes paper stock certificates along with stock options, warrants, and derivatives to create a real-time image of who owns what at a startup. eShares receives funding from a group of investors, including Draper VC, Expansion VC, k9 Ventures, Elefund, Subtraction Capital, Scott Banister, XG Ventures, Kima Ventures, Andy Palmer, and Structure Capital. Founded by Manu Kumar and Henry Ward in 2012, eShares is based in Mountain View, California
Their key learnings:
- Fundraising is a filtering exercise, not a popularity contest.
- If you are a fintech startup, go East!
- Ask for feedback other than “the market size isn’t big enough.”
- Avoid VCs who ask for unit economics.
- Success is harder than failure.
Excited investors (and the ones who invested) were different. They didn’t let me pitch. Instead, they asked questions to assess risk. They tried to find reasons not to invest. That is the pitch-paradox. The investors who won’t invest will ask you why they should. The investors who will invest ask you why they shouldn’t.
Fundraising is simple: find investors that get excited about your company. It is a filtering exercise. Too many founders believe they have the wrong pitch instead of realizing they have the wrong audience.
Many VCs will pass with“The market isn’t big enough.” It is an easy explanation because it (1) isn’t insulting to the founder or business, (2) is abstract enough to be inarguable, and (3) portrays the investor as someone who only does “really big” things.
It’s totally unhelpful. Market size lies completely outside the founder’s control. It has no impact on the challenges early stage companies face. And investors are usually wrong about market size. The best companies create new markets that, by definition, seem small (or non-existent) at first.
Before you end a meeting, try to get at least one useful piece of feedback. In our seed round, an angel investor passed explaining, “I don’t think you can convince law firms to accept eShares.” At the time, we were selling to law firms and nobody was buying. His feedback pushed us to change our sales strategy and sell directly to companies. This led to law firms accepting eShares because their clients pushed them too. That one critique transformed our business. While he never invested in eShares, we owe him a debt of gratitude.
Unless you have business that fits in a spreadsheet, avoid investors who think you should.
However, success does not bring relief. Quite the opposite. The problems get harder and the stakes get higher. At eShares, we didn’t celebrate our Series A. Instead, we talked about the responsibility of returning it 10x. And then we got back to work.
This deck is far longer than normal. It’s something I would write 😉 Despite preaching short decks, I tend to like to write longer decks and tell a compelling story. This is something they have done. The core part of the deck is 23 pages. The total is 41
The flow of the deck is not standard at all. They don’t explicitly have a ‘problem’ then a ‘solution.’ They get straight into the product and answer a series of questions that they expect investors to ask. In short, I have a bit of a nerd crush on their deck
- The deck is very clean and consistently formatted. They make great use of statement and images with supporting text. The font size is also good
- They use each heading to explain the slide. This is far superior than to writing ‘problem’ or ‘solution.’ As an earlier stage company, there is a lot to learn by studying later stage decks (other than slides about metrics, of course)
- The concept of the business can be a little hard to understand and they do a fab job of taking the investor through it step by step. I like the slide “We charge $20 per transaction” and how they explain “We chose a transaction pricing model because.” This shows thinking and they are preempting questions about their business model. I know all to well from personal experience that some investors are obsessed with SaaS recurring revenue models- they don’t have one
- I like the way that they present their metrics. See “We are growing revenue 40% month/month”
- Showing not telling that their customers ‘love us’ by showing their twitter feed is cool. I also like the fact they show emails to support their further claims
- The team slide is really good. I complain about a lot of team slides, and this is a fab format!
- I didn’t like their starting slide, but the “Raising $6-$8M Series A to converge private market” slide and the way they shade it up is a fab way to show the vision of the company
- They make good use of adding an appendix with key things investors will want to know but are not encumbered in the core part of the deck. Their financial forecast for example is simple but quite plausible
- I like they have a long term vision for building the company, the slide “This is the food chain we need to climb” is indicative of this
- There is no tag line on the first page. This is something I personally like
- The first slide is a bit hard to understand without detailed prior knowledge. I don’t quite understand what the statement “eShares is capturing the next generation of IPOs” actually means?. It would be better if they started with the slide “We issue electronic shares, options, debt, and derivatives” and then work to this slide
eShares pitch deck reading material
MUST READ: eShares Series A blog on their raise
eShares Pitch Deck
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