+

How we invest
in startups

Red Flags for VC

Deals

1
Introduction

George Damouny
Headshot Partner, Plug and Play Ventures
Goes Here
Plug and Play at a glance

553 627 1100+

Corporate Employees Portfolio
Partners Companies

22 133 33
Investment Ventures Unicorns
Offices Team

$18B Plug and Play’s portfolio has raised in venture funding

 *Order by Date

We’ve backed
some of the best
startups.
Check out our
spectacular unicorn
portfolio of 30+ unicorns!

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We help our ecosystem of 550+ corporate partners,

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 What is Venture Capital?
2021
2021 UNICORN

We have UNICORN

backed some 2021

UNICORN

of the best 2021

UNICORN

startups. 2021
UNICORN

Check out our Unicorns.

2021
UNICORN
2021
UNICORN

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Source: Salesforce
Last updated: June 2021
 What people think VC is

Source: Ge y Images
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What VC actually looks like

Source: HBO
Definition of Venture Capital

ven·ture cap·i·tal
noun noun
1. a risky or daring journey or 1. wealth in the form of money
undertaking. or other assets owned by a
“pioneering ventures into little- person or organization or
known waters” available or contributed for a
verb particular purpose such as
1. dare to do something or go starting a company or
somewhere that may be investing.
dangerous or unpleasant. "rates of return on invested
“she ventured out into the capital were high"
blizzard”
Why does Venture Capital Exist?

I. Fund dreams
II. Invest in Google before it’s “Google”
III.Back founders building something greater than
themselves
IV. … and hopefully make a lot of money
VC funding is not for everyone

Source: Unsplash
Build / Prove / Grow / Scale

Source: Unsplash
You’ve probably seen this

Source: Maplitho
Same same but different

Source: Spero Ventures

Early Stage Opportunity Assessment (ESOA)

1. Founding Team
2. Business
Red Flags in:

3. Fundraising
4. Deal

3 Source: iStock
1. Founding Team
First a team, then uniqueness

Source: Quartz
Predictor:
Past experience

Source: Greylock
1. Being
Building emotional
emotional or
or irrational 4. Unable
Unable to
to pitch
pitch idea/business
idea/business
rational
under under pressure
pressure well
well
2. Lack
Lack of
of empathy
empathy 5. Not
Not responding
responding to
to the
the key
key
questions
questions
3. Looking
Looking for
for aa quick
quick exit
exit 6. Overconfident
Overconfident oror arrogant
arrogant

15
7. Lack of necessary experience 10. Not being transparent or honest
or knowledge
11.
8. Not knowing each other for An all-star team

long/well
12. Not fully committed
9. Not sharing data room after 13.
multiple conversations Being highly diluted at an
early stage

6
2. Business
Product - vitamin or aspirin?

Source: Amazon
Solve more than just an acute pain

Source: Bayer
Market - big and in billions

Source: FourWeekMBA
The importance of big markets

Source: CB Insights
Beachheads can be misleading…

Source: FiveThirtyEight
1. Low traction after a long 3. All the traction coming from
period of time one customer

2. Lack of paid 4. User growth heavily relying

customers/pilots on marketing (or
compensation)

8
5. High GMV with a 7. Unclear business model
low/negative margin

8. Failed/bad precedents in the

6. Being a traditional business same space
instead of a high growth
business.
9. Limited exit opportunity

9
3. Fundraising

Source: Unsplash
Do they have a lead?

Source: NYPost
1. Not closed for a long time 3. Too aggressive for funding and
valuation

2. Not being transparent 4. a long gap between two

rounds

11
5. Having been founded for too 7. Spending too much effort on
long the deck

6. TAM being too big or too 8. Not spending enough effort

small on the deck

12
4. Deal

Source: Unsplash
Previous investors not following on

The same lead investor for the new round

Lack of reputable co-investor

Taking corporate money at an early stage

14
High Risk - High Reward

Source: Kitces
No pressure

Source: Innomag
Startups follow a Power Law distribution

Source: Zero to One

Startups follow a Power Law distribution

$100k —> $100M

Source: Zero to One

Stay in touch

George Damouny
Headshot Partner, Plug and Play Ventures
Goes Here

[email protected]
Cap table review

Source: TooMuchCapital
Does it have a Moat?

Source: Getty Images

How wide is the moat?

Source: Conversion XL