Get all of your startup financing and venture capital questions answered, Ask Me Anything

Jason Kraus
Mar 26, 2018

Jason Kraus has analysed hundreds of pitch decks and business plans to find the top opportunities, and he is a venture capital partner at the EQx Fund and Director of Venture Capital for Equity Venture Partners. He also founded startup consulting firm Prepare 4 VC to help entrepreneurs create better presentations and focus on the information that investors are looking for. #AskMeAnything

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How do you evaluate a business plan? What makes a good investment?
Apr 2, 8:42AM EDT0
What investment areas do you find interesting?
Apr 2, 8:33AM EDT0
Is it advisable to never exceed three syllable words unless absolutely necessary during a pitch?
Mar 31, 10:28PM EDT0

Pitches can be sophisticated just make sure someone who is unfamiliar with the current way your industry works will understand what your solution is and why it is unique. 

Mar 31, 11:45PM EDT0
Was this the job you ultimately wanted in life, or did it just happen?
Mar 31, 7:22PM EDT0
What qualifications did you need to acquire your job?
Mar 31, 1:01PM EDT0
How does venture capital work?
Mar 30, 2:30AM EDT0

In basic terms, startups and venture capital investors agree upon a valuation of the company at the current point in time that they will invest into. So if the company is worth $2Million and the VC invests an additional $2M, the company now has $4M in value and the VC owns 50% since they contributed half of the value. If there is no additional investment and Google buys the startup for $40M in a few years, $20M (50%) goes to the founders and team and $20M goes to the VC investors. 

Since the most startups fail before exit, VC's spread the risk over high potential opportunities, hoping one or two out of 10 deals will return 10-20x their investment while others in their portfolio may fail.

Mar 30, 3:12PM EDT0
What according to you are the best-kept secrets about venture capital?
Mar 29, 4:27PM EDT0
How will the venture capital model likely change in the next twenty years?
Mar 29, 3:38PM EDT0
How will the venture capital model or approach likely change in the next twenty years?
Mar 29, 12:49AM EDT0

Advances in technology plus new capital sources like crowdfunding make it easier to get initial traction on the business. Additionally, coworking spaces, accelerators etc. make it cheaper to operate businesses and VC funding should adjust to the newer landscape: less investment needed per company but a greater number of startups invested in. 

Mar 30, 2:57PM EDT0
Do you think it's a good idea for startups to avoid raising venture capital?
Mar 28, 4:34PM EDT0

This is a great option for what Angel Investors refer to as lifestyle businesses. You can build a great company that provides a stable salary for you and your management team long term.

Angel and VC investment is traditionally designed for entrepreneurs that want to grow a business rapidly to exit (a sale to another company, a private equity firm, or an IPO)

Mar 29, 10:18AM EDT1
What is the best database to find some good venture capital deals?
Mar 28, 6:59AM EDT0

For accredited investors, check out local Angel Groups, online investment groups like Equity Venture Partners, or funds like EQx funds. 

For anyone, check out equity crowdfunding platforms like WeFunder, Netcapital, seedinvest, Microventures, etc. Most of these deals are open to the public through RegCF or RegA+, some are RegD 506C offerings for Accredited investors only.

Mar 28, 11:11AM EDT1
What are some of the reasons not to invest in a company, regardless of the market opportunity?
Mar 28, 3:47AM EDT0

Assuming the product-market fit, traction and competition checks out, there may still be reasons not to invest:

A team that you don't believe can execute on the vision, the amount of risk involved (some investors like hit-or-miss homerun opportunities, while others like more de-risked investments), conflicts with portfolio companies, a difference in oppinion on the path the company should take within the space, or a great deal flow where you came in at number 5 with only funds for 4 investments.

Mar 28, 11:06AM EDT0
What immediately available resources would you recommend for a team that regularly presents to live audiences?
Mar 27, 5:17PM EDT0

Practice is the best resource, at these events or meetup groups, etc. Ask for genuine feedback from individuals in the audience on your pitch, if they understood it the whole way through, what peaked their interest and suggestions they might have for next time. 

I run through mock presentations to give feedbacks on the content, delivery and the storyline to my clients and would be happy to set up a strategy session. You can book one online via www.prepare4vc.com/contact

Last edited @ Mar 27, 9:32PM EDT.
Mar 27, 9:31PM EDT0
Do you have a role model or an entrepreneur who you admire and on what basis has this person earned your admiration?
Mar 27, 4:47PM EDT0

I heard Richard Branson speak while I was studying at Colgate University and was inspired by his philosophy of starting new companies. When he gets an idea, he doesn't waste a lot of time analyzing whether or not he should pursue it, he finds the quickest and easiest way to test it out and lets the market decide if it is worth investing resources to scale. And he has made a slew of great businesses using this method

Mar 28, 10:59AM EDT0
How valuable is a startup accelerator to a business?
Mar 27, 4:47PM EDT0

They can be very valuable in terms of both a learning experience and accountability. Even the online accelerator programs (I went through YCombinators Startup School) are very valuable as they have both training sessions to help you grow your business and a feedback session where you set goals for the next week, discuss challenges and successes with an advisor and get to learn from other startups in the same situation. 

Mar 28, 10:50AM EDT0
Since you began investing as a venture capitalist what has been your biggest mistake and the most valuable lesson you have learned?
Mar 27, 7:30AM EDT0

I wouldn't say there are mistakes on the venture capital side, I'm very excited with all of the portfolio companies. It takes time to develop but they have shown great progress and traction and are lead by amazing teams.

As an entrepreneur and startup consultant, the most difficult challenge is turning away business that is not a fit. There were many challenges early on that developed into new business opportunities. I started with the expertise on building out the content, but the designs were lacking so I built up relationships with design partners. Then I had great clients and a strong network of investors, but had to balance warm introductions with sending every opportunity that came my way. I solved this through co-founding an investment group, Equity Venture Partners, where all members were accredited investors we signed up to recieve our deals and jump on a monthly investor call to hear live presentations. I had other opportunities with clients that were not a fit for angel funding at all, so I developed relationships with crowdfunding companies, debt providers, etc. to expand the outreach. The key is that mistakes should be seen as opportunities to expand your offering without losing focus.

Mar 28, 10:46AM EDT0

I'm a Recording Artist out of Nashville, TN and a former MTV Reality TV star - I have never gone after financing for my artist project - would you advise that I do - and where would you suggest I go looking for a partner/funding? 

Mar 27, 2:57AM EDT0

That's awesome! I'd say first stop would be to check out sites like https://digitalmusicuniverse.com/

Digital Music Universe is a startup with a platform approach to replace record labels and licensing with a subscription model to get emerging artists in front of all of the major channels (itunes, pandora, spotify, etc.)

If you are looking for funding, I'd check out equity crowdfunding channels or focus on connecting with investors who have backed other artists in the past. 

Mar 27, 9:59PM EDT0

Thanks Jason, for replying :)

I will share my product projection plan with you, where can i share, may i know your email id

Mar 27, 12:16AM EDT0

Feel free to add me on LinkedIn at http://linkedin.com/in/jkraus23

or via email at jason@prepare4vc.com

Mar 27, 9:38PM EDT0
Which are the most promising tech market segments you are currently looking at as a venture capitalist?
Mar 26, 11:33PM EDT0

AI and Machine, blockchain technology, and Augmented reality are all changing the way we live our lives everyday. I look for applications of these that truly enhance the business, and are not just throwing in buzzwords into their presentation.

Mar 27, 9:36PM EDT0
What methods do you use to differentiate between the opportunities that you see and what is the average size of each investment?
Mar 26, 4:02PM EDT0

The first and most important aspect is the qualitative analysis of the management team's experience, leadership and reaction to feedback, the problem being solved, the solution and defensibility from competition. From there we narrow down the opportunities by looking at the quantitative aspects like market size, exit opportunities and multiples, and realistic financial projections and returns. 

Mar 26, 11:09PM EDT0