Bottom line question for judges:
“Which team would you hire?”
VCIC Judging Criteria Overview
(see actual judge form here)
New in 2020 — negotiations are back!
After one year off (a failed experiment), we are returning to the pre-2019 format in which the two (2) teams coming out of the partner meetings will have the chance to negotiate with the startup of their choice.
THINGS TO CONSIDER ABOUT JUDGING:
- Some students have expressed frustration at the qualitative nature of the judging. Be ready for it. This is not a numbers game. It is a people game that includes some numbers. There is no quantitative way to determine a best team just as there is specific formula to determine the “best VC” (except financial returns, and we won’t have time to wait for returns at VCIC). There are many successful VCs with wildly varying philosophies and approaches, and your judging panel will likely reflect some of these differences. In other words, different judges may be looking for different things even though they have the same “criteria” in front of them.
- Your team’s goal should be to be the best you can be, given your assets and predispositions. You might also pay some attention to the judging panel at your event (see next bullet). Even when your team is the best it can be, some judges will agree with your approach and some won’t, and that is a normal and healthy representation of venture capital. No “judging criteria” could force the judges to agree.
- There is a lot of room for interpretation in the criteria above, and different VCs, firms and geographical regions will have different cultures and opinions about how to be the “best VC.” It is worth looking at your specific event website to see who is judging the event to get an idea what they might be looking for. For example, if there are a lot of corporate VC judges at your event, you can expect that they may interpret the criteria differently than seed investors would.
- Don’t let the “points” above confuse you; the process is more qualitative than quantitative. An analogy might be the Olympics or a beauty pageant: everybody competing is very smart and talented. The judges have the difficult challenge of assessing which team would be the “best VC.” Often this means fishing for mistakes to rule out some teams.
- In the hunt for mistakes, some judges may dive deeply into the term sheet to see how much the team understands the implications and intricacies of each term. This can seem frustratingly trivial, but it is one way to differentiate teams.
- When it comes to the key terms, particularly the investment size and pre-money valuation, the judges want to hear that you are thinking like a VC (and not a banker or corporate finance officer). Make sure to watch the training videos and take a look at the VC Razor Return Analysis Worksheet.
- Judges also care a lot about how you demonstrate value as a firm, as this is an important part of the business (especially in boom times). This creates a dilemma for young teams who don’t really have any experience or a network. How much should you game it? There is no single strategy that works best. We recommend being natural and demonstrating that you’ve thought it through, while not being too goofy on the gaming it front. For example, don’t recommend your uncle Bill Gates as a board member, but DO check LinkedIn and find someone who would be a good fit, and perhaps game it by saying that individual is an entrepreneur-in-residence with your firm.
- When you receive feedback at the end of the day, you will often hear that you made some technical mistake that may seem trivial to your team. This may be because that technical mistake was the easiest thing to point out and not necessarily a more serious but complex “mistake,” such as a bad performance in due diligence caused in part by your abrasive personalities. That is difficult feedback to give. Keep in mind that it is rarely for some single reason that your team did not win (just as it is almost never a single reason people break up with one another, though they may point to one).
- The way the judging works is that each judge keeps notes and scores along the way on a judging form. Some judges are extremely meticulous with notes and numbers. Others, not so much. We don’t collect their numbers or notes. All we ask, at the end of the partner meetings, is for each judge to give us their vote for their #1, #2 and #3 teams, given the question, which team would you hire? We do not collect any forms. We encourage the judges to use those for feedback.
- Speaking of feedback, it is really difficult for judges to remember the intricacies of the day with 30+ students going through so many different activities. Asking, “What did we do wrong?” just puts your judge on the spot. You’ll likely learn more by asking how they would do things. “What were YOUR top 3 questions for startup #1?” “Which startup would YOU have selected if you were on a team, and how would YOU have structure the term sheet?” Organizers will try to get at least a few different judges in front of you at the end of the day. Getting several data points on the questions above can be a great lesson about how different VCs may have different approaches. From this, you will likely have a better idea of how your team may have missed or hit the mark for those judges.
- Also on feedback, be proactive in the VC Round Robin sessions and seek out the judge(s) you want to talk to the most.
- Back to process: to get the winners, we score 3 points for every #1 vote, 2 points for every #2 vote, and 1 point for every #3 vote. We ask the judges to vote with no discussion or deliberations so that we can get back to the teams with more time for one-on-one feedback at the end of the day. (Without this policy, judges would debate until the end of the day, leaving no time for one-on-one sessions with you.)
DUE DILIGENCE (20 pts)
- How well did the team cover what you consider the key issues/questions?
- How did the team seem to understand the business opportunity and strategy?
- To what level was the team able to establish appropriate rapport with the entrepreneur?
- How appropriately did the team lead/control the meeting?
- How well did the team dig into the right issues?
- How skilled was the team at getting information (not just asking a list of questions)?
- To what level did the team appropriately demonstrate their value as a VC firm to the entrepreneur?
- How well did the team demonstrate an understanding of the financial requirements of this deal?
- How well did the group appear to work together as a team (as best you can tell)?
TERM SHEET (20 pts)
- Reasons to invest
- Reasons not to invest
- Overall decision
- Aligned interests between VC and entrepreneur
- Valuation, investment size, syndicate, fund fit, option pool, other terms
PARTNER MEETING (20 pts)
- Demonstrated VC knowledge
- Adequately explained deal
- Addressed key issues
- Confident and convincing
- All members contributed