We see about 1000 pitches every year.  That's about 20 per week.  With the majority of these, we know that it's not for us within the first 15 minutes.  We do engage further with about 400 startups every year.

The first engagement is either an in-person meeting or a call.  This is the step where we start to demand metrics and data from these startups, and frequently, it's a painful process.

What we typically like to see is three sets of information:

1. Historic financials

Here, I don't necessarily mean the  statutory income statment, but sometimes, they work as well, as long as they reflect the management's view of the company's operations.  What we look to see is a summary of the monthly economic activity or the business, and perhaps, the unit economics.  Typical items we looks for are:

• The Top-Line Figures (GMV, Gross Revenues, etc.)
• Cost of Goods Sold
• Gross Margins
• Operating Expenses (Salaries by function, Marketing Expenses, G&A, etc.)
• EBITDA

We prefer seeing these in your local currency, monthly, and broken down to its natural components, that tell the story of your business.

2. Forecasts

In your forecasts spreadsheets, we like to see both a top down and a bottom up approach, to make sure they support each other.  By top down, I mean starting with the total addressable market data, and narrowing to get a sense of what size a slice you'll ultimately have of that market.  By bottom up, I mean checking your growth projections agains the historic patterns. Ideally these numbers are broken down monthly.  If you are foreseeing any jumps, we like to discuss why.

 3. Other Key Metrics

The third spreadsheet we like to see is your non-income statement metrics.  These give us the best sense of how you see your business.  Essentially, this is theKPI dashboard you look at to manage your business.  It may include data on your traffic, level of engagement, the number of suppliers, salesperson productivity or hours of content, etc.

One set of metrics we find useful in almost all types of businesses is customer data.  Whether you are an enterprise or a consumer business, the most valuable assets of most startups are their customers.  Therefore, demonstrating to us how your customers behave once you acquire them, using data, is critical.  Tools like cohort analysis allow us to have productive discussions with you about your business.

I'd urge any startup talking to VCs in iterating and refining these three sets of information before proceeding too far in their conversations.  Not only will it keep the process with VCs more efficient, it will improve your understanding of your business.

As a VC you get pitched many hockey stick stories, but infrequently see an actual one.  This week, I came across one in the case of Airbnb (on TC).

This is the graph of summer bookings by travelers on Airbnb.  I assume there are several drivers to this growth:

• A new market: Airbnb enables a behavior that was difficult to execute before it.  Similar to Uber, its growth benefited from the fact that it created its own market, rather than merely stealing market share from incumbents.
• Mobile growth: As one of the earliest mobile-first companies, it was always one of the top apps in the travel category in each market it operates in.
• Social graph: The business model requires a high-level of trust.  Airbnb used the social graph very effectively to provide this trust, and thus benefited from the  virality that social networks open up.
• Global network effect: Travel is inherently a global market, so in each local market, the global network effect trumps the local one.

As a result, you get the beautiful shape we see above.