The memo a 23-year-old used instead of a pitch deck to raise $4.5 million for her startup

headshot of Phoebe Yao
  • Phoebe Yao is the founder of Pareto, a data-collection tool run with the help of virtual assistants.
  • She started her company in 2020 and has since raised more than $4.5 million.
  • Yao shared the memo she used instead of a pitch deck for her seed round.

Phoebe Yao, 23, first became intrigued by how the gig economy could help people in developing nations gain access to well-paid opportunities after visiting an impact-focused BPO, or business-process outsourcing, company as an intern for Microsoft Research in India.

So when the Stanford alum moved back to California four months later, she began to think about how she could further connect bootstrapping entrepreneurs with the virtual workforce. 

The result was Pareto, launched in May 2020 as a resource for startups to launch successful marketing and sales campaigns with the assistance of “data analysts,” or virtual assistants who specialize in using Pareto’s software and send data requests to clients.

Pareto now has 11 full-time staff members and 70 data analysts who work on an ad-hoc basis, Yao said. The data analysts, who are largely in the Philippines, were found by Yao through virtual-assistant communities on LinkedIn and Facebook and via referrals. Many are stay-at-home moms who appreciate the flexible hours, Yao said, and once worked in the back office of American companies or in call centers.

Each data analyst who works for Pareto undergoes a two-week training boot camp, where they learn hard skills around basic data-collection tools and soft skills like navigating cultural differences.

Raising funding using a ‘memo’

Yao raised $600,000 in October 2019 from startup founders and venture capitalists. Two years later, she raised another $4.5 million from firms like MaC Venture Capital.

For her pre-seed round, Yao said she used a pitch deck. But when she chose to raise a seed round, she decided to switch from visual slides to a memo.

“I was very intimidated by the fundraising process,” Yao told Insider. “I didn’t really see how I could build the relationships or show up in a way that made sense for my personality.”

Yao felt that a memo would better help her get her message across and iterated on it several times before reaching the final product.

“Changing the memo is key to the fundraising process,” Yao said. “The first couple of weeks involve talking to investors, learning from those conversations, and learning what to emphasize in the memo. I think I probably edited the memo every day for the first two weeks to make it more succinct.”

Yao walked Insider through the memo she used to raise $4.5 million and explained why she thought it worked in getting investors’ attention.

Courtesy of Pareto

Yao said she wanted to start the memo with the vision for Pareto so that investors would think big about what it could be.

“We wanted to start with something that would be exciting for investors and show them the world we’re trying to build,” Yao said.

Courtesy of Pareto

Yao said she then wanted to highlight that quality data was expensive and hard to access.

“We wanted to help investors understand what’s so challenging about this space, and it helps frame the following solution,” Yao said.

Courtesy of Pareto

The goal of this section, she said, was to help investors experience the ease of using Pareto, including the fact that clients can expect a response within 24 hours of sending their first email about the data they need.

Courtesy of Pareto

Yao knew that adding the customer voice to the memo would be powerful.

“There are three testimonials in the memo,” she said. “Austen shows that customers want to fully integrate us into their day-to-day workflows, Michael talks about the core value that Pareto delivers, and David says how we deliver data that is strategic.”

Courtesy of Pareto

The market section says Pareto is part of a large industry that’s continuing to grow. Yao said she also wanted to show investors it was a space where money could be made.

Courtesy of Pareto

Within this section, Yao said she wanted to take investors “under the hood” and show how Pareto takes a simple request from a customer and turns it into machine-readable language that its software can then use to process data.

Courtesy of Pareto

Traction was one of the three key points that Yao wanted to include in the memo.

“No. 1 was that we’re at this incredible point in technology where we can use natural language processes to automate data delivery, which was impossible before,” Yao said. “Another key message was that we’re growing so fast and our customers appreciate what we’re building. And the third key message is that we have a really clear mission-driven culture and we’re not going to stop until we figure out what works.”

Courtesy of Pareto

Yao said she wanted to use this section to show investors she had a plan for continuing the company’s growth.

“The market is ready for this, and people are excited to use it,” Yao said.

Courtesy of Pareto

This section includes how money will be made moving forward.

“We have a plan for going from project-based revenue to recurring revenue. Recurring revenue is the main thing that investors are focused on,” she said.

Courtesy of Pareto

To show how Pareto is positioned for success, Yao included her background and that of Adrian Villa, Pareto’s vice president of engineering.

“Adrian has been the CTO of multiple startups in the past. I wanted to show investors that we had really incredible talent on our team,” Yao said.

Courtesy of Pareto

Yao chose to close the memo by focusing on money.

“It’s really a call to action for investors,” Yao said. “If they’re excited about what we’re doing, then they’re going to want to get their money in and support us.”