“Understanding your audience”
I see a lot of pitch decks. I have a love-hate relationship with them. I see 5-6 pitch decks a week. I help build a lot of them for our startups and help advise others as they refine them for A, B and C rounds. Pitch decks are a tool. Nothing more nothing less. But they are an extremely important tool. I have made so many mistakes over the years on the decks I have built – that I learned the hard way. Building a good pitchdeck is all about understanding your audience. Is this a fund-raising meeting? A sales meeting? Or is this just a general overview deck? Each is slightly different. Once you have nailed your funding deck, the other two are tweaked versions built off of it. Rather than get into the debate about what makes up the perfect deck, lets cover the easy part -what not to do.
Hopefully the below can keep you from making the same mistakes I made.
Lets start with the top 7 mistakes I see every week. Then let’s get into the elements that make up a good one.
- Revenue: “We are going from a loss of $1.4M this year, to $25M in revenue in 2018 to $100M in revenue in 2019.” Holy Shit! Congratulations! You’re the fastest growing, most profitable startup in history. You just lost the room and credibility. Make the effort to know what is realistic, then cut revenue by 40% again. Understand that VC’s and good Angels don’t expect a startup to be profitable for 3-5 years and sometimes longer in commercial technology.
- Text: Lots of it, everywhere! If your slides are 90% text and have more words than a novel – you just lost everyone. If I have to wear my reading glasses to read the entire page that is covered with text, I already said “no” in my mind. Images, pictures, and a demo win the day. Not text.
- TAM: Total Addressable Market. “This is a $200B market opportunity!”. Oh boy. It’s a glaring sign you don’t know your market. Take the time to really drill down to the relevant market size. Don’t worry if its only $500M….good investors understand great products take on 2-3 markets over time. Take the time to know your real market.
- Investment: “We are taking $5M in seed @ $20M valuation to build out our vision”. Understand your audience and the venture/angel market. Just because you went to MIT or came out of a high-profile Government tech job, doesn’t mean you are the next Amazon. You lose credibility right away because you have shown you don’t know realistic Seed funding, Angels, VC’s, how investors work, startup life, valuations, etc, etc. $4M @ $16M valuation is A-series round territory. Not “we have a vision” seed stage. My advice – don’t put a valuation. Let the market set that. If your starting out looking for money – use a note or go to a good seed funding investor.
- Competition & Market: “we are going to be the Uber of Analytics”. I have also seen “we have no competition” – but when I point out there are 23 well-funded startups already in this space, I often get “yes, but they don’t matter – we are very different”. Being just 10% faster, less false-positives or 15% cheaper is not a recipe for success in a crowded space. My advice –don’t go into crowded spaces unless your product is so disruptive –it’s a whole new space.
- Non Disclosure Agreements: “please sign this NDA before viewing our deck”. Don’t do it. VC’s do not sign NDA’s. Its been an industry standard for 20 years. It shows you don’t know your audience. If a VC or investor used your deck to steal an idea, they would be out of business the following day.
- Intellectual Property & Patents: “our patent alone is worth $5M”. It may very well be, but Patents are a tool, not the be-all-to-end all. VC’s and savvy investors put no value on your patent until you actually have traction and strong viable customers. Even then, it maybe worthless in of itself. Don’t over hype IP. Not until your B round.
Good Pitch decks are simple and visual. I cannot overstress how important it is to keep it basic at this stage. Make it simple, make it visual, and highlight your advantage. Having a great deck is important –very important. 50% of the time I am emailed decks from our team at DataTribe, from other founders or Angel Investors. I have never even met the team or heard the pitch in person. This is my first impression of you, the technology and the opportunity. You get one shot. Just know that even if you send your deck to just 5 people – you can bet that 100 will see it that you won’t even know about. You get one shot. Keep it simple.
Here are basic elements of a good pitch deck.
- Shoot for 10 slides, no more than 14. Most of the face to face meetings with startups I sit in on every week never get through the whole deck. Why? Because talking and explaining and having exchanges with investors is far more important than the deck. VC’s want to know you. They desire one thing above all else – to get a sense of you. The deck will either validate their impression or kill it.
- 3-4 Bullet points Max. Keep the text to a minimum. These are talking points, not explanations. Keep it simple, visual and interactive.
- Team/Founders. Put this slide somewhere in the first 4 slides of the deck, not in the back. VC’s care more about the team than the TAM or financials or competition slide.
- Pay for a good graphics person. The best investment you will make at this point is to pony-up $300-$500 for a good graphics artist/Branding expert to help clean up the font, colors, graphics and images. Your deck is a representation of you and the team. Doesn’t have to be the Mona Lisa, but put some serious effort into the look and feel.
- A solid demo of the product. (if you have one) is worth all the gold in the world. Be prepared to go right into Demo-mode at any point. This is where people like me get context and shows what really matters. If you have a web-demo, add a link to your PDF deck so others can click and watch if it’s not a face to face meeting.
- Frame the problem explain the pain point. Two slides on “The Problem” is better than one. Show investors you know the customers and market pain point inside and out. Then show why you are uniquely qualified to solve it and why your product will make life easier, cheaper and better for the customer.
- Competitive Analysis. Don’t be afraid to rank others higher than you. It gets old very quickly to see every deck with a new startup “up and to the right” ahead of all the other established companies. No one expects you to rock the Gartner Magic Quadrant in your first couple of years. Show an honest assessment, but also show why you are quickly going to disrupt them as you build out.
A good basic template to work from flows like this:
- Team & Credentials
- Traction (customers, Pilots, early adopters, etc)
- The Problem you are solving and why you are familiar with it
- The Solution (BFI -Big Fundable Idea)
- The Market
- The Competition
- Summary Financials
- Summary Company & Funding Timeline
Lastly, having a great, simple and professional deck is going to give you a lot of confidence when you make your presentations. You will also have a much higher success rate in getting funding. Spend some money on a good graphics person and professional template. Ask anyone who will listen to send you examples of awesome decks, learn all you can and practice before you present. Conversation and getting to know the founders passion is what matters most. Raising capital is HARD and takes preserverance. Here is a “cheat Sheet” to help you when its time to pitch to a room full of investors.
Don’t assume your Audience are Experts
You should be the “subject matter expert” in the room
Keep acronyms to a minimum
Practice -Make Sure you have Your Elevator Pitch down Cold
Open your meeting by Framing the Conversation
Manage your Meeting Time
30 Minutes for the Presentation
10 Minutes for the Demo
20 Minutes for Questions
The Objective of the First Meeting is to Get to a Second Meeting
Don’t try to convey everything you know – You will FAIL
Be humble, remember the manners your parents hopefully taught you
Engage with Questions – Don’t Become Defensive
Don’t Bulls#$% – Building Confidence is Essential
