Asking a venture capitalist how to make the best pitch deck is like asking an Italian chef for his spaghetti recipe. Every VC has their own idea about what they are looking for in an investable pitch, just like asking ten Italian chefs for the best recipe for spaghetti will get you ten different recipes. Investing, despite the processes, systems, or calculations someone might apply to analyze a potential deal, still comes down to a personal, often gut decision. While nearly everyone can agree on the basics—ten to fifteen slides—they also carry their own ideas about what is going to get them excited and no generic advice can account for your own passion, potential, strengths and weaknesses.
Pitching is storytelling
What turns pitches into investment dollars is a compelling story, you hear time and again that investors put their money on people, not ideas. This is primarily because ideas are everywhere, but people that can execute those ideas effectively are harder to come by. There isn’t anyone in your life that you have won over by presenting a series of headlines supported by bullet points, so don’t expect someone to offer you millions of dollars because you put together a Powerpoint from a template. You set out on this entrepreneurial journey for a reason, leave the minute details for conversations down the road and sell your story.
The slide deck is your preview and you want the investors to buy the ticket to see the whole movie.
Set the stage
Start with one of the basic structures for effective decks from, Guy Kawasaki, Dave McClure of 500 Startups, or my own. The stage of your company will largely determine which slides are vital to your presentation. Making slides just because they are “supposed” to be there is always a bad idea—either you have the data to make a compelling slide, or you don’t. A seed stage startup won’t have any financial data and making up three to five years of projections and bogus EBITDA figures is only going to create difficult questions to answer. A better approach is to focus more on your business model, how your business fits into the market and create intelligent assumptions. If you are generating revenue, you should be able to include clear financial data that includes knowing how much it costs to acquire your customers and what their lifetime value is.
A recent report by DocSend studied two hundred startup decks on their platform who successfully raised money. DocSend found that the average deck was viewed for less than four minutes and the financial, team and competition slides consumed the most time. Interestingly, only a little over half of decks included financial slides and just two out of three included slides on the competition. Takeaway—if you include it, make sure it is meaningful and if you don’t, have a solid explanation about why it was left out.
Lead with your strengths
Don’t feel self-conscious about where your idea is at, own it. If you believe your business is worthy of investment than make the case for what makes it that way and be equally clear about what you need to get to the next level. Pretending to be at a stage that you aren’t, undervaluing the competition, or overestimating your solution are warning flags that will send potential investors for the door.
Few ideas are truly unique, it is more likely to be novel, so sell your strengths.
The standard approach for the order of your slides, and the one documented in the DocSend report, goes from problem to solution, then market size and describing the product, but this is where I think the crafting of your story hits the road. Use your strengths to structure your deck and presentation. If you are early stage, but are solving a problem everyone can identify with and have a rock star team, I would order the deck around that. If you have traction, don’t save it until the end, get people on the edge of their seats as quickly as you can. I read a blog post on pitching VCs once that suggested demoing your product first. I think it is a bold and potentially risky approach as demos in presentations can make, or break you, but if you are fired up about your solution and can pull it off, it will certainly leave an impression.
Paint the picture
According to DocSend, spent the least amount of time on solution, problem and market size. This doesn’t mean you should ignore these slides, but it does support the idea that investors are investing in people and their ability to execute. If an investor thinks you are intelligent and you can make the case that you can make it happen, they know that your likelihood of success is already much higher than someone with a novel approach to a problem that doesn’t know how to bring it to market, or develop it into a profitable product. In my experience, most entrepreneurs will talk about their product and solution all day long, but none will spend too much time talking about how they plan to get customers and how they will make money.
An investment is a bet on the future success, use your slide deck to show investors exactly how you will turn your story into one that will make them money. If you have traction and are starting to hit the upturn in the hockey stick on your financial slide, it is easy to get an investor to see precisely where and how they can get the return on their investment. If you aren’t generating revenue, your work is to convince them that you know how to find and convert customers. “If we can just get on Product Hunt” isn’t going to cut it here, you need to have a plan and I would recommend finding a way to show that the plan works on some scale.
Stack the deck
This is a more active version of “know your audience"—with a little bit of research, you should be able to find investors who will be more likely to invest in your idea. How much money you need, stage and location can all play a big part in what your target investor looks like. If you are seed, or early stage, trying to line up appointments with venture capital may not be the best use of your time. You should also be looking for investors who are going to add value to your business with market experience, or potential partnership connections.
Venture capital firms will be more realistic about whether your idea is a good fit right out of the gate, but with angel investors, this can get cloudier and it is much easier to end up with a bad fit. Investors are also more likely to invest where they are—out of sight, out of mind may sound dreamy for you as an entrepreneur, but investors typically like to be close enough for a visit. No matter who you are looking at, research past deals and their connections, even try to find slide decks online of businesses they have invested in to get a sense for what they might favor.
I started this post by saying to not take advice from a VC, but the reality is that you aren’t likely to get a VC to tell you how to make a pitch that will make them invest in you, even if they are a personal friend. VCs want you to make them believe in the story and the team, but more importantly, how you are going to make them money.
Every deal has to feel like it could be a home run, even though VCs know that only one or two will hit it out of the park.