Tips for Building a Startup or New Venture Deck

For information about me, see the links to the left. This page is for those developing a pitch to raise money for a new venture.

Dear Entrepreneur,

The process of explaining your business and raising money is enough to drive away all but the most persistent entrepreneur, which is exactly why people who succeed have a decent chance to build a good business. It’s hard. It’s discouraging. And it means repeating your elevator pitch thousands of times to as many people as will listen.

I’ve been through this process dozens of times and have seen hundreds and hundreds of pitch documents. Here are 20 tips to help you in your approach.

The Dreaded Three Words
First thing’s first: the three words you don’t want to hear are “Keep in touch.” This categorically means no. Venture capitalists and angels are terrible at saying no. I’ve only gotten a direct no in one meeting ever. The rest say “keep in touch.” When you hear that, it’s over. Do not waste your time or theirs. Just walk out and think what you did wrong.

1. You Need Three Documents
Most people put together a deck, then they get feedback and questions from people, and the deck keeps expanding, until it answers every conceivable question. The type gets smaller and the page count increases until they are past 30 pages. That’s what I call a FrankenDeck. Do not send that to anyone. This is what you need:

An approach deck of no more than 13 pages total. This deck should be roughly 20% about your fantastic product or service, 10% about your team, and 70% about your market, go-to-market strategy, and traction (if any). You should use big type and only the absolutely necessary graphs or charts. The sole purpose of this deck is to get a meeting or phone call, nothing else.

A pitch deck you use during meetings as a visual aid. Do not make the mistake of putting your bullet points and text into this document. People who are reading ahead are not listening to you. The focus must be on YOU, and you have at your disposal perhaps 30 different pages to SHOW what you’re talking about. When a subject comes up, or you’re proceeding along in your presentation, you say “here, let me show you,” and then you show them a graph, a chart, a product photo, or something that illustrates what you just talked about. Don’t make the mistake of putting what you are about to say on the screen. As Guy Kawasaki says, ten slides are enough for the good guys – they should be enough for you.

A Business Plan. Rather than building a kitchen-sink deck with everything in it, write a business plan. You’ll need it anyway. This is what you send to follow up after a pitch meeting where they don’t say “keep in touch” at the end. Only send it if asked. Never send an unsolicited plan to anyone.

2. Make a Good First Impression
Spend a lot of time on your first slide, summarizing the opportunity and why your team has the expertise to capture it. What you do and why it’s a profitable business should be clear as day from the wording on this slide. Choose words and phrases you will repeat throughout the deck to drive home your core message. I have seen too many decks where, after I am done looking at it, I can’t tell you what the business does, even though it’s in there somewhere. I’m not going to give your deck a serious read on the first pass! I’m going to decide whether I want to know more. Do not talk about your solution in the first slide, except perhaps by name, or except to mention the traction you already have.

3. Look at the Hatchery’s Format
One approach is to use the Hatchery’s list of 13 key slides:

  1. what is the name of your company
  2. what is the mission statement – one sentence
  3. who comprises your team
  4. what issue/pain is to be resolved/addressed
  5. what is the solution
  6. what is the addressable market/target markets (what are the acquisition costs)
  7. what is the competitive landscape
  8. is there current revenue/customers and/or clients in the pipeline
  9. what are the revenue streams/sources
  10. what are the financial projections
  11. what are the bases/models for these projections
  12. how much of an investment is envisioned
  13. how will be the money be spent

4. Listen First
Most investors have a sweet spot. If you are not in their sweet spot, you must be aware of that and make sure they know that you know you are not likely to get an investment. However, you would still like them to look at your deal for this, that, and the following reasons. If you can’t put yourself in the investor’s situation, you will just drone on with your standard pitch, which is guaranteed to fail. Always start a meeting by asking what they are generally looking for and what their sweet spot is. Then adjust your pitch in real time accordingly. If you are sending a deck without knowing much, do your homework and address their sweet-spot issues in your cover message.

5. Is Your Project Investible?
Many people think they can get investment money for a good idea, especially for a service or a “franchising opportunity” that will “take off” once the first few are going. This is usually not the case. Investors see many proposals as lifestyle businesses that should be bootstrapped and won’t give them a proper exit. Does your business really scale? How much could it be worth in five years? Is it enough after taxes to compensate for the risk? Most entrepreneurs are far too overconfident in their abilities to build huge companies, and it shows.

6. Use the Black Box Approach
Investors don’t care about you. No matter what they say, and no matter how much money they ever give you, they are dating you, but they are married to their limited partners. What they care most about, what’s priority number 1, 2, and 3 for them, is how much money they will get back after taxes in how many years. That’s what they are thinking as you deliver your fantastic change-the-world spiel. The less you emphasize your solution, the better. Treat it like a black box that generates money for them. Get them interested in this little black money-making box, and let them ask you to tell you what’s inside.

7. Be a Marketer, not a Zealot
Don’t make the mistake of coming across as a zealot. A zealot cares about the product. A marketer cares about solving problems for her market and knows her market better than anyone. Investors don’t invest in zealots. They look for marketers who understand their market and can convert interest into sales. The more you talk about your core product advantages, the less likely they are to invest. The more you give your enthusiastic, opinionated speech about why YOU have the best solution, the more likely you are to hear “keep in touch.”

8. It’s all about Customer Acquisition
You have a great new idea for an app? That’s not music to the investor’s ears. Most apps never get found by more than a handful of people, and most apps don’t make money anyway. You’re going to be the exception? Great, then tell us how people are going to learn about your solution, try it, keep it, love it, and end up becoming worth more to you than it cost you to get them. You must show how you are going to get over the chicken/egg problem. Read this and make this the center of your pitch:

http://www.forentrepreneurs.com/startup-killer/

9. Emphasize Market Validation
If you know your market and you can prototype quickly, you should already have some form of market validation. There’s no reason you can’t get some scraps of validation and include customer testimonials in your pitch. Let the customer speak for you. If you pitch without some measure of validation, don’t be surprised to hear “keep in touch.”

10. Distribution, Distribution, Distribution
You can build any company if you have distribution. The reason most companies fail is not that they don’t perfect the product. It’s that no one knows about their product, and they run out of cash trying to acquire customers. There are other people in the distribution chain, even if you’re giving away a free piece of software. Talk about how you are incentivizing those people to help you acquire customers.

11. Use Big Type
Guy Kawasaki recommends 30-point type, which gives you very few words per slide. That’s the idea. Don’t write a book. Write only the words you need to get an idea across. As soon as you find yourself making the type smaller, you know you are in trouble.

12. Emphasize People
It’s okay to add more details and smaller type when describing the core team and their backgrounds. The backgrounds matter. Rightly or wrongly, people with previous exits matter a lot. If you don’t have a strong, seasoned marketing person on the team, stop pitching until you get that person. You won’t get funding based on that person being hired later.

13. Tell Stories
Rather than getting into the details of the solution, you’ll do better to show scenarios of typical customers and how they will decide to buy your product or service and how they will benefit from it. Tell stories while maintaining eye contact with your potential investors. People remember stories and personalities. They won’t remember matrices, and they’ll ignore your numbers anyway.

14. Build on Existing Platforms
Don’t tell investors your plan is to become the next platform for (fill in the blank activity). Build your business on an existing platform. If you’re successful, you can then work on taking a profitable business with loyal customers into platform territory, if ever. Out of every one thousand startups that wants to be the next platform, maybe one actually makes it. For investors, picking the platforms of the future is throwing darts with your eyes closed. Investors prefer to hear that you are going to have a unique way to acquire customers who are already on a particular platform. Feel free to buck the trend, but you’ll probably have to self-finance to have a chance to try.

15. End with Financials
Make your financial summary very focused. Strip out as much detail as you possibly can. Their eyes will immediately go to the bottom of your tables and look for profit. Show that you are generating free cash flow after each round of investment. NEVER give them the idea that you will need more cash to get to profitability after you have spent the money they give you. That’s for rock stars who have already proven themselves. Investors may be willing to be diluted later, but they don’t want to see the word “dilution” invisibly splashed across your numbers as you talk.

16. Get Rid of Stuff that isn’t Helping
Lose the bars, the logos, the visual noise that makes it harder to find the signal. One of the best ways to learn this is to read Edward Tufte’s books and apply his principles. Think you don’t have time? You’ll have plenty of time after you get turned down by 50 investors, so pay attention to the craft of the deck and get over the hurdle and into a meeting.

17. Don’t Compare Yourself to Established Companies
I heard a guy recently explain that DEC, the now-defunct computer company, used to give computers to schools, because then their computer-science majors would come out of schools knowing how to program them and would order them when they get to their new jobs. This is not a reason to give your product away. Do not spew anecdotes about the latest $1b acquisition or “how they do it at …” Apple, Facebook, Google, Twitter, IBM, etc. Talk about how the cost of customer acquisition will be less than the lifetime value of each customer and where you get your confidence in your numbers.

18. Build your Own Financial Model
One requirement of being an entrepreneur is to be able to construct a model and make projections that you must then defend against critical investors. This is not something you can farm out. If an investor wants to see your detailed pro-forma numbers, he’ll ask for them. Don’t show too many rows and columns in your first meeting. Keep it at the 20,000 foot level until they ask to dive in. Show and explain your assumptions! Why I have to say this, I really don’t know, but many spreadsheets don’t list the assumptions at the top.

19. Put the Name of the Company and the Month in the File Name
Always send a PDF. Never send a Word or Excel or PPT file. Ever. Don’t name your deck something like “Pitch_deck.v14.” Use the name of the company as a base and add the name of the current month to the end, so people see they have a current version. Even though you may update it several times in October, keep the same name until November, then save a copy and rename it.

20. Don’t Shy Away from Hard Work
Building a deck is easy. Building a good deck is hard. The more you test it on people, the more you’ll be tempted to add features, until you end up with a FrankenDeck. The same goes for business plans. It takes more work to craft a shorter document. Most people cannot write, and it shows in their documents. While an entrepreneur must be able to build a decent financial model, you do not have to be able to write well. Find and pay someone who can. Show that you can bolster your own weaknesses by working with others. No matter how you do it, you will have to work much harder than you ever imagined to make a good deck. If you can do it in four weeks from start to finish, you’re moving quickly.

Resources
Here are some helpful places where you can learn more:
The Hatchery
hatchery.vc/services/professional-services/
Brad Feld
forentrepreneurs.com
Guy Kowasaki
thefunded.com
entrepreneur.com/article/201826
Ed Sim
Fred Wilson
Paul Graham
Steve Jurvetson
Chris Fralic

My Services
I am available to work on these materials and coach you in your pitch. Contact me to get a quote.

[email protected]