Posted on April 1, 2015
Angels and VCs have very specific information that they want to see in a pitch deck. The more accessible that you make this info and the less you obfuscate it with unnecessary filler material, the farther you will get. Keep it simple and don’t “bury the lead.” Eight out of ten pitch decks go to extreme lengths to be unique (via visual design, creative slide titles, non-standard slides or content, etc.) and consequently bury the takeaways in an unintelligible collage of overly branded rhetoric and wishful thinking… or worse yet, they omit the main points altogether. Your goal is to demonstrate that you think clearly, understand what factors are important to their decision-making, and are capable of summarizing and communicating the relevant information to them without wasting their time. If you can do that, you’ll be in the top 20% of the pitches they see on any given day.
Your pitch deck doesn’t need to be fancy. Rather, it should be simple and have a clean modern design. Keep branding to a minimum and stick to the pertinent facts. Title your slides and use slides that investors expect to see rather than those that [you think] prove how incredible your idea is. Data talks, bullshit walks. Keep the number of presentation slides to a minimum and put all other backup content in appendices in the same deck so that you can refer to it during Q&A. You shouldn’t have more than 10-12 slides in your main presentation and you should plan on spending 1-2 minutes on each slide; of course, tailor your deck given time constraints and context. Minimize the amount of text and instead seek to describe your points using graphical representations of relevant data. Use tables for comparisons. Use visual assets instead of text wherever possible. Avoid using trite or played-out verbiage (e.g. “disruptive technology”). Present your slides in a logical order. Familiarize everybody in the room with your product prior to starting by giving a 10-30 second elevator pitch. Make sure that when people leave the room, they will be able to describe your product to someone else in one sentence; if they can’t do this, they won’t remember you.
Now, to get specific. The slides listed below are standard and every Angel and VC expects to see them in a pitch deck (in roughly this order).
- Problem / Pain Point
- Solution
- Differentiation / Special Sauce
- Addressable Market
- Competitive Landscape
- Marketing and User Acquisition or Sales and Partnerships
- Business Model
- Financials
- Ask & Use of Funds
- Potential Exit Strategies
- Team
- Appendices
Here are some slide-specific tips:
Addressable Market
- Segment the market into TAM (total addressable market), SAM (serviceable/segmented addressable market), and TM (target market).
- The TM should be tied to the Marketing & Sales slide later in the deck. It should be a bottom-up projection of the TM given how many salespeople or marketing dollars you intend to spend.
- Include the relevant industry CAGR with supporting data and evidence.
Competition
- Don’t EVER say that you don’t have any competition due to the novelty of your product. You do! You always have competition! Saying that you don’t just demonstrates that you don’t have a good grasp of the marketplace or aren’t living in realty.
- If you can, identify your competitors as direct, indirect, and potential future marketplace entrants.
- Consider graphically representing the competition (and your product) on a traditional MBA-esque 2x2 matrix where each axis represents an important dimension of differentiation. Up and to the right is always where you want your product to be located.
- Another approach is to use a tabular format with the dimensions of differentiation listed in rows and competitors listed in columns.
- Make sure that you reinforce how you’re different (in your verbal pitch) and relate it back to your “special sauce” slide.
Financials
- The Financials slide should include a table and/or bar chart with the following: quarterly financial projections for 1yr, annual financial projections for five years. You should show Revenue, EBIT, and SG&A.
- Include and be ready to discuss run rate and burn rate. Investors also typically like to see a breakeven date. It's also good to include your hurdle rate and compare it to the computed IRR -it comes across as a sanity check on your financial projections.
Ask & Use of Funds
- Make sure that you aren’t including exorbitant executive salaries in your use of funds. Investors don’t want to see half of their money going towards funding your lifestyle. You shouldn’t expect to earn as much as you did last year when you were a consultant for Deloitte; that’s not how the world works -they expect you to eat shit while you’re getting it off the ground. bout use of funds. Investors will home-in on the $1.2M in the "Other" category. Their first assumption will be "large executive salaries."
- Include the necessary info on the deal. You should show a capitalization table, what you’re offering for their investment, and the financial vehicles that you’re open to using (e.g. convertible note, straight equity). Indicate that you're flexible.
- Pay attention to your pre-money valuation. If your raise is $5M and you’re giving up 25% of the company for it, that implies a pre-money valuation of $20M. Make sure that your progress (product development and traction) warrant your valuation. You’re not going to get a $20M valuation if you’re pre-revenue and don’t have some other super human factor working for you (e.g. a successful previous exit).
- State how much runway the funds will buy you. Investors don’t like having to write an additional check every three months. You should be asking for enough to comfortably get you through the next year of operations without pinching pennies on critical expenditures.
Potential Exit Strategies
- Include this slide. They're the same in almost every pitch deck but if you don't include it, it gives the impression that you’re not a big-picture thinker. It's also another opportunity to build the perceived value of the company; e.g. "Companies in comparable verticals are being acquired at 20X (Rev, EBITDA, etc.) multiples..."
If you need another resource to help you put together the perfect pitch deck, I highly recommend that you pickup a copy of Guy Kawasaki's book "The Art of the Start." It contains a wealth of information about every aspect of founding and growing a startup.
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