The Investor Pitch Deck Still Rules and Makes-or-Breaks Funding Rounds
Despite predictions that the pandemic would soften the availability of venture capital (VC) funding for startups, it remained solid, with overall fund...
Despite predictions that the pandemic would soften the availability of venture capital (VC) funding for startups, it remained solid, with overall funding rising 4% year on year to $300 billion. But that doesn’t mean that it’s a walk in the park for founders to get support.
In fact, the vast majority of VC funding in the past year was directed towards existing portfolio members and late stage startups, rather than early funding for businesses without a VC champion. Early stage funding was down 11% compared with 2019.
In 2014, Marc Andreessen, a founding partner of Venture Capital firm Andreessen Horowitz, said that VCs hear about approximately 4,000 startups a year, screen 3,000, look seriously at 200, and invest in about 20, and there’s no sign the odds have improved significantly. Gigi Levy-Weiss, General Partner at NFX, comments “For any given meeting with a VC, the chance it will result in funding is between 1% and 10%.”
VCs basically spend all their time reviewing decks, so you’re running up the down escalator trying to get your deck seen and appreciated.
And decks still matter. For all the soundbites about how VCs “invest in teams, not products,” they do judge your startup by the deck. Actually, research found that in 2020, VCs were faster to pass over decks that didn’t appeal, making it even more important for your deck to be appealing from the first glance.
To learn more about the secret tactics to building a deck with sparkle, I reached out to Donna Griffit, corporate storyteller and self-described “pitch alchemist.”
Tell A Story
The number one message is that the deck needs to tell a story. Startup founders sometimes think that stories are beneath them, but nothing could be further from the truth. “Our brains are hardwired for the structure of a story , they simply can’t deal with mounds of data,” points out Griffit.
In essence, she explains, the story of a structure is thousands of years old, based on the classics like Greek tragedies, Shakespear, Chekhov and even biblical stories. Movie scripts follow the same format.. She recommends that founders present their business in the form of a story, including a need (the villain); a solution (the hero); a business plan (what is the hero’s plan of action?); and a future direction (the aftermath). You can use a case study, she says, refer to something that happened to you, to someone you care about, to a company in the headlines or the world at large,, or even better - an existing client, or even create an “as if” scenario to illustrate your point.
These suggestions are matched by research from DocSend’s startup index, which concluded that startups should cut anything that doesn’t advance the narrative.
Use A Structure
Templates are tried and trusted for a reason, so they are a very good place to start. Although founders worry that they’ll make every story sound the same, that won’t happen as long as you tailor the template to your unique situation and share your exciting content.
“Buildings are built with the same idea ,” says Griffit, “with a foundation and frame which are transparent, hidden from the eye. But each building has its unique characteristics, we see the windows, walls and trimmings, decor, etc. Without a proper structure, however, your building might collapse. So too, your pitch!”
The template is only a skeleton for your deck. To really score, you need to customize your deck for your startup, your achievements, your round, and the VCs you’re addressing.
Prove Your Capabilities
Even though you’re telling a story, you still need to prove that you can follow through, so use metrics to back up your story: Specify major milestones you’ve hit, the numbers for your market analysis, the next goals in your roadmap, what you need the funds for, etc. It’s a good idea to include a demo and/or testimonials, if relevant, as well as defining your market strategies and business revenue model(s).
Griffit suggests sharing “the major milestones you’ve hit in funding, product, users, downloads, revenue, growth, endorsements, partnerships, etc. since the time you launched or launched beta,” adding “The later stage you are, the more metrics you need to show.”
Show Trends And Opportunities
Among the slides Griffit recommends is one you might not have thought of — trends and opportunities. “ This slide is a silver bullet! It’s the “Why us, why now?” This is the place to really show movement in trends and opportunities, and why you are at the exact right place at the right time to leverage the momentum.”
She explains that this doesn’t mean numbers and metrics, but rather grand possibilities. It could be informing the VCs about major fundings or M&As among your competitors, pointing out a change in law or regulations, making your solution necessary, or sharing a statement from an industry leader or research firm like Gartner, Forrester, McKinsey, etc. highlighting a gap in the market or a shift in market behavior. This slide could even comprise your own research showing changing trends among your audience or other developments that show the potential for your startup. “Make it impossible for them to turn down this opportunity.”
Show The Competitive Landscape
Delving into the competitive landscape is another section that not everyone thinks about — and some deliberately try to avoid — but that’s a must. “It’s GREAT that you have competition ,” she says. “Careful not to dis them, build on their success and prove that you have a clear advantage over them.”
And there’s research to back this up. According to DocSend, in 2020, investors spent 51% more time on the competitive landscape section, while the time they spent on the product section rose 46% and that on the business model section increased 28%.
Keep It Concise
Griffit keeps reminding startup founders that they don’t need to add every data point and possibility. As she points out, you can always have a few more slides in your back pocket to share as follow up if someone asks. “Make them go wow — but don’t overwhelm them with details. In the first meeting they don’t need to know exactly how your technology works - just that it works!” is how she puts it.
As well as keeping the whole deck concise, it’s important to make sure that each slide is well laid-out, attractive to look at, and very, very easy to read. “If you need to spread some of the data on to more than one slide, don’t sweat it — I’d rather see you have more simple, clear slides than fewer slides that look like eye charts! Don’t try to conform to a ten slide rule or any other standards - you make it yours, just stick to the structure.” she says.
Investor Pitch Decks Can Still Deliver Results
VC funding didn’t disappear during the pandemic, if anything, from the end of 2020 funding picked up and we are seeing massive rounds closing. It’s still possible to tap into this. But patience is shorter than before, so VCs waste less time on prospects that don’t appear promising. By taking advice from experts like Donna to tell a story, use a structure, prove your capabilities, show trends, reveal the competitive landscape, and keep it concise, founders can succeed even when times are tough.