Robert P. Mollen, Counsel at Fried, Frank, Harris, Shriver & Jacobson (London) LLP.
I previously wrote a blog with tips on preparing a startup executive summary http://bit.ly/2omWnoO, so it was inevitable that I would also write about how to prepare a better initial startup pitch deck.
There are many useful discussions on the web about how to construct startup pitch decks. I’m particularly partial to a pitch deck presentation by Marc Philips of Arafura Ventures from his book “Inside Silicon Valley: How the Deals Get Done”. http://bit.ly/2pOIm4U
However, I frequently see pitch decks that fail to persuade, and I’m focused in this blog on some particular points where pitch decks go wrong.
Tip 1: Keep It Short
I’ve made this point before in my blog on pitching to US VC’s http://bit.ly/2qAt9XY, but it bears repeating. Keep your pitch deck short – a maximum 12 – 15 slides in most cases. Venture capital investors have short attention spans, and they need to get through a lot of initial pitch decks.
The purpose of the deck is not to provide all of the information that the investor may need to make an investment decision – rather, your objective is to persuade the investor that he or she should want to learn more. The process of developing investor interest is iterative – you are not trying to get there all in one go.
There are some VC cultural differences, of course. In particular, continental European investors and some other investors (including business angels) may want (and have the patience for) longer decks. They may also want more by way of numbers, although query the value of five years of projections in connection with a pre-revenue company. You can cater to any of these differences by including supplemental slides in an appendix, but try to make sure before you do so that the particular investor is likely to want those slides.
Tip 2: Lead with Your Strengths
There is no required order of a pitch deck so long as key elements -- problem, solution, market opportunity, market strategy and business model, technology, competition, financials, funding needs, milestones and team -- are addressed.
So you should lead with your strengths.
- If you have a management team that has led successful exits, put that up front. However, if the team is comprised of first time entrepreneurs, maybe that slide goes toward the back. This is may seem inconsistent with the fact that, for an early stage VC investor, the team is likely to be the most critical element in his or her evaluation of your business. However, if your team members are first time entrepreneurs, your management slide is unlikely to be the lead element that leaves your initial pitch deck reviewer wanting to learn more.
- If you have very prominent investors/advisors, that may be a key lead slide.
- If one of your initial customers is especially impressive, perhaps a slide with its logo, a relevant photo, and a quote from that customer should be up front.
Tip 3: “A Picture Really is Worth a 1000 Words”
Use pictures, charts and graphs, rather than grey text, to the extent that you can. Appropriate visual materials can communicate more effectively than a page of bullets.
Your slides should not summarize what you would say in an oral presentation – or, to say it differently, if you are giving an oral presentation of your pitch deck, you should not be reading from your slides. Your slides should quickly communicate key points, permitting your oral presentation to elaborate on those points and provide context.
Tip 4: Make Sure You Sell a Business, Not a Single Product or Service
Early stage VC investors are looking for a 10X return on their investment. You need to persuade them that what you are doing is scalable and that there is a sufficiently large addressable market to make that a realistic result.
Your initial product or service, no matter how great, is unlikely to be sufficient for that purpose. Consequently, you need simultaneously to communicate not only why your initial product or service should succeed, but also why your proposed development path can use that product or service as an initial step to build out a successful business.
Tip 5: Don’t Bad Mouth the Competition
While you may have good reason to think that you can compete successfully with incumbents or other startups, be respectful. Taking on incumbents, or startups that are much better funded than you are, is difficult. You can emphasize the value of your own secret sauce without underestimating their ability to compete with you. And never ever suggest that you don’t have any competition, or you will lose all credibility.
Tip 6: Avoid Buzz Words and Acronyms
I made this point in my blog on executive summaries, but I want to reemphasize it here. Buzz words simply obscure the key messages. Let your accomplishments speak for themselves, without adjectives.
Here is a list of words that I hope never again to see in a pitch deck:
- Disruptive (don’t say it even if it would fit Professor Christiansen’s definition, which it almost never would: http://bit.ly/2qAITdA)
- Innovative (show it, don’t say it)
- Unique (highly unlikely)
- Iconic (ugh!)
- Solution (a term now seen on lorries to describe waste disposal systems)
- Next level
- MBA speak (e.g., Product/Market fit – you and your investors may use these terms, but don’t put them in a slide)
Also, don’t use acronyms without first writing out the words unless you are 100% certain that everyone will know what they mean – which generally is unlikely. Your viewers will not want to ask a “stupid question.”
Tip 7: Make It Look Good
Your pitch deck needs to sell your company. If it doesn’t look professional then an investor may doubt your ability to sell to customers, or, at a minimum, doubt your seriousness.
* * *
This discussion is not intended to provide legal advice, and no legal or business decision should be based on its contents. If you have any questions or comments, feel free to contact [email protected] or via LinkedIn here.
You will find Bob’s other weekly blogs for emerging and growth companies on US issues, international expansion and early stage financing here: http://bit.ly/2lP5uMP