editione1.1.4
Updated September 15, 2023You’re reading an excerpt of The Holloway Guide to Raising Venture Capital, a book by Andy Sparks and over 55 other contributors. A current and comprehensive resource for entrepreneurs, with technical detail, practical knowledge, real-world scenarios, and pitfalls to avoid. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, over 770 links and references, commentary and future updates, and a high-quality PDF download.
Definition Nearly every round of financing will rely on a pitch deck, which is a succinct overview, in slide format, of the company seeking investment. It is usually built using digital presentation software like Keynote or Powerpoint, or a free version like Google Slides. Founders use pitch decks in two primary ways: to generate investor interest via email and as visual storytelling aids for in-person pitch meetings.
The pitch deck presents a company’s potential to investors. It is a vehicle for your company story, through which you convey all the thought, research, and insights you have about your business, product, and target market. The pitch deck answers three primary questions: what are you doing, why does it matter, and why are you uniquely positioned to do it better than anyone else? Like all stories, the pitch deck is a tool of persuasion.
It is also an opportunity for you to align your founding team internally on your company’s mission and path. The research necessary to build a compelling deck will bring you new insights into your market and product. While the purpose of a pitch deck is to “pitch” your company as a great investment to potential investors, creating the deck is good for you and your team, by compelling you to present a clear and concise message that resonates emotionally and logically: in short, it is heart and data.
important Before you begin reaching out to your target list of investors to get a meeting, be prepared with your pitch deck. An investor you’re chatting with might ask at any point to see what you’ve got. And if an investor wants to set a partner meeting fast, you don’t want to scramble to get your pitch deck done in time.
While we suggest starting work on your pitch deck well before you reach out to your target list, in reality, you might be working through this section and trying to set meetings at the same time. That’s OK. But the more time you give yourself to work on your pitch, the better prepared you’ll be for those meetings. The good news is, if you’ve already done the research necessary to determine whether raising venture capital is a good idea for your company, you already have a lot of the numbers that investors are going to want to see in your pitch deck. The research you did when creating your target list of investors will also help a great deal in designing a deck that will speak to the specific investor audience you want to reach.
What you learn in this section will help immensely in writing emails to investors that will stand out—take this knowledge with you when you move to getting the meeting, where a compelling company story, a one-line version of your pitch, and the confidence gained from deep preparation will get you where you want to go.
As you begin preparing your slides, keep these general guidelines in mind.
Keep it short. You don’t have much time, and your audience typically doesn’t have much attention span.
Analysts typically recommend 10–12 slides, cautioning that a solid, longer deck is better than an incomplete shorter one, and you never want to cram too much text on any one slide. Seed-stage investor Leo Polovets recommends keeping a deck under 500 words. If in doubt, you can’t go wrong with 12 slides.
Your deck may also include an appendix with several more slides, and you might decide to create a longer, more text-heavy version of the deck that you can email (you probably wouldn’t send both). The purpose of the appendix or longer version is to provide more detail and deeper coverage on anything in your main slides you think your audience might ask about. You can’t depend on these additions, but it can be very helpful if the extra material corresponds to questions you’ve anticipated being asked. “Do you have any justification for those projections?” “Oh, of course, here’s our research.”
Depending on what your company’s strong suits are at this stage, you might have two slides for traction, or two for team, et cetera. But it’s very important that you don’t overload investors with information, even if you think they need to know everything. Many founders say, “I have a lot of slides but I click through them really fast; that’s my storytelling style!” No. Keep it at 12. Remember, “brevity is a by-product of vigor.” Extra information can go in the appendix or emailed version.
important Startup investor and operator Eric Friedman advises founders to be prepared to tell their story in varying lengths of time. You should be able to pitch in an elevator in 1 minute, in 5 minutes at a dinner party, 15 if you have a little more time, 30 if you are really sitting down with someone, and 60 if you’re in front of a partner at a firm. (Obviously, you won’t be pitching directly from your deck in some of those situations—always remember that the deck is not a crutch, it’s a supplement). If you prepare for all of these settings, you’re far more likely to get investors, find people to work with you, sell your product, and generally get people interested. If an investor is 30 minutes late or only has 15 minutes on their schedule, you can make it work. For an average pitch meeting, prepare to get through your deck in 15–20 minutes, keeping in mind that that time will at least double with investors’ questions.
Show, don’t tell. Favor visuals over text as much as possible. Use photos, maps, and other graphics.
When you get into the product details, include a demo (or at least a mock-up) if possible, rather than a written list of features.
If you’re providing a longer deck in an email, you do want to include more detailed text information in that version. You can’t rely on your attendees to remember the meaning of a particular image the next day or week.
Keep it simple. Remember, the main point of your pitch is to make an impression, not to provide all the finer points of your company in detail. Your audience is going to walk away remembering maybe only one or two moments from your presentation. If nothing else, you need to communicate clearly what you do and why it matters.
Be wary of using complicated builds or animations in your deck as well—they increase the number of clicks needed to return to previous slides, making it hard to get back to your flow, and they’re often distracting from the actual substance of your pitch.
caution Avoid industry jargon. Besides being obscure and, more often than not, completely meaningless, jargon lowers the impact of your message by wrapping it in unnecessary layers of language. Not sure what’s jargon and what isn’t? Read, “Startups can’t explain what they do because they’re addicted to meaningless jargon,” a piece we love from Josh Horwitz at Quartz.
Iterate. Ultimately, you want to be prepared for the content of your pitch deck to change radically over the course of the fundraising process. Avoid thinking of your story, your pitch, your data, or your deck as static products you can shove out the door—cycle in what you learn as you research, practice, and present. Instead, consider designing your pitch (including the story, deck, and presentation) more like a product development cycle. Take rehearsal seriously, so you can make sure you’re hitting your marks and sparking inspiration in as many audiences as possible. It’s always a good idea to revisit your deck after every pitch you make to investors—what did they react to, positively and negatively? What did they ignore that you thought would impress them? Don’t be afraid to kill your darlings.
By now, pitch decks have a fairly standard format of 10–12 slides that investors expect founders to roughly adhere to: thesis, vision, problem, solution, traction, team, timing, market, competition, financing, and risks and challenges.
The slides in your deck may or may not correspond directly to each of these elements, but each of them should be covered. Some founders will choose to follow this sequence slide-by-slide (one slide for thesis, the next for vision, and so on). You are unlikely to garner criticism for following that structure, but when it comes to putting the elements together, you have options. You might let your company story lead the way, weaving these elements into a narrative. Or you can consider the pitch deck modularly, where each of the elements falls into a different category that you can then work through with more flexibility. We will cover each of these strategies here, and we hope you’ll read through both of them, as they will give you different insights into what you want to convey. You should ultimately design the deck that best demonstrates your company’s mission, optimizes the flow of your story, and fits your presentation style.
It’ll also be helpful to refer to decks created and used by founders who have successfully raised venture capital, to see how they have treated these elements—don’t miss our list of great pitch decks in Appendix C.
At the top of your deck, include the key takeaway message that captures your company’s who, what, where, how, and why. Some people might just call this an elevator pitch, others will call it a value proposition (or “value prop”), others a mission statement. We think it’s helpful to consider the thesis to be a distilled version of the larger value proposition your company offers. Whatever you call it, this is how you introduce your company. Typically your thesis appears at or near the beginning and end of the deck, and possibly at another key point midway through.
It’s crucial to have this statement not just for your pitch deck, but to help you introduce your company to investors through email, and in any situation where you might only have fifteen seconds (like, the time it takes to ride up a floor in an elevator) to intrigue an investor, a potential employee or customer, a reporter, or anyone else.
If you can’t yet explain who you are and what you do in 25 words or fewer, just give it time and give yourself a break. This one-sentence description of your company is asininely hard to produce. You’ll brainstorm for weeks, eventually think you have something kind of cool, and then everyone you share it with will tell you that it sucks, and you’ll go back and start over. Arguably, the best way to come up with this thesis statement is to finish all the other slides first, and come back to this at the end. Working through your company story will also help a great deal, because the story forces you to consider how you want to frame your company’s mission and vision.
Tor Grønsund provides helpful templates for coming up with a thesis (he calls it the value proposition), along with some great examples.
What is your company’s vision for its future—and what will be this company’s role in how the future plays out? At what scale? For individuals, a community, a nation, the world?
One way of looking at explaining your company’s vision is through specific outcomes within a set period of time. What will this project/product/company have achieved in five years? In five years, what crucial problem will it have solved (or be on its way to solving)? Let your audience know where you’re headed.
Try to explain your company’s vision in a single line. In “How to Nail Your Startup’s Vision Statement,” entrepreneur David Henzel lays out the difference between the mission and vision statements and provides helpful strategies for developing each of them. He calls the vision statement “the north star of an organization.” You can find a great example on slide two of YouTube’s 2005 pitch deck, “Company purpose”: “to become the primary outlet of user-generated video content on the internet, and to allow anyone to upload, share, and browse content.”*
Before you dive into your product or the service or technology your company is building, you need to clearly explain the problem that that product, service, or technology is solving. The best strategy here is to think of the problem as a pain point in the lives of your customers. You don’t want the problem to be too abstract, but rather connected to the emotional lives of real people—emotional pain is what motivates people to change from whatever they’re doing (or not doing) now to embracing (and paying for) your solution.
important Figuring out the problem and how to describe its significance may be the most important part of your pitch to spend significant time on—and it’s the most common place where founders go wrong. In fact, leaving out the problem or pain point slide altogether is something of a classic mistake new founders make. You can’t go into a pitch meeting and suddenly start talking about what your company is doing and how it does it. You have to start with why. If you haven’t stated the problem, emphasizing its scale and importance to your customer, you’re not ready to move on to showing investors how you plan to solve it.
Start with a statement of the problem: “10 zillion tons of CO₂ are being dumped into Washington State’s clean water supply every year, and by next year every person and animal within a 100-mile radius will be dead.”
Notice that in this very fake example, the problem stated is clearly huge. This problem needs to be solved. It affects a lot of people, and the people it affects are very affected. A poor problem statement might be something like, “100% of human people have to wait 30 minutes for food delivery when they could be waiting 25.” In this example, the scale of the problem might be large, but the effect of the problem is insignificant.
You should also clarify whether the problem is a new one for customers or an existing one that you’re addressing in a new and better way. For the latter scenario, emphasize why current solutions are ineffective or inadequate, or why this problem has not yet been solved. For example, has the market been ignored? Or is a technology only now emerging that can allow a solution to be developed? Note that this may overlap with the timing slide, which you can move up in the deck if timing is closely related to your problem and/or solution.
When stating the problem your company is addressing, keep in mind that you may choose to make your personal connection to the company’s mission clear, or even lead with your personal connection, if that is part of your story. It is very important to investors that you are able to convince them that your insight into the market is contrarian (you’re seeing something differently), and demonstrate how you were able to arrive at that insight; this often comes out of the founder’s personal connection to the problem, though it may be based in past work experience, research, or something else.
Now that you’ve set up your problem as deeply important to a significant number of customers, transition into what your company is doing or building to solve this problem, and what makes your product or service different.
If you are selling a product and have mock-up images, you can show them now—but you’ll likely be interrupted by an investor saying, “Wait, can I see it?” or “Whoa! Is this live?” If you were planning on delivering a live demo at the end of the pitch, you might have to adjust your flow and do it now. If you don’t have a demo, you’ll have to explain that the pictures are just a mock-up and the real thing doesn’t exist yet (building it may, of course, be a milestone you’re trying to reach through this fundraising round).
important Remember to focus on how it solves or resolves the pain point, and the benefits it provides to users, not simply its sweet features. Typical benefits include saving customers time or money, but the more detail you’ve put into explaining your pain point, the more specific you can be about how the solution will help them.
Explain why your solution is unique, superior, and poised for endurance in the marketplace. You may bring up your personal connection to the problem or the customer community here again; good storytellers will be able to connect their company’s unique position in the marketplace with their own or their founding team’s intimate connection to the problem. Why are you more likely to benefit your users and gain traction than those who have attempted to solve this problem before?
important Finally, express to investors your deep commitment to solving the problem. Remember, the average time to an IPO is 11 years. Investors need to know that you’re in it for the long haul. This could be stated explicitly as you demonstrate your personal connection to the problem (“I suffered with this problem and will do everything I can to make sure no one has to again.”) or how you plan to solve it (“My entire career has prepared me to put this solution into action. All I want to do now is see it through.”) or it might not be specific to any one slide—just make sure you’ve found a way to express your commitment honestly.
If you have any traction—that is, if you’ve acquired any customers, or proven that people would buy your product or service if it were available—don’t delay in sharing that with investors!
Especially when pitching to investors you think are skeptical that the problem you introduced is worth solving (if investors don’t know your secret), this is where you hit them with the numbers they need to hear. If they under-appreciate your target market (they don’t think your idea will scale), and you tell them you have 50K people using your app or visiting your site every day, they’re going to have to open their eyes. (And then grab their partners, because you probably have yourself a deal.)
If you’ve acquired any customers so far, discuss the strategy that led you to acquire these customers and how that strategy will lead to continued customer growth moving forward.
Include information about sales and marketing plans, acquisition costs, and lead conversion rates.
If possible, highlight a few case studies of current customers, including quotes about the value your offering has provided.
If you haven’t yet acquired customers, use projections and show the underlying assumptions you used to create those projections.
At this point, perform a live demo if possible, or provide a link to a demo login. Save technical details for the appendix or takeaway handout if you’re using one.
The team slide may not seem like the most important thing in your deck, but especially at the early stages of your company, your core team is your most valuable asset, and this is your chance to prove it. The team slide can cover any relevant connection your team members have to the pain point (you’ve already discussed your own), as well as the relevant experience your teammates have had that makes them uniquely suited to solving your stated problem.
important Investors know that the number of companies that die because of team dissolution is far greater than those that weren’t able to reach product-market fit. What can you tell them that will give them confidence that this team is devoted to the project and has what it takes to see it through? Also remember that your ability to bring talented people on board with you is something investors are explicitly looking for. “These amazing people could be doing anything, so why are they devoting themselves to this particular project?”
This is also a chance to demonstrate that you’re not on an ego trip: show investors that you know a founder is only as promising as the team they’ve brought together.
To keep momentum, you can wait to get into your team’s story until after you’ve discussed any traction you have. Or, if you don’t yet have traction and can position your team’s story as extremely important to the future success of your company, you can bring up your team after or as you discuss the pain point and solution. No matter what, at some point in your presentation, you need to demonstrate that this team has the vision, experience, and skills to ensure your project’s success.
When discussing your team, you can also include any key advisors or stakeholders who might be of interest to your audience.
caution At the same time, never exaggerate the role that advisors or others play, or their responsibilities to your company. Investors talk and will do their due diligence on all the players you mention.
If there are any roles or skill gaps in the company that need to be filled, you can mention those here, or when you cover your milestones (are there financial milestones you’ve set in order to hire the next superstar?) or your risks and challenges.
Make sure to answer these questions:
If your product is so great, why hasn’t anyone come up with it before now?
If this problem is so compelling, why hasn’t it been addressed before now?
If people haven’t been motivated to address this problem in this way before, why will they be now?
Timing is also a question about the market for your product. Be sure to answer what in the market has changed—either the problem, new technology, or new dynamics—that allows your company to enter the market and thrive.
As you can probably tell, timing is very closely related to the pain point, solution, traction, and your team’s fitness for solving the problem. Depending on your storytelling style and where among these elements your company really shines, this element may appear on its own slide after you’ve discussed those other elements, or it may appear earlier.
For the most part, experts recommend telling a bottom-up market story: how many customers there are for your offering, how much revenue you can get from them, and how you plan to capture them. Make it clear whether you’re disrupting an existing market or inventing a new one.
Doing a top-down market analysis can also be helpful, and involves determining how much of an entire market you would be able to or plan to capture. You can do both.
The purpose is to show that your target market is either already large or will be large. But avoid high-level generalizations like, “We’re entering an $X billion market.” You need to do enough research to understand the size and potential of your target market. For all your data points, provide a clear, justifiable background as to how you arrived at the numbers. For more on how to calculate market size, we recommend reading steps one through five of Bill Aulet’s Disciplined Entrepreneurship.
The purpose of this slide is to answer the following question: If your product didn’t exist, what would customers use instead?
Educate yourself on current, past, and potential competitors in your space, and be prepared to explain what makes you different, and what will make you more successful than your competitors.
There are two parts here:
The first is demonstrating that you understand the competition. List specific company names if possible, and cast a wide net. Include direct and indirect competitors, legacy companies, potential entrants, and customer alternatives. (Be thorough. You don’t want your investors knowing about competitors before you do.) List each competitor’s strengths to show that you understand the challenges they present.
Then, show your competitive advantage. Given the landscape, why are customers going to choose you? Avoid feature list comparisons—every product has features that its competition doesn’t. Instead, focus on strategy: networking, execution, understanding market needs, founder-market fit, business or growth planning, and so on.
cautionThe one thing you never want to say to investors—nor believe in your heart of hearts—is: “We don’t have any competition.” This attitude will not serve you, and it won’t be accurate.
important When you’re building something entirely new, there may not be any companies doing exactly what you’re doing. But for every product or service, consumers have the choice to buy or to use or to do something else. Who does Reed Hastings, CEO of Netflix, say is his company’s biggest competitor? Sleep.* This is an important lesson. Some competition won’t be other companies. (At Holloway, we consider our biggest competitor to be a cup of coffee with an expensive human expert, or hours of Googling.) Competitors don’t have to be doing what you’re doing or even be as good as you. Just ask yourself: what would people do to solve their problem if you weren’t around?
These slides cover the amount and goals for your fundraising; the milestones you plan to achieve at each funding stage; your go-to-market plan; and growth projections for revenue, customers, and users. Show outcomes for the next one to two years, and include any assumptions underlying your projections. Also include your revenue, if you have any, and current or planned pricing models.
The important thing here is to relate the amount of money you’re raising to specific milestones you need to reach. For example, how will this number get you to cash-flow positive within a year? How will this $500K pre-seed get you to a point where you can raise a $1M+ seed?
Your audience is going to poke holes at perceived and real weak spots in your plan. Anticipate and be ready to address the hardest questions you might get asked—don’t pretend it’s going to be easy.
Demonstrating an understanding of challenges builds trust with investors. Describe any legalities, technology, value chain, or other obstacles that put your vision of success at risk. For example, Airbnb knew that marketing to change behavior would be their biggest challenge—they knew they’d have to convince people that renting out their rooms to strangers could be safe. Spotify knew they’d have to (and they continue to) spend a lot of time and money working out legal issues with producers and artists. Present your biggest challenges, and then explain how you will overcome them.
You may have discussed any skill gaps in your current team earlier in the deck, but if you haven’t yet, you can bring that up here and explain how you plan to source and hire key team members you still need.
Including challenge areas in your company story adds a human element that can help encourage empathy from your audience, and it demonstrates self-awareness, which is definitely something investors are looking for. It’s also important because investors, if they know the industry, are thinking about these challenges as well. Address how you will handle the elephant in the room instead of pretending it isn’t there.
Stories constitute the single most powerful weapon in a leader’s arsenal.Dr. Howard Gardner, Professor, Harvard Graduate School of Education*
Building an emotionally captivating story for your company is essential in getting investors’ attention—and ultimately in getting them to open their wallets. Founders who concentrate solely on the mechanical details or functions of their product and ignore the story of what it will do and why it matters do so at their own peril. How you frame your company and anticipate the motivations of your investors is the difference between a successful pitch and a disappointed walk home. Storytelling lets your audience make inferences and come to conclusions without being told how to think or feel about your offering.
important Let’s say that again: if you can’t get an investor emotionally interested in what you’re building, they will not invest in your company. An investor’s emotional response will dictate how the pitch goes. If they aren’t excited in the first few minutes, they’re going to be looking for evidence to justify their lack of excitement. If they are excited, they will be looking for confirmatory evidence. The best investors recognize emotional bias, but many will not. This is an unconscious behavior, and if you underestimate the impact of emotions on decision-making, you’re actively selling yourself short and reducing your chances of getting someone to invest in you. And remember, figuring out how to get people emotionally invested in your problem and solution will serve you not just in securing investment, but in recruiting and hiring employees and in reaching customers. Investors know that.
Indeed, storytelling isn’t just about giving your deck some flair. Especially for early-stage companies, investors are assessing a founder’s ability to tell their company story. They want to see that you can succinctly share your vision and the opportunity the company presents to those involved, both monetarily and with regard to mission. They want to see how well you understand your customers and how you have managed to bring together the right team of people to make the company a success. If you can’t do these things, early investors will assume that you won’t be able to impress or convince investors down the line, and that you’ll have trouble reaching customers to buy what you’re selling and talent to join your team.
Take the words of legendary* marketer and entrepreneur Seth Godin to heart: “Marketing is no longer about the stuff that you make, but about the stories you tell.”* And make no mistake—the pitch deck is a marketing tool. Emotionally captivating stories can convince employees, advisors, and investors to commit to being a part of building the founders’ vision.
No matter what, you must convince investors that your company can create enough value to return their fund; while portions of your pitch deck will speak directly to market size and how you plan to capture your portion, your story will tell investors why this idea is going to gain traction and how you are uniquely positioned to meet the needs of your customers and reach them. Your story is a value proposition that goes beyond returns: What other value does your company offer? What kind of opportunity does investment in your company represent to VCs?
The guiding value proposition should be distilled in your thesis statement. Based on your audience research, you can tailor your value proposition to which investors you’re in front of.
If there is any one secret of success it lies in the ability to get the other person’s point of view and see things from their angle as well as your own.Henry Ford, founder, Ford Motor Company*
To create an effective story, you have to consider what motivates the recipient of your story: for founders, this includes customers as well as investors.
When building the deck, most founders are solving only for reception from investors, which can lead them to an inadequate understanding of the end user, the customer. These founders are starting with the wrong thesis: getting buy-in from investors. But in fact, the thing that is going to create the best reception among your investor audience is that you demonstrate a deep understanding of who you are ultimately serving.
Lay the groundwork for this by making sure you’ve interviewed a number of theoretical ground users and put what you learn into your story. Concentrate on understanding your “desperate user”—that is, the person most motivated to change a habit, behavior, or buying pattern based on the amount of pain they experience from the problem you have identified.
When it comes to investors, they are usually motivated by a combination of impact, power, and money. Your due diligence on firms and individual investors will help you determine which of these factors is likely to be dominant. But you also need to understand the kinds of businesses they fund, what criteria they use to judge the likely success of a project, what they care about, and what takeaways they need to sell you to their colleagues and partners.
If you’re pitching at an event (like Disrupt, SXSW Pitch, or DEMO), talk to the organizers to find out if the event has a theme and to get a sense of audience size and level of expertise.
Your thesis and vision come out of how you frame your company’s mission. It’s accurate to say Tesla is a manufacturer of cars and batteries. But their mission statement is to “accelerate the world’s transition to sustainable energy.” A great story for an investor paints an emotional picture for the recipient that shouts, “This problem is huge. It’s dramatic. Solving it would mean massive value creation—the world would be better off and we’d get rich doing it.”
At the same time, lengthy stage-setting may make some investors frustrated—they will want you to get to the point. Storytelling is not about theatrics, nor is it about overinflating your company’s mission. Are you a pizza-delivery app? Don’t try to tell investors that you’re going to save the world. Your story should be honest and humble while framing your company in the best possible light.
A lot of founders find focusing on numbers (like market size and revenue projections) more comfortable than focusing on emotion. But emotion is what motivates people to change, and no matter what you’re selling, you need customers to change their behavior. You want to frame your narrative thus: “People are really grappling with something very difficult, which is going to motivate them to do something differently, and it has financial repercussions.”
Who is suffering so much that they’ll be willing to take a chance on an unproven startup? This is where it all begins and all comes together: the story of your company’s relationship to that desperate customer, based on the pain point you have identified.
That story may begin with your personal connection to the pain point, which is a great way to communicate how you have arrived at a contrarian insight—that is, what do you know about the market that other people don’t? The personal connection strategy doesn’t work for every startup, but it can be a crucial part of your narrative if it helps investors see how you as the founder can understand and communicate with your customers. Is this a problem you currently face or faced at one time? Introducing the problem as something you have struggled with, or that people in communities close to you have struggled with, will help you demonstrate the ways in which you are uniquely positioned to solve this problem. Investors are also looking for founder-market fit, so a personal connection to the problem at hand can be part of how you explain why and how you understand the market and are poised to make this particular business a success.
Keep in mind that if you do not have an authentic personal connection or do not want to make the company story personal, you still need to explain to investors how you arrived at your contrarian insight. How do you know what you know?
Though introducing the problem as somehow personal to you is an important storytelling element, you also need to use data to explain why it’s a serious or large enough problem that your solution will find an eager, sizable reception.
important Your own experience with the pain point or customer base should supplement your thesis, not be your thesis. You don’t want to represent an insular viewpoint or sound like you’re building something for yourself alone. The personal, emotional connection to what you’re building should come out of your research into a broader population, while your personal connection to that population and/or pain point should be framed as what gives you a unique ability to reach customers.
If you do not have a strong personal connection to the problem, or if it simply isn’t your style or preference to focus on your own story, you might choose to tell a narrative about a “real” person. (You can, of course, do both.) You can give them a name and a location. The story might flow something like this:
“Here’s what happens when X tries to do Y. She suffers, she pays X amount, and the results aren’t good.”
“This is how it makes her feel.”
“Here’s what her experience could look like instead, and how it changes some deep emotional stuff that that experience is connected to.”
If you choose to tell your customer’s story up front when explaining the pain point you’ve identified and the solution you’re offering, you might cover it all in about two slides: “Here’s what happened to her” and “Here’s what could be different.” Alternatively, you can bring the theoretical customer along with you from beginning to end, focusing on their pain point, your connection to their problem, how you are uniquely situated to solve that problem, what the solution would mean to them, how many more people are out there suffering in the same way, and how you will reach them with your solution.
Whatever storytelling style you choose, the purpose of your narrative is to demonstrate that you have a contrarian insight, that you’ve been able to identify a need that is underserved in the market, proven that there is a real pain around it, and shown what it will mean when you solve the problem.
Founders often go wrong here. They say things like, “Your life will be better or easier or more convenient!” But that’s not as effective as, “There is real pain around this and no one is doing enough to solve it.” Today, most investors are looking for painkillers, not vitamins. You don’t want to frame your company story or mission around making people’s lives easier. True narrative strength lies deeper: “Why are people suffering? Here’s how we’ll mitigate that suffering.”
So you’ve told a great story that demonstrates the importance of your company’s mission, how you arrived at a contrarian insight, and why customers find this problem so painful. But what if investors don’t “get it”? They say, “I’ve never had that experience before; I’m not sure there’s a market for it.” This is where whatever revenue you’re generating or plan to generate or that comparative companies generate comes in: “X person is willing to pay $500 a month for a service that doesn’t adequately solve her problem.”
This is also part of your narrative because you’re tying revenue to the emotional pain you discussed: “People will migrate to a better solution and this is what they will pay. And you can see that based on what they’ve been paying for substandard solutions.” If you’re working on a SaaS tool and this emotional stuff isn’t feeling like it’ll be easy to harness, just dig deep—this model can work for everyone. Is it a financial interface for an actuarial firm? Well, maybe the inefficiency of their current system causes strife or confusion or job dissatisfaction, and it’s costing them in retention and morale. Find something that hurts, and then you can pivot to revenue.
Now that you understand the elements needed in the pitch deck and how you can express them through your company story, you’re probably wondering how you can structure the deck narratively. Thinking of the elements of the deck thematically is a great way to build a deck that makes sense for your story, and it can also give you more flexibility when presenting. If you rely too much on an elemental, slide-by-slide approach from beginning to end, you risk rigidity in your presentation, which can make it really hard to respond to investor questions, and can make adding in a story on top of those elements seem forced. We suggest splitting up your outline into four themes, or modules, which you can jump between when you’re interrupted. So long as each module covers the elements described below, those elements can appear in the order that makes the most sense for your story.
Your introductory module should be about five minutes long. It includes:
a concrete description of your customer
the pain point you are solving
why the pain point is so dire and intense, and
crisply, what your solution is and why it relieves that pain.
Remember to describe your desperate customer—that is, someone who would be willing to pay money to eliminate their pain. In this way, you are tying that pain point to revenue and making it clear that those experiencing this pain will be (or can be) motivated to change their behavior.
Begin by focusing on your connection to your audience:
Why do you understand them? Why do you have deeper than average access to so many of them?
If you haven’t experienced the problem yourself, how do you know about the problem?
Then discuss how you and your team are positioned to solve the problem:
What experience have you had that’s relevant to the competencies required to solve the problem?
And/or what access do you have to people who can help solve the problem, who do have those competencies?
Here, you’ll include relevant past work experience that proves you can succeed in your current entrepreneurial pursuit. You might say something like: “I know at this stage it’s all about flexibility and the ability to move in the right direction based on data we’re collecting in real time. Here’s what I’ve done in the past that proves I can work in that way.” Or you might say, “My most recent experience with this…” Or, “In my last role, I was a PM, and we had to experiment a heck of a lot to arrive at X product, and that’s the kind of experience that I’m going to bring as a founder.”
Don’t wait for investors to ask this, because they might not. Make your past part of your proving process.
cautionThat said, do not give investors your resume, particularly not verbally in a pitch. Focus on one or two relevant work experiences that prove you have the skills to see this through.
important No matter how great your problem-identification and solution are, at the early stages, investors assume that you’re going to pivot a bunch of times before you get it all right. That’s why you want to prove that you are the team that can move with those shifts. Even acknowledging that that’s the case can work to your advantage: “No matter what the solution looks like a year from now, this is the team to solve this problem.”
Now you can present your awesome data, focused on your market, financing, and gained or potential revenue.
VCs get annoyed by overly ambitious market estimations, like: “Everyone has a phone. My revenue cap is in the trillions!” (One VC told us that men routinely overestimate their market capture and revenue streams, while women tend to be more down-to-earth with their numbers.)
We recommend staying conservative with your numbers, but being honest about it. “This is our TAM, and we’ve been really hard on ourselves to arrive at this.” When it comes to revenue, stick to the near term. A lot of founders will jump ahead and say, “In five years we’ll have $10M in ARR.” Remember, investors are expecting you to pivot with your product and target market at the early stages. So instead, say something like, “This is a conservative estimate of what’s possible in the near term.” Tell them what it’s going to look like when you first start to earn revenue. When you get to $1M ARR, why will that be?
Another good place to start or end this module is with your beachhead market—that is, where you find your first paying customers. You’ve already outlined an audience that’s going to resonate with your product, and within that you’re going to have the small sliver of beachhead that’s going to gravitate to you. Knowing who that population is will help you present your go-to-market strategy, which is the last thing you’ll talk about.
This is where you explain to investors how you’re going to get your product into the market you’ve identified. There is some flexibility here, as strategy depends completely on your company, where you are on the product-market fit continuum, and whether you’re an enterprise or consumer company.
If you’re an enterprise company, present your go-to-market strategy: “Here’s how we’re going to attract our first customers and here’s how we’ll leverage them.” If you’re a consumer company, you want to present a compelling viral story that will prove when and how you’ll get into the zeitgeist: “Here’s how we’re going to start connecting with people. This is our influencer strategy or why our content will achieve virality.”
Either way, the goal of this module is to demonstrate to investors that you have a plan, and it’s partly what their investment will be used for: how are you going to connect with the core audience you identified at the very beginning of your pitch?
There’s no two ways about it: if you want to successfully raise venture capital, you have to devote a significant amount of time to practicing your pitch. You could send an email today and get a call tomorrow that an investor wants to meet. Do not go in unprepared.
A big part of the purpose of rehearsing is that it gives you flexibility. You will be interrupted in a pitch meeting. Hear us: you won’t make it to all of your slides! But if you know the material frontward and backward, you can move around within that material depending on the reactions in the room and the questions you get asked. Improv classes won’t help here. There is nothing more valuable you can take with you into a pitch meeting than preparation.
Build an outline. Starting with an outline, make sure the beats of your story are right. Digressions and extra detail can be tempting when speaking, and the outline—which should be a little more detailed than the talking points on the slides—will help you move swiftly through the presentation. As we said above, we suggest splitting up the outline into four modules, which can also help with flexibility: pain point and solution, founder and team, data, and getting to market.
Locate signposts. Come up with turns of phrase that have really resonated with people while you’ve talked about your mission or company. Peg those linguistic diamonds to different parts of the outline and try to remember them word for word (but don’t freak out if you don’t get to deliver one). This can help you keep track of where you are.
The first step is to spend some time practicing alone. When you practice in front of others, you’re adding a layer of complexity and emotional overhead that’s not going to help you until you have the material itself down cold.
You don’t have to do this in front of a mirror, though you can if it helps. Your job is to get through the entire deck ten times. The first few times you try, you’re going to have some false starts, you’re going to get to the second slide and forget what’s next. Messing up a bunch of times is part of this process! Staring at the blinking cursor of your mind does not mean you’ve already failed—it means you’re practicing so you don’t fail in front of others. So once you’ve gotten through the entire thing once, do it nine more times.
The purpose of practicing in front of an audience is to do a SWOT analysis: figuring out your pitch’s strengths and weaknesses, opportunities to improve it, and threats that could sink your pitch. If you prefer, you can tell your audience that their job is to point out any plot holes in the story you’re telling.
But who should you practice in front of?
We recommend moving outward in concentric circles until you’ve covered your bases. You started with yourself—you’re the center. Now you want to bring in a little group of people who love you. Maybe they don’t know anything about your product, but they are fully invested in you. These people are going to help you with your confidence. They’re going to tell you you’re great, and maybe remind you not to talk so loudly. This is your chance to start practicing in front of an audience, which can inspire odd behaviors that maybe weren’t present when you were alone. Are you suddenly shouting? Why are your hands not moving? Are they normally like that? But your friends will also tell you what you’re doing right, and knowing what’s working is just as important as knowing what to change. This is a really important step—don’t discount the power of being pumped up by your friends.
caution Pitching friends is important, but be careful about the advice on your content that you get from people unfamiliar with the pitching process or with your field. Pitching a novice can help to a degree because you will have to pitch all kinds of people in the future. But for the purposes of preparing a pitch for investors, your goal is to sell equity in a business, not to create a marketing tool to sell a product or service. If you’re getting feedback on the marketing potential of your pitch it can be distracting.
Once your confidence has been bolstered, widen the circle a bit. Bring in some professional contacts who may be familiar with the market or investors you’ll be pitching to. These people are going to start asking the tough questions, and poking holes in your structure and logic. Adjust your material in response to their feedback.
Finally, it’s time for the big guns to blow holes right through your story: mentors, advisors, and, most importantly, other founders. The most valuable advice you get will be from people who have pitched before, who can tell you what it feels like and what to expect, and enact some of the attitudes of the investors they have known. If you’ve already received friends and family or angel investments, you can call those investors in, too.
You might think that practicing in front of VCs is a good idea, and if you are friendly with some investors you certainly can bring them on. But their advice to you should only go so far. Every VC has their own styles and opinions and preferences, and what works for one will not necessarily work for someone else—especially someone at a different firm or who works in a different sector.
If you don’t know any founders or VCs, check out our tips on getting connected in Getting the Meeting, and general networking strategies and principles in Appendix A: Networking and Mentorship. You can even find a local business professional, at the very least. Clarity.fm is a good tool to find experts and get in touch to practice your pitch. You can also consider finding an organization that helps founders practice their pitch and hook up with mentors who can help, like Female Founders Office Hours, or The Founder Forge in Chicago. (Search “founder office hours” and your city.)
Preparing to answer questions is extremely important. This is how you stress test your deck. You can start thinking about this as you ready your deck and outline, but make sure you continue to respond to questions and iterate on your presentation as you involve others. Here are a few tips:
Write down the questions that would scare you most to be asked in a meeting. People are reluctant to do this, but it’s an important step. Chances are, you will get asked those questions, so prepare answers in advance. Remember, your answer can be, “I don’t know yet, but here’s how I plan to get signal on that.” When you start rehearsing in front of an audience, assign members of your rehearsal audience these questions to interrupt you with so you can practice answering them.
important The benefit of rehearsing in front of people who know something about your topic is that they can ask relevant questions. But the single most common question you will be asked in a pitch meeting doesn’t take any special expertise to ask: “How do you know that?”
When answering, “How do you know that?” don’t get defensive. It’s not good enough to say, “Well, I’ve experienced it,” or “I’ve met so many people who have experienced this.” The best answers will be tied to data, even if it’s limited data. Maybe you’re still working off qualitative data from some end users. Well, how many people did you talk to? How many people do you still plan to talk to? Any kind of data can help you here.
You should go through your talking points and determine whether you can answer “How do you know that?” for every claim you make, and at any stage you can have your practice audience poke you with this, too. It’s the number one stress test of your deck.
According to one expert Silicon Valley storyteller we spoke with, “80% of your success at this is going to be because of your energy, and 20% is going to be because of the content. The way you make these people feel is going to be much more important than what you make them think.”
In Getting the Meeting, we’ll talk a lot more on the subject of confidence and get into a few things you can do to show investors that you’re 100% devoted to the success of your project and believe that it will succeed. Here, we’ll share a few tips for displaying confidence that are specific to delivering your pitch in an investor meeting.
First of all, your presentation is a performance, not a lecture. As part of your practice sessions, ask for feedback on your delivery as well as on the content. Try to assess your liabilities when it comes to projecting confidence in advance, and then begin to problem-solve. If you are having trouble displaying confidence, treat it like a problem to solve rather than a personal failure. If your audience are perceiving foibles in your presentation during rehearsal, know that these are problems that have a solution.
caution Don’t say, “I’m just the kind of person who does X, and I’m not going to be able to do Y.” Even if you’re a serious introvert, if you have a command of the material so that you can focus on things besides what comes in the next slide, then you’re in better shape to work on projecting confidence and on your presentation skills.
Do you vary your cadence and vocal quality, or is everything a slow or fast monotone? Modulation—a range in inflection—in speech represents the opposite of tension: it displays an ease that will show your audience you’re confident in the material and totally prepared.
Are your hands pressed against the table or your arms crossed? Loosen up. Gesturing while talking shows a command of the space and will come across as confident to investors.
Are your shoulders square, or you hunched over, looking like you’re hiding from something? Investors are looking for founders who won’t bend under pressure and scrutiny from the public, the media, and their customers.
Consider a public speaking course if presenting isn’t comfortable for you. Alternatively, improv is also a popular training tool for public speakers—getting over being embarrassed can be a valuable skill. Improv won’t help you present a better pitch deck—that’s in the design, preparation, and rehearsal. But if just being in front of people isn’t your strong suit, practicing at failing can help.
important Of course, the best way to display confidence is to be really, really confident in what you’re saying. During your practice sessions, pay attention to any parts of the presentation where you don’t have 100% confidence in what you’re saying. Remember the cardinal question: “How do you know that?” Rethink, reword, and rework the content until it’s all true for you.
It’s one thing to tell investors what your product does. “It has this benefit and that benefit and does this thing that’s never been done before!” But telling investors about what you’re offering means relying a lot—maybe too much—on their subjective imaginations. Showing them the product is where you get to bring them into the world you imagine.
Just as pitching verbally is a skill you’ll need outside of convincing investors to invest, you will demo your product to other people as well—potential hires, customers, reporters, the general public. Nailing your product demo is time well spent.
The key to creating and presenting a good product demonstration is understanding what a demo is and isn’t:
A demo is a sales pitch. The entire focus of your demo should be, “How does my product address my customers’ need or pain point?” At Series A, the investor probably signed up for an account when they heard about your company, or you’ve given them an account and they’ve tested your product or service. However, at the early stages, you and your investors are expecting that the product you demo is not a final iteration. The product will change as your company grows. You’re not necessarily committing to the product you demo, but this is a chance to show your commitment to solving the problem you’ve identified and to show off the skills of your team.
A demo is not a feature presentation. All products have features. All competitive products have features that the competition doesn’t. Your demo isn’t the time to present a laundry list—it’s a time to address audience need.
A demo is not a learning tool. Your demo isn’t intended to teach the audience how to use your product. It shouldn’t include any “how to” or step-by-step instructions.
If you have a working product, you’ll want to demo it for investors. Founders might plan to conduct their demo after they’ve gone through the pitch deck, but in reality, the demo happens when the investor asks for it. If you’ve put mock-up images in your solution slides, an investor could ask if you have a live version to show them. At any point they can stop you and say, “Can we see it?”; “Wait, what is it?”; “Do you have an app?”; “Can I download it?”; “Let’s take a look!”
These prompts are very hard to shut down in a meeting without killing the vibe and coming off like you’re hiding something. If it’s not ready, you can always say, “It’s not ready,” or “We only have some mock-ups right now,” if that’s true.
If it’s important to you to keep the structure you’ve planned, you can try controlling the presentation by saying, “First we’d like to explain our thinking behind the solution and market, and then we’d like to demo what we’ve built so far.”
Much of our advice on creating and presenting successful product demos echoes the advice for presentations in general—there are also specific tips and strategies that will help you deliver a great product demo. We recommend that anyone building a product demo read “Your Product Demo Sucks Because It’s Focused on Your Product,” First Round’s interview with Monetate co-founder and author of Just F*ing Demo!, Rob Falcone.
Know your audience. You can’t explain how your product meets the audience’s needs without knowing what those are.
Remember, an investor pitch meeting isn’t the only time you’ll demo your product. A demo for an IT audience might focus on more technical aspects, while one for the purchasing team might focus on features that address the potential buyer’s specific pain points. For an investor audience, where a key question is likely, “How will this product give me a return on my investment?” the demo might target features that address areas where the competitive landscape is known to be lacking.
Keep it short. Common wisdom says to keep the demo to about two minutes in length. Not only does this prevent boredom, but it forces you to focus on the features that matter to your audience.
Keep it simple. No jargon, no overly technical terms, no buzzwords.
Show, don’t tell. The basic rule for every kind of presentation applies here. Don’t just tell me that your product will make my life better by providing a return on my investment—show me what it does that’s unique or better that will make customers line up to buy it.
Start and end strong. Your first goal for any presentation should be that the audience walks away remembering the beginning and the end. Start your demo with a punch, and end it with a bang. Robert Falcone advises founders to “start with outcomes” and spend the rest of the demo proving how your product makes those outcomes possible.
Focus on the script. A demo’s visual format lets you make an impact with eye-catching graphics and splashy animations. Even so, the key to a successful demo is the script. A demo is a sales pitch—and as in any pitch, the words are of paramount importance. If your demo doesn’t explain—in words—how your product addresses your audience’s needs, all the eye candy in the world won’t matter. On a related note, avoid the temptation to overstuff your demo with visual effects. This comes off as gimmicky.
Go big, then small. Start with a macro view of your product—the two or three features you think are most important to this audience, at a high level—and then zero in to a more detailed level of use cases and benefits. As you get input from your audience, put focus on the areas that resonate most with them.
Know your tools. There are a number of popular tools available that you can use to make and manage great-looking demos:
Keynote, PowerPoint, and Prezi
Icons: The Noun Project
Stock Photography: Death to the Stock Photo, Unsplash
Access Management: DocSend
Know your options. Screencasts are alternatives to traditional demos that might work for some companies. If you’re still in the research stage, check out those options as well.
Make it interactive. When giving your demo, allow room for pauses, questions, and conversation. This gives the audience a chance to zero in on what they most want to know about your product, so you can adjust the demo narrative accordingly. Prepare some questions for your audience ahead of time to encourage participation.
Ask for what you want. If you’re ending your pitch with your demo, don’t leave things open-ended (“Any questions?”)—otherwise, you run the risk of leaving empty-handed. Close your pitch with the request or action item you want from your audience. This may not be as blunt as, “Are you ready to commit to an investment?” but you can grok what they’re thinking by asking, “What do you need to see, hear, or learn that will make you feel confident about this investment?”
Practice, practice, practice. Make sure you know your demo forward and backward, inside and out. Not only does this let you improvise in case of technical difficulty, it also lets you deal with unexpected audience input or questions.
If you get a question at the 30-second mark that isn’t addressed until the end of your demo, you can set the expectation that the answer is coming soon, or nimbly skip to that section to keep the flow going smoothly. Try not to say, “I’ll get to that.”
A good practice is to record your demos so you can review them later with an eye to improvement.
You have the idea. You understand the risks of venture capital and get why the incentives behind venture capital matter. You know how much money you need to operate your company for the next 12–24 months. You’ve mastered the differences between priced rounds, safes, and convertible notes. You’ve done your research and created a list of investors who you think would be interested in investing and whom you’re interested in working with. And you’ve designed your pitch deck.
important The material we lay out here isn’t just about getting meetings with investors. This is about getting meetings in a manner that sets you up to succeed. The tools and knowledge we share will also be useful far beyond reaching out to investors, as they are the same tools and knowledge you will use to find great talent to join your team and customers to buy—and love—what you’re selling.
There is a lot to think about during this stage of outreach, like, how do you get introduced to VCs? What kinds of emails are appropriate to send? Once you’ve connected to an investor on your target list, should you email your pitch? How do you get invited to pitch in person? Is that how it works? How do you schedule meetings? When should you schedule them for? And that needling question that will follow you no matter how far you get: What if no one says yes? In this section, we’ll cover all of these questions and more.