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The pitch deck is a short presentation which has become central to the startup funding process.
With the biggest venture capital companies receiving hundreds of these documents every day, ensuring that a pitch deck stands out from the rest - in content, message, and appearance - is a crucial step in achieving startup funding.
FirmRoom often hosts the fundraising processes for both startups and venture capitalists, giving us the know-how and insights needed to put together this guide to successful pitch decks.
A pitch deck is a short presentation sent to investors which provides an overview of a company, its industry, and its potential, with the aim of convincing them to provide funding for the company.
In less than 20 slides, the pitch deck should convey a powerful message to invstors, which shows them a clear path to cash flow for the business, and convinces them that their money is better invested in this business than any of the hundreds of others they’ve looked at.
The sheer scale of pitch decks that venture capital investors receive on a monthly basis is comparable to the number of resumes received by top investment banks.
The importance of pitch decks is analogous to that of the resume and cover letter of the aspiring investment banker.
It has to communicate a call to action (i.e., to invest) for the reader. As famed investor Warren Buffet has said:
“If you can’t communicate and talk to other people, you’re giving up your potential.”
Pitch decks are all about communication. The investor that first reads it has no idea what the business does, how it does it, or why (s)he should invest.
They’re not going to spend too long poring over these questions, either. They’ve got too much to do. Thus, the pitch deck should grab their attention, then hold it, then motivate them to look for more information.
Good pitch decks have literally led to hundreds of billions of dollars of funding for startup businesses. This is what makes them important.
A distinction needs to be made between good businesses and good pitch decks.
Good businesses can have terrible pitch decks, and businesses which are unattractive from an investment standpoint can have outstanding pitch decks. A great pitch deck levels the field for otherwise unattractive businesses, and often means that those businesses which aren’t the most investible achieve their funding goals.
So, what makes a great pitch deck? Below, we look at some of the components:
The temptation to use overly descriptive language or buzz words is the death knell of many pitch decks.
The investor Peter Thiel aptly captures this by calling any investor that liberally uses buzzwords ‘a fraud.’ He succinctly notes that companies which are investible are in a category of one.
It’s remarkable how many pitch deck writers fall into the trap of comparing their company with another, usually highly successful company.
“This is going to be the Uber of the [insert industry].”
This is lazy and probably highly unrealistic. It only serves to take credibility from the company.
If the idea cannot be communicated in a few words, it cannot be communicated. That’s the general thrust of a pitch deck. In that sense, it’s sort of like a joke: If you have to describe what’s going on, it’s not going to work. This also explains why most of the pitch decks have less than 30 words per slide and no more than 20 pages.
An unspoken truth about pitch decks is that when there’s very little verbiage, the design has more of an impact. Most venture capital analysts have already looked through countless pitch decks by the time they reach any given company’s deck. It pays to make it visually appealing to them.
Above all, remember that a pitch deck is distinct to an information memorandum. The idea is to convey the message as succinctly as possible. The rest can be taken care of in due diligence or in an accompanying business plan, if the venture capital company requests it.
Pitch decks all resemble each other to a greater or lesser extent. This is due to the format which is expected by venture capital entrepreneurs.
There are some variations on the format (for example, some companies introduce the opportunity rather than the problem) but largely, it is set. The following are the non-negotiables for pitch decks:
Great pitch decks define a clear problem that the company is solving. This sometimes referred to as the ‘pain point’ that the company is proposing to solve. The more universal the pain point, the more it resonates with the investors viewing the presentation, the better.
This slide should outline in very clear terms how the company solves the problem on the previous slide. This should be clearly expressed and preferably in quantitative rather than qualitative terms. By the time the reader gets to this slide, they should already feel like this is something they want to invest in.
Above all, the company should have a unique value proposition. It’s great to be a ‘me too’ (a company which copies another in a different market (e.g., VK.com in Russia was a blatant copy of Facebook in Russia in the mid-2000s), but it’s better if the company’s value proposition is out on its own.
The market should be clearly defined. A company cannot be everything to everybody. It needs to have defined market parameters, whose quantitative characteristics are justifiable. If the company has a $1B market, it should not be defined by the pitch deck as a $100B market.
Good pitch decks show what the company’s competition looks like, and clearly outlines how it will beat them. This could be anything from price to strategy, but it one slide, the investor should be left in no doubt that they’re investing in the company which has a clear advantage over the others.
An investor will want to know what the funds are being used for. In fast-growing technology startups, most of the funding will typically go on technology and sales and marketing. Hiring is the third part of the triumvirate. The key is to show that the funds are being spent in a way which will ultimately generate growth.
The company doesn’t need to go into depth with the financial projections - that’s the job of financial statements which are requested later by the investors. But it does need to make projections about where the company’s income is headed, and preferably, show how it’s obvious that it will achieve those goals.
Successful and unsuccessful companies show similarities in their pitch deck structures.
However, thriving startups place their business model and fundraising objectives at the end, while their less successful counterparts feature these sections earlier in the presentation.
Following is a comparison of pre-seed deck structure:
A comparison of successful and unsuccessful seed pitch decks reveals distinct patterns in section arrangement. Winning decks generally feature the crucial team slide prominently at the beginning, while struggling decks position it in the middle or towards the end.
Additionally, successful decks emphasize their product section early in the presentation, while their less successful counterparts place it in the middle.
Below is a comparison of successful pre-seed and seed decks and their most common opening slides.
With larger rounds and higher meeting acceptance rates, narrative-driven decks capture investor interest. Prior rounds have vetted infrastructure and logistics, so investors seek scalability and future positioning.
Successful Series A decks diverge from Pre-Seed and Seed decks, emphasizing fewer Problem, Solution, Product, and Competition sections.
Investors typically devote significant attention to three primary sections in Series A pitch decks.
The objective is to demonstrate that the business's achievements are not only sustainable but also expandable over the long run.
In his book, the art of startup fundraising, famed startup founder and investor, Alejandro Cremades, outlines 19 items that investors want and expect.
These are as follows:
While contacting a larger number of investors may result in more meetings, Dropbox's research indicates that numerous successful founders secured seed rounds by reaching out to 80 or fewer venture capitalists.
A weaker connection exists between the number of investors approached and the funds raised. Seed founders should focus on fostering relationships with well-suited investors in their industry, rather than pursuing extensive outreach efforts. Adopting a strategic and targeted approach remains key to effective pitching.
Venture capitalists are keen to tell anybody who will listen that the same mistakes are made in pitch decks by over-enhusiastic company founders over and over again. Perhaps the most common of these is sending the pitch deck to irrelevant investors.
If a VC firm is only interested in US-based firms operating in the health sciences, it doesn’t matter if you’re a Estonian SAAS company about to disrupt work from home.
Here are the rest of the most common mistakes:
Understanding what the business does (its ‘jobs to be done’) is the most important part of the pitch deck and one where entrepreneurs often fail to communicate properly. It’s essential now exactly what the business does, why it’s going to win that space, and to communicate this.
A company that solves a million problems probably solves no problems at all. Venture Capital investors aren’t looking for an octopus that extends its tentacles into several different problems. They’re looking for a winning solution for one problem.
Venture Capital investors are familiar with exaggeration. In fact, they expect it. It goes with the territory of working with entrepreneurs. But there are limits to exaggeration and too much will reduce the entrepreneur’s credibility, and even turn off the investor so much that they’ll cut short the process.
Closely related to exaggerating is the tendency of entrepreneurs to namedrop in their presentations. You may have met Mark Cuban backstage at a technology conference. You may even have discussed your business with him. If he said it’s a cool idea, it probably doesn’t mean he’s going to provide funding.
Even the most accomplished writers in the world need editors. For entrepreneurs putting together pitch decks for the first time, poor grammar, syntax, punctuation, and construction is typical. However, the pitch deck should not be shared until such point as all of these issues have been dealt with.
The fact that pitch decks are in presentation format means that design is important. In the unlikely event that there’s an experienced designer on your team, they may be able to construct the pitch deck.
Otherwise, it’s common practice to hire external designers for the pitch deck. They can also work on things like a corporate color scheme and the company logo. Attempting to do this in-house has the potential to look amateurish, and to undermine the company’s chances of achieving funding.
Although it’s possible to hire one-off designers on freelancer sites like UpWork and Fiverr, and sometimes they can do an outstanding job, most of the time it pays to hire specialist teams.
This Medium article outlines some of the companies operating in this space. Most of these pitch deck design specialists are also keen to underline how much capital their decks have helped raise, which is a useful metric to measure the quality of their work.
Companies can look to spend a minimum of $2,000 on their pitch deck, with higher pricing depending on the number of pages.
Nobody ever gave a killer presentation of their pitch deck to investors without practice. A half hour spent watching shows like Shark Tank shows the difference between practice and lack of it. Those that practice give polished presentations, even when their business doesn’t convince the investors to part with their funds. Those that don’t ruin their chances of achieving funding merely by the fact that they cannot properly communicate what could be an excellent investment.
Look in the mirror and give the presentation. Give it to family and friends. Repeat several times. Make the mistakes before the presentation to investors. There is simply no way around it, but practice. And going over it a few times by yourself at your desk is not practice. Ultimately, nothing can fully prepare you for the moment when experienced investors are grilling you about your business. But at least you can prepare for the feeling of eyes staring back at you as you walk through the pitch.
FirmRoom features several tools which have been developed with the startup funding process in mind. These include:
FirmRoom arms entrepreneurs with document data and analytics, enabling them to see which investors are truly interested in their pitch deck an allowing them to track engagement to better understand investors' interests and tailor their approach based on data in real time.