A recent TechCrunch story revealed how little time venture capitalists spend looking at pitch decks.
Successful pitch decks — the ones that went on to raise money.
3 minutes, 44 seconds to be exact, spread over 19 slides on average. That works out to < 12 seconds per slide.
Again, these were successful decks. Combined, the 200 pitch decks analyzed raised $360 million from investors. No word on how long the same investors looked at unsuccessful pitch decks (2 minutes, 44 seconds? 1 minutes, 44 seconds?)
Now before throwing your hands up and thinking it’s not worth putting in the time to get your deck right, OR conversely, putting more of your precious time into the deck, hoping to tack on a few extra seconds of interest from investors, remember this…
Your Pitch Deck is only ONE part of the fundraising process.
While it’s an important part (hellz yeah!) it is still only ONE part. There’s no need to stress about the short attention spans of venture capitalists, angels or other investors. Instead, concentrate on your entire fundraising strategy, from start to finish. Congruence is the word.
Here’s what you should do to give your pitch deck the best chance for success:
Study a firm’s investment philosophy. Investment firms normally state their investing thesis everywhere — website, marketing collateral. This way they attract like-minded entrepreneurs while repelling contrarian types. Do yourself (and them) a solid by reading it before contacting them.
Ask yourself whether this firm’s value system lines up with yours (e.g., do they normally take on an advisory role?). Could you imagine partnering with them long-term? You gotta be thinking 5, 7, 10 years out for your startup. If the answer to either question is no, find someone else. There are plenty of other sugar daddies in the startup universe.
Understand that investment firms have solid reasons for why they invest. If they pass on you, don’t bother arguing or trying to convince them to change their mind. Just say “thanks” and move on. Raising money is more about quality pitches than quantity pitches. You will get more meetings if you contact more investors, but not necessarily more money.
Remember, you’re looking to leave meetings with a check in hand, not polite applause.
See who they’ve funded. The type of investments a firm has made to date will give you a good indication of whether they’d be interested in your company. Investment firms usually advertise their portfolio right on their website. The startups that have generated the biggest returns will get top billing. You can also use third-party platforms like VentureFocus, AngelList and Venture360 to examine the strategy and portfolio of an investment firm.
Now obviously, if you notice that they’ve already funded a direct competitor of yours, you probably don’t wanna contact them. The reason being that savvy investors try not to cannibalize their portfolio.
Study the pitch decks in their portfolio. Although as the SEC likes to remind us, past performance does not necessarily predict future results, often it does. That is to say, if a pitch deck worked 1X, it might work 2X. Just google “XYZ Company pitch deck” and you can see what format worked for them. Startups are a lot less protective of their old decks nowadays, because you really can’t steal the important IP stuff. SlideShare is packed with old pitch decks.
Study your investor’s backgrounds, especially before sending a cold email (“we both hate the new Star Wars trailer!”). Even if you can get a warm introduction, it’s always good to have something in common for reference purposes.
This is NOT ass kissing or groveling, just sales psychology. Investors are people and they prefer doing business with other people who they know, like and trust. A lot of investment firms, especially the newer ones, exist because of personal connections from work, school or hobbies.
Peter Thiel, venture capitalist and PayPal founder, recommends probing deep into the background of your investor targets. For example, if one of them wrote a book, read it. If another one has been on TV, watch the interview. If a third owns a restaurant, try it out. This will help you pick up the subtle clues about an investor’s priorities. Most other founders won’t bother with this step. When you know a person’s background, you can personalize every aspect of the pitching process, setting your company apart.
The actual Pitch Deck
Once you’ve selected a list of investors to reach out to, you can get started on your deck. Your deck should follow good design principles — clean lines, punchy copy, sharp images and short bullet points. Your slides gotta emphasize the 3 T’s (Team, Technology, Traction). Create as few slides as possible (but as many as necessary).
Your pitch deck has to answer the BIG questions any shrewd investor would ask. Variations of those questions are:
- Why does this (problem) matter?
- Why should I care?
- Why now?
- How is your product different (from everything else)?
- Is this inevitable?
Michael Wolfe says he sees a lot of entrepreneurs scrambling to answer these questions once they’ve secured a meeting with investors. This is exactly backwards. As he says, “you need the answers because you need the answers, not to impress VCs.” Jason Lemkin says you’ll “win” if your deck can answer all the right questions without having anyone there to present it.
Your deck is not a one-shot miracle pill, it’s a quick-n-dirty version of where your company is now. Hopefully this article has taken away some of the mystique around pitch decks.
While it’s always tempting to look at the early decks of massive companies like Airbnb and think funding success is a mystery of the universe, it’s really not. Early investors at Airbnb saw what could be, rather than what was. They did not get sidetracked by the deck’s crudeness, realizing that the team and the idea was better than the packaging.
If all a pitch deck needed to secure funding were beautiful, intuitive and clean design, then EVERY creative agency would be cranking out winners. That just ain’t so. Great design flows out of a startup’s work, mission and unique talent. A killer pitch deck presupposes a detailed understanding of the company.
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