Like it or not, raising external capital is part of the process of building a successful startup. Of course, every rule has its exceptions, and there are many companies that bootstrapped and did not raise capital, but for most entrepreneurs, eventually you are going to want to increase the oxygen by bringing on investors. The first thing investors want to see? An investor deck.
Before we go into how to create a deck and what its purpose is, there is one more point worth emphasizing. Similar to the world of job hunting, you might prefer to send your LinkedIn info over a traditional resume, but if recruiters want a resume, you'd better comply if you want to move forward. So too with fundraising. You might prefer to send a one-pager or a website, but investors, at least most of them, work the way they work, and a deck is still necessary in 90 percent of cases.
So, what is the goal of a deck?
You are raising funds, and that is your goal, but sending a deck to an investor, as amazing as that deck might be, is not going to result in a wire of the funds to your account, nor will it even result in a term sheet in your inbox.
The goal of an investor deck is very simple, to get you that first meeting in which you will make your case, pitch your company, then hopefully get a second meeting, maybe a third, and ultimately, if things go well, a check.
That means your deck has to cover the basics. It has to answer the question the investor is asking herself: "Why should I meet this company?" Answer that question and you are gold.
Answer the investor's question.
When preparing the deck, get out of your own bubble, and try to get into the head of the investor to whom you are about to send the presentation. This deck is surely going to be one of many on that investor's desk, which means you need to stand out.
At this point, you can't use your product to stand out because all the investor has and knows is the deck. So make it great!
Now, as for the content of the deck, all the investor wants to know is why. Why should they meet you? Why should they invest?
To answer that, cover the basics. Who are you, who is on the team? Why are they able to execute on this vision of yours? What is the market size? Who wants your product? What is the product? Is there proprietary tech? What is the go-to-market? Meaning, you have a strong team, a great product, and deep tech, but how are you going to get that product into the hands of customers? Will those customers pay? How much will they pay?
These are some of the questions you need to address in the deck, among others.
Remember what the investor is truly after here.
Never forget the mindset and the mechanism of a tech investor. Two to 5 percent of their investment portfolio will hopefully return their investment to their limited partners. You need to convince that investor that your company, which is comprised of a strong market need, a compelling product, and a talented team, is able to build a company that falls into that 2 percent. You will build such a large company that this investor will regret not investing if they decide to pass.
The world of fundraising can be summed up in four letters.
The goal of your deck is to get that meeting and the goal of that meeting is to get your funding. How do you do that? By creating FOMO, fear of missing out. For that, you need a strong pitch that will communicate that if this investor does not take out her checkbook, she will regret passing on this deal forever.
The deck is your first impression, it is the moment you ring the doorbell to pick up your date for the first time. You don't get a second shot at that. Make it pop.