When I sit down with new startup founders, most ask me about one thing: raising money.
This is smart of them, because, as I've stated previously, fundraising needs to be one of the core competencies of any young company. Yet for the many high-level conversations I've enjoyed on the subject with young entrepreneurs, rarely do we delve into the kinds of DIY steps they can take to legitimately improve their chances of actually landing an investment.
I want to spend some time doing just that on a subject worthy of much more discussion than it generally receives: the pitch deck.
If you're a budding entrepreneur who gobbles up broader pontifications on the art of fundraising but find yourself constantly in want of "next steps" advice, this is the column you're going to want to print out and put in your pocket.
The reason I want to talk about pitch decks is simple: I see too many that are simply not good. What should be a short, powerful presentation to pique investor interest is too frequently a gaudy, Keynote-based claptrap--with the apparent build time of a freeway and more slides than a water park.
When I set out for my company's most recent round of funding, I hit the road with a mere eight slides. Am I being prudent to the extreme? Downright cocky? Not at all. In fact, each slide in a pitch deck should precisely mirror one of the eight psychological pillars that any savvy investor has in their head when considering a funding decision.
Granted, nothing I'm about to tell you about how to structure the perfect pitch deck amounts to the magic elixir. It's just simple blocking and tackling. But too many people are hurting themselves by doing it wrong, and it needs to stop.
So here's how to do a pitch deck right, slide by simple slide.
Slide 1: Make your statement of purpose.
When I talk with a young entrepreneur, I always start by asking, "What's the big idea?" What I'm looking for is a statement about who they are and what they do in a sentence so elemental and polished as to adorn a statue. This isn't just the elevator pitch; this is the pitch you need to get out before the elevator doors have closed in the lobby. This statement is worth spending a remarkable amount of time on, because it might be the most valuable dozen words you'll ever assemble. It's something that needs to be torn up and debated and rewritten a thousand times. It also needs to be a living statement that can grow and change as you learn about your business, what happens in your marketplace, what matters to investors, the zeitgeist, and the thousand other factors that will be crucial to the growth of your business. And if your first slide is lacking it, your deck is like a book with a bad cover--nobody's going to buy it.
Slide 2: Introduce your team.
Ever go to the oh-so-fancy movie theater where the usher (kind of uncomfortably, in my opinion) comes out in front of everyone to tell you what the movie is about? That's exactly what you did in the first slide. In Slide 2, the lights go down, the movie starts, and your audience gets to see how this whole thing is going to unfold--beginning with meeting your main characters. And what are investors looking for in your team? Three things, really: that they've done it before, that they're the best at what they do, and that they're incredibly charismatic. Think charisma isn't a gigantic factor in a funding decision? Then you're forgetting that dogs would be mere members of the wild kingdom if not for being gifted with oodles of the stuff. So bring as much of your team as you think helps your cause and show off the veritable tour de force of talent that's going to give the room absolute confidence you can pull off everything you're about to lay out.
Slide 3: Identify the problem.
If you're pursuing the kind of big idea that matters to venture capitalists, you need to comprehensively and vividly identify the fundamental problem you're solving. This accomplishes a couple of things. One, it demonstrates that you understand current market pressures and the macro trends that drive them. Second, it forces you to train a spotlight on what you're aiming to tackle by ensuring it's an actual problem in the world. If you're trying to franchise a chain of "freeze the fat" body-sculpting offices, you're not solving a problem. You're preying on human weakness for the purpose of turning one-dollar bills into two-dollar bills--with the yawning downside that almost anyone can do the same thing. As an investment opportunity, your rich uncle Ned may jump all over this. But real investors want to solve real problems. If all you want is to turn a buck, skip the VC pitch meetings and buy vending machines.
Slide 4: Present your solution.
Your fourth slide should cover how you plan to solve the previously stated problem. It's a simple rundown of your value propositions, illustrating how you plan to address the crucial societal need you already identified faster, more effectively, and more affordably than ever before. Surprisingly, infomercials tend to do a pretty fantastic job conveying this kind of information. "For just three simple payments of just $9.99, it slices, dices, minces, purees--and cleanup is a breeze!" This slide will be a breeze too--if your solution is solid.
Slide 5: Answer "Why now?"
Investors are like mountain climbers looking for a foothold. Ideally, it comes in the form of a Eureka! moment that happens when a new technology overlays with a coinciding shift in societal needs. The mass-market automobile. A streaming music service. The "Why now?" slide needs to focus on what's going on in your industry and society at large that makes the timing of your business so prescient. This is where you get to stand on your soapbox and give a primer on all the things you know about the intricacies of your business, and how they match up with the dynamics of the market. You should also touch on the competition: why nobody's doing this, how the people who are doing it aren't very good at it, and why you're uniquely poised to color in the resulting white space. Feel free to be a great big, annoying know-it-all here. It's expected.
Slide 6: Explain how this will work.
This sounds pretty open-ended and hairy, but it's really just a short and simple explanation of your revenue model. Basically, how do you plan to make money? If you're running a digital content company, slide No. 6 might sound something like this: "Our business works because we buy premium domain names, add unique content created by our world-class team, require consumers to register with their emails, and then sell their emails for $5 each to companies that want them--and we get paid up front." Remember those Family Circus cartoons with the dotted trail that tracked the roaming shenanigans of little Jeffy? Slide 6 is pretty much that, but for the dollars that will be flowing into your business.
Slide 7: Spell out how your business will perform for the next five years.
Perhaps unsurprisingly, you're going to finish with two financial slides. This first one should map out the expected results of the business as told by the five narratives that matter: units sold, revenue, cost, yield, and customer acquisition cost over time. Obviously, there's an art to presenting all of this information in a way that shows your business as the most compelling money-spawning creation in recent history. I'll give a much more detailed rundown of this slide in a future column, but for now just prepare a simple line chart for the above information and know that slide No. 7 is a mere steppingstone to something much more critical ...
Slide: 8: Show your investors how they'll 10x.
You've covered the problem, walked through your solution, your team, your timing, your revenue model--now it's time for the dramatic climax: how your potential investors can make a 10x return. There's nothing rational about this particular number. It's just what humans who invest for a living have decided feels good. And it is all any investor will really care about--from a tiny, early-stage VC to a late-round institutional partner looking to fund you for the long term. So explain how it's going to happen for them--and don't be shy. Describe the cavernously huge addressable market you're tapping into. Demonstrate how you and your team plan to mine it to its core like a gang of crack roustabouts. And spell out how this will bring all involved the most insanely profitable investment of their careers.
If you can pull off all of the above in just eight slides, the folks across the table will doubt you at their peril, thank you for your brevity--and hopefully back you with their pocketbooks.