Recently, I shared this outline with the Capital Factory; Below are both
example slides and descriptions / discussion for each. Also note this earlier post regarding “what to ask” your potential Venture Capital partner.
Makes sense to read that while you’re creating your investor deck; I
probably need to update that post as well. Use this outline as a
prototype for creating your very own deck for fun and profit.
High-level guidelines:
- Create your own deck! Create a deck that allows you to tell your
story according to your style; name the slides what you want; tell your
story with text or pictures (within reason)
- Don’t leave out critical information! This outline is my
suggestion of a “critical information” list; no rational investor will
fund your company without knowing the information suggested by this
outline.
- Proactively answer big-ticket questions! If there are obvious,
elephant-in-the-room sort of questions regarding your business: address
them before they get asked. This is always a better way to go.
- Be passionate and informed! Investors invest in the team – show
them your passion and be sure to know data from adjacent or competitive
markets, companies, and models.
- Finally, it’s really important to have enough white space in
your presentation format. I like a white background because it prints
and projects cleanly. I like titles that are single-line and as few
words as possible; and I try to keep the text/image area “middle part”
of the slide as open as possible. In general, right angles are easier
to make look clean than circles but your mileage may vary. Less is
absolutely more when it comes to the presentation template.
- The get everyone in the room and sitting down slide; Don’t roll
forward from here until you have everyone in the room and paying
attention if you can help it.
-
The title slide is really an opportunity to call your investor
meeting to order. Most of the time, investors will be in motion getting
drinks, setting up, finding their partners, etc. Stay here until
everyone is ready.
Important information to have on this slide includes the company
name, date, and some investor-specific marking such as show in the
Title Slide picture. Why the investor-specific tag? I think most VCs
tend to honor the notion of confidential information – but don’t try to
get them to sign an NDA – they’d reather not hear your pitch. I
believe the most effective way to minimize the sharing of your investor
deck is to ensure the investor’s name/firm is on EVERY page. That way,
if it gets around, everyone will know where it came from and that
should create at least some amout of hesitation ahead of sharing.
Ideally, you’re off this slide as soon as everyone is settled or
maybe just ahead of that…quick…the clock is ticking and your potential
investors have very short attention spans. Trust me.
- Make sure you’re covering what they want to cover; ask if you’re missing anything before launching into the pitch
- This is also the slide to give a quick summary of your company.
This summary is important because it will give any other partners at
the firm you talking to a “snap shot” of you’re company after you’re
gone; it’s helpful for other partners in the firm to have at-a-glace
info on what you do, in what market, company details, and so on.
-
In general, I believe that every slide should communicate exactly
one concept (the “punchline”). So why are there obviously two concepts
on this slide?
First, the Agenda has minimal value in the presentation but you
still need an opportunity to ask if there is anything that this
investor/firm wants to cover that is not in your current agenda. Maybe
they have an investment in this space and therefore some very specific
market questions; perhaps they have heard a few interesting things
about your company that they want to be sure to dig into those items
before the meeting is over. Who knows…but make sure you let them know
what you’re going to cover and ask if there is anything else you should
be sure to hit in the course of the discussion.
The Company Snapshot serves to key purposes: first, it tells
investors who are not familiar with your company what you do. I can’t
tell you how many times I’ve been in a pitch (to me, as an investor)
where we’re at slide 5 in the deck and I’m still not sure what it is
that this company does. Don’t make your investors guess…lay it out
simply along with the other details of your company so you don’t make
anyone spend your precious pitch time on silly information you should
have dished out earlier.
The second thing that the Company Snapshot slide does is create a
simple and effective way for partners at the firm who were NOT at your
pitch meeting to easily understand the high-level information about
your company. In most cases, there will be more people involved in
making the investment decision for your company than are in the room
when you first pitch – give them an easy way to start understanding why
they should care about you, your company, and your opportunity.
Include: business focus, target market, significant customers &
partners, how many employees you have (gives them a sense of your
expenses), do you have any other investors currently, when & where
was the company founded, where are other offices, and what can they
expect in terms of revenue and expenses (”pre-revenue” is a fair answer
as well).
- Why is your market interesting? Are there any compelling dynamics currently at play?
- How do you fit in? This can help set up your unique competitive advantage / “secret sauce” slide.
-
When building the Market Context slide, you should feel comfortable
with the nagging feeling that SURELY everyone on the planet knows at
least this much information about the market your company operates
within.
Perhaps they do; perhaps they don’t. In any case, you need to frame
up why you market is interesting: it’s big and growing; it’s going
through massive disruption; it’s suddenly ready to enjoy the leverage
of technology for the first time; everyone else is thinking about the
problem/solution/etc wrong. It’s important to describe the (hopefully
growing) market in which your company will capture a small and growing
portion.
This is also your opportunity to describe any compelling dynamics
currently at play; perhaps something that gives your company an
advantage. In a real sense, this slide should be the set-up for your
“secret sauce” / “why we should win” slide that is coming right up.
- In many cases, your entire pitch will be an interactive conversation while sitting on a single slide; this should be that slide.
- Done right, this allows you to describe what you do, who you do it for, why that’s important and your vision for the future.
-
For me, this next slide is the most imporant slide in the deck.
This is the slide that, if necessary, you could use to tell the entire
story (what you do, why (=value) you do it, and for who) of your
company.
While this slide can look VERY different, I believe it contains the
same basic information for any company. The concept of the past,
present and future is key to this sort of slide because it allows you
to talk not only about the product/solution you’re selling today but
your vision of the future and the associated products. Your customers
value your ability to see into your/their collective future and
anticipate problems they don’t even have yet.
In this example, the left of the blue bar represents all of the
past…where customers didn’t need to (or didn’t KNOW they need to) use
your company’s solution. But now, here in the blue bar, “we all now
know we have this problem.” We should name it! A perfect use of the
header space. Here, it’s called “The Land Grab” – which referred to
broadband service provider’s need to quickly and efficiently acquire
new broadband customers before their competitor beat them to it. NewCo
has products to help with this…and the effect is “Broadband Deployment
Acceleration.” Investors should appreciate how well you understand the
problem (so well, in fact, that you named it). It also shows that
NewCo’s products map to the problem and have a clear value proposition.
The middle, green bar represents the near-future. Perhaps NewCo’s
customers are already experiencing problems associated with this near
future. In any event, this represents the next step in how NewCo would
work with their customers…and forecasts the products they might sell to
address the next phase of challenges. If it makes sense, name this one
too! This helps investors understand that you’re thinking down the
path of product/market evolution and that you’re less likely to be a
one-trick pony. The more logical the linkage, the better. Here, it
makes all the sense in the world that FIRST you have to initiate the
service, THEN you have to manage and support effectively while
minimizing the costs to do so.
Finally, the orange section represents your vision of the future. If
your company could wave a magic wand, this would be the resulting
condition or capability. In general, this phase should be predicated in
some capacity on the earlier phases. It’s really important for
investors to hear your vision of the future; everyone will understand
that it will take great products, a willing market, superior execution
and money to get there…but you have to have a sense of where “there”
actually is. If your company vision is having your first / only
product increasingly adopted – that’s not a company vision – that’s
just execution. In this case, the vision was to eventually enable
broadband service providers to sell value-added services (gaming,
security, triple-play) to their subscribers in order to create some
lock-in and differentiation for their service…instead of being
relegated to providing only the increasingly commodotized broadband
“pipe.”
- How, exactly, does your company make money? Do you have any examples of this working so far?
- Does any part of your business act as a “loss leader” for another, more valuable part?
- Do you have two models running simultaneously? is that good or bad
& why? Make sure you clearly describe and delineate between
them…and hopefully describe how they benefit and support each.
-
The business model / how we make money slide is a critical component
to the pitch deck. Again, it can take many different forms but the
punchline is the same: our company does “this set of stuff” in order
to make money. It may be a SaaS-based web application, it may be an
appliance sold directly into IT departments, it may be a freemium
model…what ever it is, you must explain it clearly.
As you can see from the example slide here, the business model slide
can actually be a product/solution/service description as well…as long
as you’re sure to describe HOW you sell the product and the details of
your go-to-market strategy and/or plan.
A core aspect of the business model slide is an articulation of how
the business scales within this business “model” and go-to-market
strategy. For selling directly into IT departments, it’s scaling up a
direct sales force; for a product that can leverage existing channels,
it’s finding and signing up channel partners; for SaaS businesses it’s
how customers “find” your company on the Internet and your cost of
customer acquistion versus your lifetime value of the customer to the
business. Does any part of your business act as a “loss leader” for
another, more valuable part? if yes, then say so. Do you have two
models running simultaneously? Make sure you clearly describe and
delineate between them…and hopefully describe how they benefit and
support each. You get the idea.
- What you’ve accomplished so far?
- What you plan to do in the near future? In what time frame?
-
The Milestone / Progress slide is your opportunity to show how far you’ve come since the original concept for your business.
In the example here, there are two simple examples of how you can
present this information. This sort of slide gives investors a
short-cut to understanding how well you’ve executed so far in your
company’s life. Important, value-creating milestones over a reasonably
SHORT amount of time suggests that your company is focused, you’re
prioritizing what is important to grow your company and executing
against that list.
Value-creating milestones can really be anything but should clear a
certain “news-worthy” bar to make a list like this. I’d suggest that
the following items would clear that bar: founding the company,
funding events, launching a product, winning a customer or significant
trial, signing business-affecting partners, and so on.
Importantly, this slide is also an opportunity for you to forecast
what your company will do next. Nothing suggests great execution to an
investor such as calling your shot and coming back later and showing
that “you did what you said you were going to do.” Conversely, be very
careful NOT to suggest a big milestone such a significant customer win
unless you’re VERY confident. The first question out of an investor’s
mouth during any follow-on meeting will inevitably be: “so, did you
land that big account?” You never want to say “No” to that question
because there is no good explanation for why not given the fact YOU are
the one that told them to expect it.
- You relative to others in your space.
- The question that you must answer well: if your company is
successful, how will you defend its business from competitors who see
your success and want some or all of it for themselves? What can
you do differently? What can you do uniquely and realistically for how
long? What CAN’T (or is really really hard to) be duplicated? What is
your special tech, model, process, team advantage or unique solution?
-
It’s important to realize that investors (any many other people)
will begin to understand what your company does by ANALOGY. Having
seen many different companies over time (and understanding how THEY
operate), understanding your company is largely an exercise in figuring
how how you are similar to dissimilar to the companies that investors
know well. Framing up a set of similar and/or dissimilar companies is
one of the key purposes of the competition chart.
It is universally accepted that the standard “check-box” comparison
chart will start with your company in the first column, having the vast
predominance of boxes checked, and then proceed to list 3-4 other
less-checked competitors that you’re in the process of wildly out
executing. The example Slide 7 has three examples of these charts.
While nearly cliche, such a slide still serves the purpose of
listing the competitive criteria that you deem important relative to
your company and this market and how other companies in your space
stack up. …and it’s probably best to NOT use the phrase “secret sauce”
in your pitch…we’re using it here colloquially.
The set of competitive criteria for your company – the rows on these sort of slides – leads directly to your company’s unique competitive advantage
(aka “secret sauce” or “unfair advantage”). There are a number of
standard, competitive differentiators: being first to market, unique
technology, patent protection, your amazing team, and others; these
differentiators all have varying degrees of “defensibility,” which is
an important concept when it comes to decribing your company’s
competitive advantage. For example, being first to market may simply
illuminate the path for a larger competitor who is willing and able to
fast-follow your strategy and throw huge dollars at solving the same
problem. Is that true? why or why not? Have your data-backed (versus
emotional-bias-backed) answers ready!
The question that investors will have and that you must answer as best you can is this: if
your company is successful, how will you defend its business from
competitors who see your success and want some or all of it for
themselves? What can you do differently? What can you do
uniquely and realistically for how long? What CAN’T (or is really
really hard to) be duplicated?
- Who are you working with today? Who will be your customer tomorrow?
- How, exactly, do you acquire customers? How much does it cost to
acquire them? What is your average deal size? How could your
business increase the average deal size? What is the average deal
size of other companies in this same market? Does this information
align with the Market Size / Market Context data from Slide #3
? (hint: it should) Once you have a customer, can you sell them MORE
stuff more easily? Why / why not / how much / when will you have it to
sell? What is the expected life-time value of a customer (be careful
to think about this relative to the cost to acquire a customer)?
-
Perhaps more than any other slide, this example can take a variety
of forms. The “punch line” for this slide is to communicate what ever
progress your company has made relative to actual customers, the future
customer pipeline, and partners that help your business be successful
in some capacity. Logos are always nice to look at but don’t get
hung-up on anything other than clearly communicating your current
status.
You may not have customers yet; or your customer base may be every
consumer in the world. In any case, you need to communicate the current
status of how well your business is working and customers (because they
pay or should pay you money) are a great metric for
investors to use to judge your progress so far. Revenue is, of course,
the most binary judge of success…but revenue from a top-tier,
brand-name, market-leading customer is (to some real degree) more
valuable than revenue from a no-name company because markets tend to
follow (adopt the same solutions in a similar time frame) the market
leaders. Alpha or Beta (or non-paying customers) should be called out
explicity.
The discussion of your company’s “pipeline” is basically a
description of how customer acquisition is going. Whether you’re an
Internet consumer application or building widgets to sell directly to
other businesses, how efficiently your company acquires new customers
is material to investors as they judge the state of your business and
what could / should happen if they choose to fund you. How, exactly,
do you acquire customers? How much does it cost to acquire them?
What is your average deal size? How could your business make the
average deal size go UP? What is the average deal size of other
companies in this same market? Does this information align with the
Market Size / Market Context data from Slide #3
? (hint: it should) Once you have a customer, can you sell them MORE
stuff more easily? Why / why not / how much / when will you have it to
sell? What is the expected life-time value of a customer (be careful
to think about this relative to the cost to acquire a customer)?
Partners are a necessary evil in most businesses. “Evil,” because
in general, a company’s life would be much easier if it ran and scaled
just fine without help from any other company. Partners might be a
critical part of your business/market ecosystem; they might give you
efficient access to potential customers; they might provide a critical
part of your overall solution; they might actually sell your product or
service for you. What ever they “might” do, the one thing that is for
certain is that they require some level of “care and feeding” and that
equates to time and money for your business. Make SURE they are worth
it. And remember that all partnerships tend to fail in the long term
if both sides are not benefiting to approximately the same degree
relative to their business. What did the partner commit to, if
anything? What did your company commit to? Do you need more than one
such partner? How long will it take for you to measure partnership
success? What is required to ensure they are effective? How might
this partner accelerate, add scale, or de-risk your business and your
execution?
One concept that we’ll keep coming back to is the concept of scale
and, in particular, scaling your business. Investor’s excitement about
your business is predicated on their beliefs regarding how your
business scales from where it is today to something much larger and
much more valuable in the future. Desire for scale in your business is,
without question, is applied most directly to revenue. That said, there
are many other factors related to scaling your company: business
processes (go-to-market, sales, manufacturing, testing, etc), hiring,
geographical expansion, and general awareness of your company / product
/ service. Of course, all these factors are related to revenue scale in
some direct or indirect way. Think through the discussion generated by
this slide as a tool to proactively address questions regarding how
your business scales.
…Cover these these items clearly and you’ll be answering their questions before they get asked.
For early stage companies, I believe that a “one quarter ago,
current quarter, and 4-quarters-out” view presents a reasonably
complete set of financial information. With such a time frame, you’ll
show a bit of history, where you are today, and a reasonable guess at
what is going to happen in the next year. I think a simple
auto-generated excel graph help quickly communicate the ramp in both
expenses and revenue.
If the company is really early stage and doesn’t have revenue or
limited expense detail, it’s still far better to say something is
explicitly zero (or unknown) than not mention missing/needing important
data.
This example chart is a bit busy as it combines both the graph as
well as a screen-grab from the company’s financial model spreadsheet.
If you have a longer operating history or feel like you need to
communicate more detail, it makes sense to break this into two slides:
a graph (the reader’s digest version) and the spreadsheet detail.
Data that investors will always want to clearly understand include:
what is your current and future headcount (this equates to your burn
rate as headcount is almost always the biggest expense)? what is your
current monthy/quarterly burn rate and how does that ramp over time?
what is your current revenue and how does that ramp over time? How
quickly are you approaching a cash-flow breakeven point? What’s your
revenue run-rate 12 months from now? What’s the net loss / gain over
the same period?
10. Funding “ask” + use of proceeds (timing, other firms)
Funding Status and Ask
The funding ask slide requires a bit of finesse as you are starting
a set of discussions that could turn into negotiations if your
potential investor turns into your actual investor.
In this slide, a little back ground is very helpful. Make sure you
let your audience know who you have raised money from in the past and
at what valuation. This is not “secret” information; be open and
transparent. If you seed funded your company, that’s a good story,
make sure you talk about it. You should also talk about the structure
of any prior formal investment by a third party: who, how much, when,
format (common, preferred, convertible debt, etc).
It’s important to get right to the punch line of this slide; You MUST be prepared to address the following (have data, be thoughtful, use a clear explanation):
- how much money would you like to raise?
- why that amount? (what will it be spent on? how long will it last? what value will you create in your business using it?)
- could you do what you need to do with less? what might you do with more?
- are you actively working with anyone else on this round?
When it comes to timing, it’s important be realistic. If this is the
first time you have met with this firm, it’s typically just the
beginning of a process that will almost certainly involve multiple
meetings over weeks if not months. For larger VC firms, you will not
receive a term sheet until you’ve run the gauntlet of their Monday
partner’s meeting…if you’re dealing with a top 25% firm, you’re not
even close to “done” until you’ve got the Monday invite. Smaller firms
are able to be much more dynamic and efficient…however, that doesn’t
guarantee that they will.
If the conversation is going remotely well, you’re likely to be
asked about your valuation expectations. If you have raised money at a
particular valuation in the past, that is your starting point…but in
this current macro-economic environment previous valuations do not
guarantee ANYTHING. If you have a number in mind that is based on data
that is realistic – don’t be shy – flop it out there. It’s important
to understand enough about the VC business to know that investors tend
to model their business on investment exits, cash returned to their
limiteds…and consequently ownership percentages in their portfolio
companies at the time of exit. Given this, it’s reasonable to approach
a valuation discussion by starting with “how much of the company you’re
comfortable selling in this round of financing.” Fixing the amount
raised and how much you’re comfortable selling implies a valuation.
Raising $300k while targeting selling 25% of your company imples a
valuation of $1.2m. This is a useful way to have a valuation
discussion because if the round size happens to go up (not uncommon) as
the round & syndicate come together, you can at least make an
argument for raising the valuation. No guarantee it will work.
11. Team Overview (yes; I added a new slide in the outline as of July 28th)
The Team Slide
Ah, the team slide. I’m not a huge fan of the team slide as I
personally prefer the details (background, passion, expertise, etc.) of
the team to come out in the presentation and subsequent discussion.
That said, your potential investors will want to know about you and
your team so you should be prepared to have a slide that allows you to
brag on yourself and your team a bit. This is especially true if your
team delivers some competitive advantage or special expertise to your
business.
My advice is to keep the slide short and sweet. The example here is
from an early-stage company I know and it represents a nice, simple, to
the point example. Pictures are optional but it’s a good, visual
touch…and clearly less likely as your company and executive team grows
in size.
Finally, this example remindes me to make one note on titles. My
personal rule of thumb is that company size should match title size;
very early companies should have teams with titles that don’t over
emphasize a hierarchy that doesn’t yet exist.
It doesn’t make too much sense to have four C-level executives in a
company of four people (I’m not picking on this example slide…I’m
talking “in general”). President instead of CEO; Director of Finance
instead of CFO; perhaps just “development” on the business card until
there are more than 2 developers. While this is not a critical point,
reasonably scaling into your mangement-team titles does send a good
message that the team is focused on the “right” things and that
outcomes matter more than titles.
12. Thank you, questions, contact info (no example slide)
Thank you slide
Be polite; say “thank you.” More than anything else, this slide
serves as the indication of the end of the presentation. Questions and
other discussions are welcome.
That said, if you somehow managed to get here in a linear,
non-distracted manner it’s probably more cause for concern than
celebration. The flow of most investor pitch presentations diverge
wildly as questions, deeper details and anecdotes drive the
conversation – and that is a good thing. It shows your investors are
interested.
