There are probably more articles about how to create a pitch deck than there are venture capitalists. So rather than reiterate the conventional wisdom I’m just going to touch on a few elements of the conventional wisdom that you are best off ignoring.
- Use 10 slides – not more! I first ran across this one from Guy Kawasaki in his book The Art of the Startup. (This book is so old he focuses on the size of the text in your bullet points! You do know that everyone hates bullet points and they are to be avoided at all costs!) The problem with this idea is what is important is how much time you’ll have to tell your story. And that is what you are doing telling a story: there’s a beginning – your origin story, how you got the idea for the business; the middle, the problem you are solving and the customers you are targeting; and the ending, how you will make money and build a company of lasting value. So you could do this in three slides, or maybe 15. The important thing is not how many slides you present but that you present one and only one idea per slide. The rule of 10 slides often results in founders jamming so much stuff into their slides the message gets lost in the noise. Each slide needs to be impactful and reinforce, not just repeat, what you are saying. Think of the illustrations in a children’s book – your slides need to illustrate your message, and be memorable.
- Spell out how your business will perform for the next 5 years. This is old school thinking. Back in the days we wrote 20 page business plans with half a dozen pages of financials. In today’s rapidly accelerating rate of change anything past three years is pure fiction. Project three years of your business, with maximum detail in year one. Once you are actually up and running you can keep up a rolling 3-year projection, but you won’t get to year one by trying to con investors that you can project the future 5 years out! If you could, forget about being a founder and become a stock picker!
- Investors need to know your exit strategy. When Dan Gregory, then managing director of Greylock was asked if he wanted to know our exit strategy he replied, “Your job is to build a great company. Do that and the exit strategy will take care of itself. Don’t, and the exit strategy will … take care of itself.” Angels will often insist on knowing your exit strategy, but VCs are more sophisticated. You want patient capital. VC funds run 10 years, so you should plan on returning capital to your investors in 5 to 7 years. But how you’ll do that will remain to be seen. Focus on creating value everyday and you’ll have the right options when the time comes.
- Make sure you include a slide of financial projections. And make sure it’s got the hockey stick curve showing the investors how they will make 10x their investment too! Rather than crystal-balling future revenues, spend a lot of time understanding the key metrics of your business: the size of the total addressable market, its growth rate, you ARPU (Average Revenue Per User), your cost of customer acquisition, customer churn rate, and the lifetime value of a customer. Your closing slide shouldn’t be the Excel hockey stick that any first year MBA can crank out but a simple reiteration of the why investors need to invest in your venture, now: because you have a world-class team solving a major problem in a huge and growing market!
Keep in mind that a pitch deck is an unnecessary evil. You are far better off demoing a knock ’em out of their seats prototype then having a discussion with the investors that addresses what they want to know, rather than subjecting them to death by PowerPoint. See my post Why a prototype is worth 1,000 pitch decks.
Finally read the article 12 KPIs you must know before pitching your startup by Phil Nadel, founder and managing director at Forefront Venture Partners. Your ability to knowledgeably discuss these 12 KPIs is far more important than any financial slide you can cook up with Excel or nowadays, Google Sheets. Keep in mind your goal in a meeting with investors is a meaningful conversation, not a canned presentation.