I was very pleased to see business plans die out, replaced by pitch decks. IMHO no one reads, and even fewer people actually read business plans! By the time these plans were completed they were obsolete. They tended to be more fact than fiction and were usually accompanied by voluminous Excel spreadsheets showing the classical hockey curve of revenue growth. A giant waste of time for all involved!
But the Business Insider article by Troy Wolverton This serial founder thinks pitch decks are passé. Here’s what his startup used instead to raise $45 million in new funding argues that pitch decks are so over, replaced by a “pitch memo.” The pitch memo sounds exactly the wordy business plan of yore. But Parker Conrad, who founded three venture-backed startups — SigFig, Zenefits, and, most recently, Rippling, argues that a pitch memo is far more effective than the typical pitch deck. He clearly understands that pitch decks are meant to be presented, not read and thus must leave out a lot of detail that is provided on the fly by the presenter. So yes, pitch decks rarely standalone, in fact they shouldn’t. As I’ve written previously, founders need two versions of their decks: one to enhance their standup presentation, they other meant for sit down reading by an investor. I encourage founders to start with the highly detailed version, then edit it down for presentation usage.
There are two advantages to the written narrative, one is obvious, it can contain a lot more detail; the second is much less obvious and relies on a deep understanding of how VC firms work, which obviously Parker Conrad possesses. Investment decisions are made at weekly partners meetings – usually on Mondays – where the partners who are seeking an investment by the firm need to convince their colleagues it’s a good investment for the fund. By providing a “pitch memo” the founder can make it very easy for the partner championing their cause to write the memo to their partners for the firm’s investment decision meeting.
Riplings’ pitch memo is included in the article. It’s only 11 pages long and basically covers the same topics as a pitch deck, just in much more depth. In other words it looks just like the “business plans” that were de rigeur in the VC game back when I was raising money in the last century.
But while Parker Conrad has had great success raising money with his pitch memos, I’m not convinced pitch memos will replace pitch decks for two reasons: one, it’s so much easier to get feedback from friends and mentors on a pitch deck than on an 11 page memo, and two, people don’t read! The safer play is just to send a more detailed pitch deck that can be read by your target investor instead of taking the risk that 11 pages of dense text will not only get read, but not get passed around the firm either.
So I’m not convinced by the Business Insider article that founders should take the time to do both a pitch deck and pitch memo. These things change often and trying to keep both of them in sync is not easy – simpler to keep two different version of a deck in sync.
But that doesn’t means founders can skimp on detail – they need to foresee all the questions an investor may ask in the detailed version of the deck they email to them.
To recap my recommendations made previously here’s what you need in your search for capital:
- A short executive summary of your business plan – one page or less with one eye popping graphic
- A great subject line for the email you send to prospective investors
- A body of text for the email that is so compelling that the recipient will open the attached file – which is your one page business plan
- A pitch deck designed to be used as part of a presentation
- A very detailed version of the deck to be emailed to prospective investors
With these documents in hand you can contact are large number of investors. But keep in mind the goal is not to give a presentation but to engage an investor in a conversation. Pitch decks and pitch memos are a means to an end, not an end in of themselves.