At VentureFriends we have reviewed more than 1.000 startup decks in the last couple of years, and thus adding to our entrepreneurial history we can claim to have gained a certain expertise on how entrepreneurs should build their deck in order to better communicate their passionate story and attract investors.
You might be an entrepreneur with a strong engineering background or a stellar product or operations guy but are you also a great storyteller?
You need to keep in mind that the best entrepreneurs are those who combine passion and expertise but are also excellent storytellers.
When it comes to talking about your startup, the deck is your essential fundraising tool that needs to enthuse people so that they start a conversation about your business and hopefully invest in your company. At the end of the day, this well designed but brief and concise slide presentation should provide your potential investors with a solid overview of your startup.
The fundraising story of your startup begins with a clear idea that deals with a big problem for which you will provide a solution. Then, it is all about your deck describing that story!
A great startup deck should address the following topics
Clearly and briefly: After explaining your vision, without using tons of text, start with the core of your presentation by answering one simple question: Why did you start this? “To raise funding” is a wrong answer, to make money is not a compelling answer either.
Explain in a few but clear sentences, which is this worth-solving problem that revealed to you. In any case, use data and/or market research to support your statement thoroughly.
The magic happens not just because you have an idea that hopefully solves an actual problem but because you are ready to share, full of excitement and with a little bit of a thrill, your unique insight. The solution you are giving has to be as specific as it gets. It also has to prove sufficiently its uniqueness: the new way to do things.
No one said that it is going to be easy
Describe the addressable market. Show your investors what’s going on by clarifying the market opportunity. It is important that your name and size the market you place yourself in. Use numbers to grab the attention! No one wants to invest in a small, shrinking market, so prove that the addressable market is large and growing. Make sure you don’t include unrealistic growth forecasts as it will surely grab the attention initially but it will conclude with a negative impression about you and your startup. Visuals are a great thing to invest in as long as they simplify and clearly demonstrate what you want to say.
TAM or Total Available Market is the total market demand for a product or service.
SAM or Serviceable Available Market is the segment of the TAM targeted by your products and services which are within your geographical reach.
SOM or Serviceable Obtainable Market is the portion of SAM that you can capture.
Be sure to illustrate exactly who is the product user and what the value proposition is for her. A very effective communication tool is to describe a typical use case of the product, highlighting what it is the user gains from the usage (money, time, entertainment, etc.). Be sure to provide some evidence of the value proposition either by testimonials or preferably by low churn rates from your existing customer base. Moreover, since what you are presenting today is an early version of the product, make sure that you have a coherent product map included in order for the evaluator to gain insight on how that value is going to evolve.
Analyze how you are planning to monetize your product and how much your company’s revenue potential will be in the next 12–18 months when you plan to raise another round. It is also useful to discuss the end game which would be the revenues 5–6 years ahead once you have captured a reasonable % of your market.
Make charts and stats big and clear and remember to use a font size matching the number of the average age of your potential investors in the room. :p
Include in the Appendix section the complex product images , detailed descriptions, technical explanations, financial data and marketing items. Let investors dive deeper to that detailed information, should they chose to, and only after they get the basics straight about your startup.
Describe which are the competitive advantages of your product. List all your major competitors (direct and indirect), highlight their strengths and also their weaknesses compared to your offering.
What’s the story of the team? Why will they be able to tackle the problem at hand? List the team, relevant/industry experience and background. The founders should have complementary skill sets and preferably a history of working together. Highlight what qualifies the team to start this specific business and why the urgency to do it now. In case you have any, list your key advisors as well.
Funding has two main and sometimes contradicting aspects:
How much money do you need?
How much of the company are you willing to give to get that amount?
For the first one be sure to have a detailed use of proceeds statement prepared, to show how the funds are going to be used in order to achieve the necessary milestones for the next equity round. This deck is prepared for a seed round which means that hopefully, more funding rounds will follow to allow the startup to scale.
As an example, a summary of the use of funds and suggested milestone to be achieved could be: “We need 200k for business development in order for the commercial version to hit the market by Q3 of year 1 with 200 customers on board”.
For the second aspect keep in mind how much equity you are willing to give (a ballpark value of the maximum percentage you are willing to part with which typically in a Seed round is around 20%). 20% is a good % to part with because significant equity needs to stay with the founders and key employees so that they stay motivated while there is still enough room for future investors to join. On the other hand, keep in mind that VCs are eager to invest if they can get a significant stake. Giving investors a much smaller percentage might compromise an investor’s commitment and might play against you in their decision-making process.
Once you build the deck, get feedback from your advisors and VCs as you pitch to them, and take criticism openly. Don’t get happy ears. Then use that feedback to iterate and improve your deck for the following funding meetings.
Best of success! :)