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Pitch the way VCs think
The document provides tips for developing an effective fundraising presentation deck for venture capitalists. It recommends starting with the key reasons to invest upfront, using clear and concise slide titles as the main takeaway message for each slide, and decluttering slides to remove unnecessary text, images or colors. Financial projections should use a bottom-up market analysis approach rather than top-down projections, and financial details on slides should be laid out clearly while keeping the number of rows to seven or fewer.
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Pitch the way VCs think
- 1. Pitch the wayVCs think Presenting with emotion STANDARD OPERATING PROCEDURES
- 2. How to developan effective fundraising deck Examples of what works and what doesn’t 1 2
- 3. 1 2 3 Develop your companynarrative Follow the VC thought process Basic rules for putting together a deck
- 4. Start with everythingyou want to say Data/Technology • First provider of video • Low-cost gizmos enable locations to be monitored on a weekly basis, impossible with current technology • Will be able to image anywhere within 90 minutes, no capability exists to do so in less than a day • Will be able to downlink imagery every two weeks, nearly 10x competitors of today • Business intelligence will lead a transition from mapping to monitoring • Exponential increase in customer base • Can launch latest advanced commercial electronics into space 5x faster than competitors • Designed world’s highest performance gizmo with data costs less than 1/20 that of competitors • Developed proprietary designs for world’s lowest cost gizmo system Business • High barrier to entry for potential competitors (technology, regulatory, capex, specialized experience) • A $4.5M gizmo has the capacity to generate $60M+ in revenue over its 2 year lifetime Initial market • Currently a $1.5B+ addressable market • Today’s two providers operate at software-like gross margins • Positive response from lead customers with deep pockets (Google, Microsoft, oil & gas sector) • Will be cash flow positive off first gizmo(2013) Huge potential market • Today, X is a $1.5B market ,Y is a $3B market, and Z is a $6-8B market, Gizmo will revolutionize all 3 • Automate monitoring of land, vehicles, infrastructure & facilities (billions of dollars annually) • Market research reports have consistent potential for gizmo to be a $10B industry Team • Gizmo team among world experts in microsatellite technology • Unique combination of silicon valley start-up experience with strong Stanford ties REASONS TO INVEST REASONS NOT TO INVEST • Launch vehicle delay or failure • 1 fails before 2 year design lifetime • US Government regulation • Customer product requirements mandate scope creep & cost increases • Technology development results in cost increases & delays • Delay in recruiting remainder of team • Large information product market fails to materialize • Anchor customers reduce data budgets • Actual images fail to meet lead customer requirements • Competitors match Gizmo’s low commercial pricing • Lower cost monitoring solutions materialize • Payload supplier can’t deliver on time/on budget • Automated analysis capabilities require more time/effort to implement than anticipated • US Government commissions similar to Gizmo • Gizmo security compromised • Foreign government competes with Gizmo *Also, see KV consumer fundraising deck checklist
- 5. Narrow down the3-5 major takeaways Emphasize the actual reason to invest, not just the facts REASONS TO INVEST FACTS Greed $10M gizmo generates $60M high margin revenue 10X data over competitors Low risk, very low CAPEX approach to rapid & extensive monitoring Technical advantage Proprietary high data rate system = 95% lower data costs; 900% more data Large existing markets with huge potential Revolutionizing $1.5B sensing, $3B GIS, $6B BI markets Easy economics, if we get to stage 1, then we’ve achieved our goal First gizmo = cash flow positive company Suggested reading Fascinate: Your 7 Triggers to Persuasion and Captivation by Sally Hogshead
- 6. Develop your companynarrative Follow the VC thought process Basic rules for putting together a deck 1 2 3
- 7. Address investor fearsdirectly Recognize the reasons they may not want to invest Contingency for delay or failure Gizmo fails before 2-year design lifetime Technology development delays and cost increases Automated analysis technology risks Large market fails to materialize
- 8. Ask the samequestions VCs will ask you Mission: What pain does company alleviate? Reasons to invest Risks and mitigation strategies Team: How good are you? Financials with cash flow: How dangerous? Appendix: Answer all the critical questions
- 9. Develop your companynarrative Address investor fears directly Basic rules for putting together a deck 2 1 3
- 10. Budget the lengthof your presentation Max: 20-25 slides REASONS TO INVEST NUMBER OF SLIDES $10M gizmo generates $60M high margin revenue 1 Low risk, very low CAPEX approach to rapid and extensive monitoring 3 Proprietary high data rate system = 95% lower data costs; 900% more data 3 Revolutionizing $1.5B sensing, $3B GIS, $6B BI markets; Competition 5 First gizmo = cash flow positive company 2 OTHER INFORMATION AND MESSAGES NUMBER OF SLIDES Risks: Well planned for contingencies 3 Team: Very good but “additional needs” 1 Financials: Upside revenue, reasonable cash flows, CAPEX, low burn rate 3 Others: What you deliver with each series? Contingencies? 1 Have a backup slide for every question you might encounter (put these slides in your appendix section) You will impress your audience if you have thought of all the possible questions
- 11. Tips for slidedesign No clutter: Where does the eye go first? Don’t use up the entire slide: Leave space at the edges Examine every word and image: Are they absolutely necessary? Text should be 1-line (titles, bullet points, etc.) Will your audience understand each slide immediately? Superlatives don’t mean anything: Show, don’t tell Start with an agenda and repeat where you are in the agenda throughout
- 12. If it’s hardto read, then it’s hard to do Example: University of Michigan researchers, Song & Schwarz If we want people to adopt a new behavior, instructions need to be: 1. Semantically clear 2. Visually easy-to-read Otherwise the behavior will seem too demanding. EXAMPLE A EXAMPLE B When researchers presented exercise instructions in easy-to-read font type, Arial, readers guessed the exercise would only take 8.2 minutes to complete When presented with identical instructions in more difficult-to-read font type, Brush Script MT, readers guessed the exercise would take more than 15 minutes to complete
- 13. Be consistent Make allyour numbers match: Be sure your P&L is consistent throughout Verbal descriptions should be consistent Clearly label all charts and graphs Tie details through the appendix
- 14. How to developan effective fundraising deck Examples of what works and what doesn’t2 1
- 15. 1 2 3 4 5 6 7 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email
- 16. No clear messageor take away Example of what doesn’t work
- 17. Slight improvement Clear messagebut still cluttered
- 18. Focus on thevisceral punch Example that gets to the heart of the company mission
- 19. 1 2 3 4 5 6 7 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email
- 20. State the reasonsto invest upfront Make it easy for the audience to understand immediately
- 21. Title should explainyour company mission Make the content easy to consume
- 22. 2 1 3 4 5 6 7 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email
- 23. There should onlybe one message per slide Example of a cluttered slide with no clear message
- 24. Slide titles shouldbe the takeaway Use declarative statements
- 25. 4 2 1 5 6 7 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3
- 26. Don’t make theaudience do the work
- 27. Slides should beimmediately understandable
- 28. Cluttered slide muddiestakeaway Bland title does not get the message across
- 29. Emphasize your keymessage Titles and subtitles are opportunities to get your point across
- 30. No more than25 words on a slide Titles should only take up one-line
- 31.
- 32. No superfluous words,colors or images
- 33.
- 34. Highlight company advantage Don’tobscure or simplify technological breakthroughs
- 35. Too much texton a slide is distracting
- 36. Focus on yourcore message Title is the takeaway
- 37. 5 2 1 6 7 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4
- 38. Top down marketprojection reduces credibility
- 39. Bottom up analysisis more convincing
- 40. 6 2 1 7 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5
- 41. Too much financialdata is overwhelming
- 42. Less is more 7rows or fewer
- 43. 7 2 1 8 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5 6
- 44. Show the strengthof your team Don’t just list names and logos
- 45. Be selective aboutwho you include Show the team that is directly responsible for your success
- 46.
- 47. 8 2 1 9 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5 6 7
- 48. Investors want toknow you are proactively managing risk Share this information in detail
- 49. 2 1 10 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5 6 7 9 8
- 50. Make your askclear Funding history should demonstrate accomplishments
- 51. Explain how youwill use the new funding What milestones have and will be completed
- 52. 2 1 11 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5 6 7 10 8 9
- 53. Analogies can workfor you
- 54. 2 1 12 State the problem Givethe reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5 6 7 8 9 11 10
- 55. Finish with aflourish Use emotion to capture your audience’s imagination
- 56. 2 1 State theproblem Give the reasons to invest upfront Slide titles are the key takeaway Declutter slides Bottom up market projections are more effective Clearly layout financials Emphasize team advantages Explain how you are proactively managing risk The fundraising ask is key Analogies are effective Use emotion Engineer the investor email 3 4 5 6 7 8 9 10 12 11
- 57. Your goal isto engineer the investors’ email Bias the investment team in your favor
- 58. The message sent isnot the same as the message received