The Good, the Bad, and the Ugly
Over the course of the past year, I have looked at hundreds of pitch decks. Despite the massive number of articles and guides out there, many people still seem to be missing the mark. Lately, I have been reviewing the decks of several who have looked online and formatted their slide decks in the ‘standard’ 10 slide order, and many are still lacking.
I recently read a great guide here — Stripe Atlas: Guide to pitching your startup, which does a great job of getting you into the right mindset to pitch.
I have heard comments online from many who have been on clubhouse and have complained at the inconsistent feedback that has been confusing.
This does not surprise me. Investors all come from different backgrounds, and because of their varied experiences, see some things as more important than others. There is a fair amount of survivor bias that influences what they thinking and what they are looking for.
I cannot address all of these issues. What I can do is try to give some insight into what I think, and try to get founders into the right mindset to craft a successful pitch deck — and while it may not hit the target, at least it will not miss it entirely.
I have tried several times, to many founders, to explain that the ‘tone’ of the deck is wrong, and have talked several people through my thinking process and helped them to adjust their decks.
This article is NOT going to go through the ‘standard’ deck format, I am going to go beyond the format and try to explain what is going on in the head of an investor when they are looking at a deck. Trying to see things from ‘the other side of the table’ will help you to better parse the feedback.
The first part will focus on the mindset of the investor and the mode they are in when reviewing decks. This will provide the necessary high level framing for understanding ‘why’ a ‘meh’ deck is not getting a response. The second part of the article will talk about ‘tone’ — trying to send the right messages and signals to the investor.
Getting it right is tough, and 10 slides is not enough to communicate all you want to say. Hitting the mark means you meet your audience where they are, give the ‘Goldilocks’ amount of information (not too much nor too little). Sometimes including a certain word or phrase can mean the difference between getting a call back or your email being archived. Nailing it perfectly will make you stand out from the pack.
KNOW YOUR AUDIENCE.
Let me get you into the brain of an investor. To frame this for you, my own situation is that our fund is in harvest mode (meaning we are not actively looking for deals). I am also mentoring numerous startup founders ranging from very early to looking to raise growth rounds who have connected with me through one channel or another (and I am not actively looking for those either.) I am not literally hiding under a rock, but I am certainly not on clubhouse or out on twitter looking.
I still see, on average, at least 20 decks a week. This is normal for me and when we were actively hunting it was way more than that. 52 weeks in a year.. we will omit Christmas and New Years to make the math easy. 50 weeks, 20 a week. I see maybe 1000 decks, executive summaries, or business plans a year.
Most founders, especially first time founders, are dealing with ONE startup or idea. I am dealing with more than one. I am not alone. I suspect most investors are in a similar situation, seeing 100s of inbound requests a week (if not a day). It is hard to sort all of this. Investors are human, and as humans need to find a way to sort through the massive amount of inbound information. It is exhausting. I am not asking for a pity party or empathy here, just trying to get you into my headspace.
While everyone probably hates the ‘pattern matching’ explanation, it is one of the tools that makes it easy to reduce the stack.
The first phase of sorting is to just look at a deck and see if it matches the familiar 10 slide format (there are a few variants, but the variants are small). If it does not match the pattern, it is an easy reject.
The thought process goes something like this. This founder did not do their homework. Using Google to come up with a ‘how to create a pitch deck’ will turn up 100s of hits. If they can’t get the basics right there is probably more they are not getting right, and this is going to get rejected by others for not being formatted ‘correctly’ so not worth a lot of my time.
When reviewing so many, you are going through and identifying.. ok. DVD, DVD, DVD, 8 Track Tape… wait, what? …. ok, that’s weird. You stand out for sure.. but not in a good way. I am looking to find the content and when the format of the content is not familiar it detracts from your ability to absorb it.
Use one of the standard formats. It gets you in the door and does not short circuit the brain of the investor.
second — Don’t bury the lead.
Tell me what you are doing up front.
Tell me what it is you are building. Keep it simple, put it first. Investors often have a thesis separated by stage and industry. If I cannot figure out what you are building or what stage you are at, you will probably not even get a response. Similar to the above problem, if I can’t figure out, other investors can’t either, so, not worth a lot of my time.
In some decks (many) I am just trying to figure out what it is.. so I am page forwarding to figure it out, and when I do find it.. oh.. ok, this is a D2C App!.. I start there and then read to the end. Many decks get this wrong and yes, this means I probably skipped the first 6 slides.
All of that is just getting the basics right. If you cannot get the basics right you will be sorted into a ‘no’ pile before the investor even looks to see if it is interesting. This is why the dreaded ‘warm intro’ is so important. If someone else puts a deck in my hands it will at least get a read.
so, the takeaway.. learn about the standard deck format, and stick to it. Don’t bury the lead. Tell me what you are doing as simply as you can.
Doing these two things correctly immediately moves you from the ‘don’t bother to read’ pile to the ‘ok, I will read it and not just scan it’ pile. I would say 60% end up in ‘don’t bother’ pile.
ok. you passed GO. now,
Talk about the opportunity.
This is all about tone. An investor is trying to see if you have your head in the game. It is hard to do this with a deck alone, which is why a conversation helps to address these issues. Before meeting though, it helps to see if the founder even knows the rules of ‘the game’.
What an investor is trying to determine, very quickly, is — is this opportunity interesting. Many founders get this wrong, as they spend too much time talking about their product and not enough time talking about the opportunity.
A conversation is the best way to assess this, and I am trying to see if you are looking out or looking in.
Everyone talks about this, but in order for it to be worth the investment it needs to have potential to be large. More important than a ‘big market’ I like to see some understanding of the market and it’s potential. You are trying to sell me on an opportunity in a hopefully big space that has plenty of room to grow. Your specific product is in that space, and you need to show me that the entire area is a good opportunity.
Often this is the ‘size of market’ slide. You are selling me on the market and why this market and opportunity is better than another opportunity. Yes, you want investment in YOUR company, but convincing me I should be investing is this SPACE is step one. Convince me that the space is worth it and then convince me you, your team, and your product are the right ones. This is tricky as if we are talking I am probably already interested in the space. If your thesis of where the market is going matches mine, we are aligned. I won’t know what you see until you tell me, so.. tell me. In your pitch deck.
If you seem to lack an awareness of the greater market forces at play, you will get rejected. Too general is not great, but I do want to see that you are getting that there is some big ‘movement’ that is happening — and then a specific way to wedge yourself into it.
To really drive this home, I am going to create a fictitious story of two founders pitching me.
Founder one comes in and pitches me. And it goes like this -
“The west has opened up! There is gold in them there hills!”
ok, I ask.. I see that there is opportunity there. What is the plan?
“To go into the hills and find gold! Can I have money?”
and… no. I am thinking that if I invest you are going to go into the hills, die either from starvation, eaten by a bear, killed by another gold hunter, or..you get some points for boldness, but no.
Founder Two comes in — and it goes like this.
“The west has opened up! There is gold in them there hills!”
ok, I ask.. I see that there is opportunity there. What is the plan?
“Here is the plan. There is a river on the main trail to the hills. There is a ferry there that everyone has to use to cross the river. There is a big line of people waiting there. I am going to open up an ice cream store on the east side of the river. I have a friend way up north who can float ice down the river to me (which I will need to make the ice cream). What I need is to have someone invest so I can get a few cows, which I will milk to make the ice cream”
This is interesting.. sees a growth opportunity, and has a clever plan, understands what he needs. Much more compelling as a presentation.
Ok, you have convinced me that you have the right mindset, and then I ask myself,
Is this the right team?
“Does the founder know what they are selling?”
Many founders that are pitching are generally too focused on what they are building (their product that the customer buys.).
Many are totally unaware of what I am thinking when I have my investor hat on. They fail to realize that when pitching me they should not think of me as a customer of their product or service.
I have to understand your product and why customers will want it, but I am NOT buying your product.
I am investing in YOU.
As an investor, I have many options, and I can choose to invest in you or one the several hundred other ideas that crosses my path. You are shopping your idea around in a marketplace of other ideas to be invested in.
This does not show through in a many many pitch decks. I need to see that there is some awareness that you are participating in this marketplace.
I am not trying to figure out if your product will work.. I am trying to figure out if you are the right person and the right team to figure out if your product will work for the customers you have chosen in the markets you have selected.
ok, you made it this far, now I start screening. But before I start digging deep, I want to see where the founders head is at. Have they been part of or built a company before, and do they know how hard it is?
A first time young founder, with minimal life experience has not (yet) had the experience of working at a big company and does not understand how things work and communication flows in ‘big’ organizations. Many have not (yet) experienced ‘fast’ — and if you have been part of a rapidly scaling organization you know what I mean.
Big organizations can be difficult. Going fast has challenges. Going big AND fast is difficult + difficult. Knowing this, I am looking to see if the founders have experienced this before, and if not, using my imperfect judgement on their potential to succeed.
If there seems to be no awareness of either what it takes to build a company, you will go in the ‘maybe’ stack — risky, but not a disqualifier, so we move on to the next test.
I need to be sure that you are seeking money to grow a company and not seeking it for reasons of ego.
Founders, eager to join the ranks of the anointed ‘funded’, set out to raise the biggest round, as if raising a round is winning and raising the biggest round is a gold medal.
Many see being ‘funded’ as validation that they are doing something worth doing. They are first time founders, and are looking for someone ‘successful’ to validate their idea as ‘good’ and that they are ‘worthy’.
I get it. It is scary being a founder, and when you are alone at night struggling to fall asleep, you swing back and forth between feeling brilliant and terrified. You think you see something no one else has seen.. and then wonder if what you see is a delusion, that your bias of desire has distorted your reality to the extent that you have walked way past the line from bold to crazy.
You so badly want someone, anyone, who has ‘made it’ to say, yes, I see what you see, you are not insane. The more you can raise, the less insane you are. The quest for reassurance and the comfort of knowing that you are not, in fact, off your rocker, is normal, and in order to actually do a startup, somewhat necessary.
The measure of your sanity is quantified by the size of the round you can close. Unfortunately, making you feel like you are not an idiot is not a good reason to invest. It is an even worse investment when what is being sought is the founder wanting to attach the magical ‘CEO’ words before his/her name.
There is no clear ‘test’ for this other than a conversation with questions, but it becomes clear very quickly if a founder is seeking validation instead of resources to attack a problem.
Once that test is passed, I look to the opportunity mindset. There is where tone and attitude matter the most.
I am looking to see if you are focused out or focused in. There is subtlety in the language used when talking about your company. Your company is a vehicle for providing value through providing a solution to your customers. Often there is an idea for a product that looks to solve a customer problem. More often than not the founder is obsessed with their product, and not obsessed with the problem or the customer.
I am trying to determine if you are thinking about the customer and the larger problem that needs to be solved and not the particular solution you arrived at. Your first attempt at a product is probably wrong, and I am trying to see that when the product meets the market, if it does not get immediate market response, are you going to double down and focus on your product and keep polishing and polishing the wrong thing (burning capital the whole time) — or are you going to focus outward toward the market?
This is all about tone.. I want to see clear signs you are focused outward, and I get nervous when I see signs of inward focus, or if it is not clear where your focus is.
- Use the standard deck format.
- Don’t bury the lead.
- Talk about the opportunity.
- Sell your team (and show me that you are thinking about thing clearly.
- Think of fundraising as a validation of your idea.
- Make it about you and your ego.
- Try to sell me your product.
Hopefully this article helps by giving you some context to help parse the feedback you are hearing on your deck/pitch. The reason you are not getting called back is probably one or more of the issues outlined above.