Common Mistakes In The Pitch Deck
The pitch deck is the starting point for your “live” engagement with the VCs. The deck is there to support you during the pitch. Some tend to think that a flashy deck with lots of animation and colorful graphs is going to impress the VC audience. This is wrong: you are the focus, it is your story and hence the deck only supports your story. This is the reason why a pitch deck does not have extensive text and complicated graphs – anything that distracts your audience from your story should be removed. Keep it simple and stupid: KISS. Remember, your audience probably has 3-6 pitches a day – your pitch has to stick out and the only way you can make that happen is if they remember your STORY.
A LOT OF LOGOS WITH NO REVENUE
Having Fortune 500 companies listed as customers, makes investors assume that the company is generating meaningful revenue. But if the financials are not representative of the claims, it can mean either the company’s definition of ‘customer’ is very loose and includes non-paying ‘customers,’ or the company can’t charge enough for the product. Both options are equally bad.
NOT CONNECTING THE FINANCIAL MODEL TO THE NARRATIVE
Back to the story – financials are (an essential) part of the story so presenting your story and subsequently throwing in the financials as an afterthought deteriorates the quality of the story and leaves a hole in the overall presentation.
NOT USING CHARTS, GRAPHS OR TABS IN THE PITCH
A picture tells more than a thousand words. In order to keep your presentation clutter-free and easy to grasp use simple charts, and graphs. Avoid the high complexity graphs with 3D representation – use easy, simple graphs, tables and charts so that the audience quickly understands the data and can focus on you and your story.
WRITING THE EXPECTED VALUATION
It’s OK to quote your expected valuation in a meeting. It’s not OK to write the same in your deck. It is naïve and takes away your leverage in the negotiation. That is, don’t write something akin to “raising $4mn at $16mn pre”.
CALCULATING INVESTORS’ EXPECTED RETURNS
It’s almost impossible for you & investors to calculate the ROI the investor can expect so early in the life of a startup. Quoting a small number would turn off the investors, and a huge number will make them ask more questions about your assumptions. This is not where you should be spending your time. Your job as an entrepreneur is to build a huge company. That is what you should be obsessively focused on — and that’s what you should present.
NO COMPETITION
Saying that you have no competition generally means either you have not done your homework, or you are going after a tiny market that doesn’t matter. Odds are you have not done a good assessment of competition in your industry. Think strategically and broaden your horizon.
‘HARD CODED’ FINANCIALS IN YOUR PRESENTATION
Hard coding numbers in your presentation is a rookie mistake. Linking your sheets with formulae and assumptions allows investors to play with various financial inputs to see how your business model will survive in changing conditions. Don’t do this.
TEAM SLIDE IS SIMPLY A BRIEF BIO
This is one of the key slides of your presentation. Investors are bidding for your team and their biggest worry is if you would be able to execute. Make sure you talk about the chemistry, domain experience, past achievements. Mention the complimentary skills of your cofounders and if you have worked together before. Do not create a substandard presentation of your headshots and degrees only. The team slide is one of the most important slides.
NOT PAYING ATTENTION TO DETAIL
For your legal protection, put a copyright notice at the bottom and add the phrase “Private & Confidential.” Include page numbers on each slide so that the investors can easily reference a specific page. Make sure your presentation is a visual treat, not text heavy and does not contain typos or inconsistencies.
NOT BEING ABLE TO EXPLAIN THE KEY ASSUMPTIONS IN YOUR PROJECTIONS
It feels you don’t have a real handle on your business if you can’t explain your financial assumptions and projections. If you go unprepared, you will not get a second meeting with the investors.
NOT ARTICULATING WHY YOUR PRODUCT OR TECHNOLOGY IS DIFFERENT FROM A COMPETITOR
You will have to explain why your product is different and 10X better than your competitor. You can assume that investors know about the competitive landscape. Don’t shoot yourself in the foot with sloppy response. Also, if your product is 1.5X, 2X, or 3X better, most times that is not good enough. 10X better or 10X less costly is a great goal to hit.
NOT BEING ABLE TO TELL HOW YOU WILL USE THE INVESTMENT CAPITAL AND HOW LONG IT WILL LAST
Investors want to know how you will use the raised funds and your burn rate (so that they know when you will need the next round of financing). It will also confirm that you know your costs for hiring, marketing, support & admin etc., given their experience with other startups.
NOT UNDERSTANDING THE DIFFERENCE BETWEEN A STANDALONE DECK AND A PRESENTATION
The standalone deck tends to be text heavy because you are not there to explain it. It explains certain graphs and other assumptions & ideas. Your presentation deck should be visually appealing, with maximum 5 words per slide if possible. This will help you make a great presentation as you will not be reading out from your slides (which is the fastest way to put a room to sleep). Use your standalone deck only when you can’t be there.
NDA
No investor will sign an NDA. Investors cannot be exposed later by someone they did not invest in, claiming that their idea was similar to the one they chose to invest in. It would be better if you let them know that you are pre-market and that all the information you present should remain confidential. That said, don’t assume the investors will not share your numbers with others.