If you can raise capital right now, you will have something in common with Taylor Swift. Closing a venture deal during 2020 is like writing a pop song that hits No. 1 on the charts. It takes tremendous work and skill to achieve, not just luck.
In fact, VC funds are much like record labels, because both make the bulk of their money on their platinum deals. A major venture fund can only thrive if it manages to find and lead one of the top 10 to 20 venture deals in the United States every calendar year.
Especially over Zoom, your pitch has to be perfect before investors will start thinking You Belong With Me. So get ready to show VCs how you will build an extraordinary company, with broad-reaching impact, that becomes one of the best deals in their portfolio.
Composing the Perfect Story for a Financial Audience
What language do investors speak?
Surprise! It’s not English.
You may not be founding a company purely to make money, but professional investors are. The pitch deck is a financial document. A pitch meeting is a financial discussion.
The deck has one job: Show that your company will earn profits.
Whether you talk about user needs, product performance or marketing campaigns, always translate that qualitative information into dollar impact. Dollars are the dimension that matters most to your financial audience.
We can take it a step further. The ideal “story” follows the same outline as an income statement, thus communicating perfectly to a financial audience.
Deliver these four messages in this sequence, so you can create these four conclusions in the mind of the investor:
- “We have identified a target customer with a painful need who will pay.” > That founder knows how to earn Revenue
- “We built a product or service that sells for more than it costs.” > with positive Gross Margin Percentage
- “The market is large, and we can build a unicorn-scale company.” > and can achieve high annual Net Income dollars
- “As we grow, we are creating a moat that protects the profits we earn.” > then attract acquirers who will pay a high Exit Multiple
A VC has to arrive at all four of these conclusions to justify a risky investment.
Convert the Story Into a Deck
Next organize your slides. Write a deck like this:
- Open with an attention-getter.
- Introduce the team.
- Walk through the four main questions (two slides per question).
- Finish with financial projections.
Why do you need an attention-getter? Because VCs see hundreds of pitches, and tend to walk in with low expectations, perhaps only half listening at first. Convince them that a sea change is occurring, a major change is afoot, a complete reset is coming, and that it’s about to reshape the winners and losers for a large industry.
Opportunity is at hand, and you have a plan to capture it. Suddenly, they are looking up and turning up the volume.
Before they absorb the details, they first need to be sure you are backable as a person.
So now the team slide. Wow them with a polished explanation of your own bio, that shows you are mentally tough, driven, persuasive, practical, and constantly self-improving. Then explain how you have attracted a team of all-stars. At this point, they are all ears.
Need more help? If you want to work on the flow of the slides and how to weave together a narrative story, then the Pillar VC Pitch Deck Storytelling Template is a good resource.
Know Your Hook
Hit songs have a “hook” somewhere in the middle that listeners find irresistible. You should too.
What is going to make your company unusually important and valuable in the future? Is it your business model, barriers to entry, network economics or competitive dynamics?
What unique insight have you developed about the customer?
How do you build outsized value? Why is this a profit machine? Why will customers keep coming back?
What are the implications of your company’s success? Is it economies of manufacturing scale? Technical leadership? A unique channel? A network effect?
The hook is a one-liner that an investor can use to explain the genius of the deal to his or her partners. Make your hook abundantly clear.
Drafting and Polishing Individual Slides
Start with the Pillar seed stage pitch deck template. (If you are raising for Series A, you should also add detailed slides to prove you have achieved product-market fit.) Then develop a voiceover for each slide. Think about main points and transitions. Polish and refine your story.
Then hire a graphic artist to give it pizzazz. The visual quality of a business presentation matters more than you might imagine. Simplifying ideas and eliminating clutter with your editorial eye is demonstrated proof that you know how to prioritize. Keep it simple, clean, clear, attractive and full of white space and readable font sizes.
Finish by splitting your deck into two separate versions:
Teaser Deck (12-15 Slides)
This is an attachment you can forward with a request to meet and walk through during your first call or meeting. Make the teaser an attachment, not a DocSend. Why? Investors do not make decisions in a vacuum. They do a lot of behind-the-scenes discussing with their internal team, fellow investors, and expert advisers. You want them to be able to do that, easily and privately, because that feedback is what helps them decide whether to engage. So make your deck easy to forward. Just assume your competitors will see it, and keep it generic where you choose.
The teaser deck will cause many VCs to pass and you want that, so that you do not waste your precious time chasing dead ends and sap your own confidence by hearing nos from people who were never even possibilities. See “How VCs Really Evaluate Seed Investments.”
Full Deck (20-25 Slides Plus an Appendix of Up to 50 Slides)
You will use your longer deck for use with an interested investor who schedules a second meeting or site visit. The 25 slides walk through every element of the story, plus the financials. Back-up data and detailed answers to common questions are available as needed in your appendix.
Intensively Practice Your Pitch
Warm up those vocal cords; it’s time to start working on your pitch.
We recommend learning to tell the story at three different levels, so it can stretch shorter or longer to fit the available time, like an accordion.
The high-level version should be just one declarative sentence per slide, which should be delivered by the title right on the slide. Anyone can read your deck at this level in five minutes and understand your message without you standing there to explain the slides. It is important that the deck stand on its own.
The medium-level version should fit in a one-hour meeting. Plan on a five-minute introduction, then 40 minutes for the deck, of which half is pitch and half is Q&A, so it feels more like a mutual discussion. The final 15 minutes is free time to talk about their reactions and advice, next steps and your questions about them and their firm. That all boils down into you being able to present 20 slides in 60 seconds each. We suggest you write this out at first.
Finally, for each meaningful slide, prepare a three- to five-minute colorful story. You don’t have time to tell an anecdote for each of the 20 slides, but when you see the audience is leaning forward and very interested in a specific topic, then you will be prepared to go deep and wow them.
Memorize your key numbers. Interested VCs will ask lots of probing and what-if questions, and you need to know your numbers to be able to answer on the fly. Great CEOs know by heart the sales targets and headcount targets for every month in the next 12 months and every year for the next several years, and they obsess about their business metrics like CAC, LTV, commission rate, ASP, days receivable, the average salary for different positions, and so on. Such numbers are vital to building an actual company, so your modeling them in advance is a sign of operating competence and readiness; not knowing them is a sign you and the project are still green.
Special Tips for Pitching Over Zoom
Due to COVID-19 all pitches are remote right now, and remote pitching is a bit different.
During a video pitch, the investor will be staring into his or her monitor, so you have room to include a bit more detail than normal. Stage the details with animation to reveal the information point by point as you speak, so you can stay in sync with the audience.
Make sure you are well lit. Buy a $50 ring light and place it behind your camera to illuminate your face, so investors can see you clearly, no matter the time of day.
Sit closer to your computer than you typically would so that your face and shoulders take up the bulk of the screen. This projects a strong image and makes you completely visible. Sit up straight and make sure you are in full view. If your laptop has an older camera, buy an external camera that supports at least 720P or above.
Keep your background simple and clean. Don’t stress about showing artifacts of your life in the background behind you, thinking that an appropriately placed diploma or compelling book will make a difference. It won’t. Be cautious of using a packaged Zoom background, as they don’t always work well and can prove to be distracting.
Always keep your eyes focused and looking at the camera. Don’t use a separate monitor for your deck — it will give the appearance that you are looking away from the screen.
Facial expressions are important on video pitches. Since the investors don’t have the benefit of having met you or having a reference point for your mannerisms, you need to make sure you look pleasantly engaged and “on.” Beware of looking overly serious or letting your eyes wander while the other person is speaking — what is natural in person can appear disengaged on video.
Speak more carefully than usual, taking care to enunciate. It is critical that investors hear every word. Practice in advance with a colleague. If you are not coming through, invest in an external mic. (Swift reportedly records with a $9,000 Telefunken C12, but even a $200 Blue Yeti is enough to make your voice sound pretty great.)
Practice with friends over video at least a dozen times before your first important call, so the mechanics become second nature. If you are pitching with another member of your team, practice the handoffs until the transitions are seamless.
Remember, you can't control everything. It is OK for your kids to make a surprise appearance during a pitch. We are all human and managing WFH at the same time.
Now Lay Down the Tracks
With your deck in hand, start taking meetings!
Bring a co-founder or teammate to watch the audience and take notes. After each meeting, revisit the audience’s reaction at each slide. Don’t change your message based on just one reaction, but if you see friction at the same point across several meetings, then do make an edit.
Write down every question you get. Draft a slide with a crisp answer to each and put it in the appendix. After a while, you are ready to handle anything.
Are you hearing rejections? Even great companies take a lot of work to explain, and even experienced CEOs start off hearing rejections. So be like Taylor Swift and Shake It Off.
Keep polishing ... until at last your song finds its audience and your audience rewards you with the right kind of applause — a signed Series A term sheet!