SlideMagic Blog

Some draft investor pitches I receive dive straight into the nuts and bolts of running the company, business model options, and roll out strategies.

But maybe it is better to first take the time to explain what your idea actually is. It may sound boring and obvious to you, but someone who has not spent the last 2 years working alongside you, these 10 minutes of explanation are a good investment.

Issues that are hugely important to you such as conversion rates, customer acquisition cost, go-to-market analysis can wait until you have managed to communicate what you are doing, what problem you are solving.

Every story has a few key messages. And a message is not something like “We are a highly flexible, customer-satisfying, and scalable platform, that delivers return on marketing investment.” Things need to be more specific.

For example, you have a company pitch that makes your startup sound like - yet another - social network to the ignorant outsider, and you are not. Rather than making this important point verbally, explaining around the slides, it is better to take the issue head-on: write “We are not a social network” at the top of the slide and design the most powerful visual you can think of to visualize it.

Maybe use 2 charts. One can be incredibly simple: 2 circles, one says ”Social network”, the other “Us”. Then in the next slide (using the same headline) provide factual evidence/explanation why you are not. And factual evidence is not the same as writing a long bullet point: “We are not a social network” (duplicating the headline). You need to list some sort of feature comparison between social networks and your application.

The cover letter of a fund raising letter for an academic institution I just received in the physical mail has the same mistakes as cover emails for fund raising presentations.

• The first two paragraphs start with “I”
• The letter is dated 4 weeks ago
• These same paragraphs are full of generic marketing speak that all academic institutions are using, top-tier institution, remarkable faculty, break-through research, teaching excellence, prestigious awards.
• Then comes the ask for funding
• Then an appeal to share the values of the founders of the institution
• The rest of the envelop contains reports and statistics (mostly text) on expensive, heavy paper

Here is what I would do different:

1. Send the whole thing as a PDF document by email, heaving, expensive paper is not a good indicator that my money is spent wisely
2. Write a very short first page: here is the annual fund raising mailing, we need your money to maintain our brand (and that means you, alumni, your own reputation). Obviously not as bluntly stated as here
3. Add a very visual presentation: Images of the campus that remind my of my own time there, and see how it developed since then. Images of some students and/or faculty and the great things they are doing (the visual backup of the vague statements made in the letter). A visual presentation of the great things the institution is going to do with my money. Many tiny pictures/stories of students that have donated to build peer pressure to do the same.

Entrepreneurs are often so deep into their own story that they leave the supporting visuals for some of the most fundamental points of their business idea out of the presentation. “Oh, why Amazon would not do this? Well, I have a great story to tell that I usually do verbally when displaying the agenda page.”

Stories are great, verbal explanations without visuals are great, BUT. My two arguments why it might be a good idea to back up your story with visuals (in particular relevant for an investor presentation):

1. You want people to remember your story, and a big bold visual might help anchor the idea in the mind of your audience. The visual does not necessarily have to explain the idea, it should just trigger the memory when you bring up that story of the banana peel back up 3 weeks later.
2. The argument for going further than a visual anchor point is that you often lose control of what happens to your file with slides after you have emailed it to an investor. It gets forwarded to partners in the firm, industry experts, etc. Just in case, it is a good idea that someone who did not sit in the room still can understand the idea behind your business.

A venture capitalist needs to turn down people all the time. Sometimes decisions are scientific, most of the times they are not. Sometimes they are made after extensive deliberations, most of the time in the first minutes of meeting you. It can be that they do not like the sector, do not believe in the idea, do not like you, have a bad day, do not believe that you can pull it of, anything.

When you ask them for feedback, most of them will not tell you the real story. But, VCs want to be helpful. So, some of them will give constructive feedback about your business or the presentation. Some feedback is helpful, some less so. When they do suggest that you include 5 more breakdowns in the year 5 revenue forecast, they were nice to you in giving you a suggestion, but I very much doubt that if you had included those numbers in your first presentation, she would have changed her mind.

Filter feedback and try to drill down to the real issue.

The Internet is full of business plan/investor pitch outlines (here is a nice one from Sequoia). Use these guidelines as a check list to see whether you covered all the content that investors expect. But do not stick to them too literally. A rigid, generic, structure kills the spontaneity of your specific story. Do not simply copy the sections of the structure and use them as (boring) headlines for your slides, instead write headlines that mean something (The Solution is not very meaningful). The text book approach to TAM calculation might not exactly fit your specific market.

All advice (including the one you will find on this blog) is given to help you. In the end, it is you who makes the call what to use, and what not.

An executive summary that sits on top of a management consulting document is usually a page that summarises the recommendations, next steps, and decisions. It is meant for an insider, the executive reading it is likely to have a 90% understanding of what is inside the document. There is no need for graphics here, a few dry bullets with decisions will do the trick to remind everyone of what will happen next, and who will do it.

So, this is totally the opposite of the other use of an executive summary that I come across often: a short teaser to someone who has no understanding at all of what you want to achieve. Here, a dense text, or a dry list of bullets will do the opposite of attracting attention.

Feel free to step away from the habit of sending dense text pages to get people excited about your project. Instead, think of the time you want the recipient to spend on your document. Now, fill that time with the most visually pleasing and exciting way to present your case. Lower your expectations, you do not want to close a deal at this stage, you want a phone call, or a next meeting. Sending a short, visual presentation that can stand on its own without verbal explanation is a perfect reply to the request for an executive summary.

I see (and work on) a lot of presentations that investors use to raise their own money from high net worth individuals or institutional money managers.

Pitching an venture capital (VC) fund is harder than pitching a regular company. Companies are different by nature, different market, different product, different type of people. Investment funds on the other hand, or more or less the same when you listen to pitches “from a distance”, i.e., with the same level of attention that VCs would use themselves when opening the email inbox in the morning and page-downing some decks that hopeful startups have sent overnight.

Most VC/PE (private equity) pitches would talk about that there are lots of great companies out there that cannot get financing, that the team has a stellar track record, and that - unlike all other VCs - this fund will work hands on with their portfolio companies to create value (strategic help, contact network, access to more financing).

So when to the untrained ear all of these pitches sound the same, it is really important to bring out the distinctions. Bring hard data that show that your target companies cannot get financing. Discuss example deals and show why other investors would not be interested in them, and why you can turn them around. Beef up your track record with quantified exits (unlike most presentations, here the more detail, the better). And - sometimes - reconsider your investment strategy and make it very focused and specific, because believe me, you are not the only one out there pitching for money.

Listing pages and pages of market size numbers that are related to your industry are hard to digest for the novice (for example, a potential investor in your company). This number includes devices, that number is 2011 only, this number excludes Eastern Europe, that one is number of users, that one is in Euro, and this is the percentage growth, but the growth of the average basket size.

An investor who is seriously considering putting money in your company will try to piece this data together to come to some consistent picture. You might as well do the work for her with reasonable assumptions. Size up the 2011 market to 2013, add your estimate for Eastern Europe, convert everything to dollars, etc. etc.

Start with some sort of overall market estimate, compare it to something the investor can relate to, then start adding complexity, break things into pieces.

Obviously your estimate will biased and very optimistic, but your analysis has at least provided the investor with a framework of how to think about your market. Put all the raw data that you used in the appendix so that the investor can do her own homework when she returns back to her office.

I get this question often from startups who are in the process of fund raising. If you are on a tight budget, you might be able to hold off the big expense of producing a video.

1. There are videos and videos. Many of the animated videos you see today on the web (“So, you want to [FILL IN UNMET NEED]”) are presentations in disguise: an animated sequence of static slides. For some products, showing moving footage of the product is really useful. Examples are gadgets and other hardware that you often see on sites such as Kickstarter. If your product does not depend on a live demonstration, a sequence of presentation slides can be as effective.
2. Unlike consumers, investors are usually perfectly happy to click through a sequence of slides instead of playing a video
3. Videos are permanent and very hard to edit. Startup stories always evolve and change.

So, the best approach might be to start with an animated series of static slides. You perfect the flow over time and if you really feel you nailed the story flow (and you have the budget), you can make the expensive of creating a pitch video.