SlideMagic Blog

A copy of a new section I wrote for my corporate web site.

In the very beginning, the only asset a startup has is often the VC pitch deck. Here are some suggestions for designing good VC pitch presentations. In the end I will list some of the resources you can tap in. There is a lot of information and advice available about startup pitches.

Different pitches for different meetings There are different investor presentations in a fund raising process. There is the line up in a big conference where everyone has 1 minute to pitch (not very effective). There is the 10 minute phone call, the 20 minute coffee chat. The first meeting at the VC office, the presentation to the full partner group. Prepare your story and deck for each situation. As you go through the investment process funnel, your story will shift from talking about what the company is about, to how the company will do it.

Do a pitch without a deck Practice a 20 minute pitch without slides in front of a friend. Record yourself, listen to your self. What sequence did you use to tell your story? What examples did you use? Where did you have the urge to take a piece of paper and sketch a framework? Where were you tempted to open your laptop to show a detailed chart with financials? All this gives you a clue about the sort of visuals you need to support your natural story.

It is about you When an investor looks at entrepreneur, 50% of the attention will go to the content of the presentation, the other 50% will be spent on making a personal assessment of you, the presenter. Are you a good person to work with, who takes input from a Board? Do you have a sense of realism? Are you fired up for the roller coaster ride or hedging by keeping your day job? Can I trust you? Can you actually sell? Can you pull it off? These are all questions that cannot be answered by the slides you are presenting, they are answered by reading in between the lines.

Most startups pitching for VC money would pound the audience with billion dollar market forecasts produced by market research firms such as IDC or Gartner. They are important, but they do not touch the gut feel of an investor. Often, showing a small street scene without a single number in it, does the trick.

As an example, take online gambling, and let’s go to Spain. Anyone who spend some time there has seen the numerous lottery stands scattered across the cities. What if all these people could get the same thrill of purchasing a lottery ticket on their mobile device, rather than standing (visibly annoyed) in a long line? The opportunity is staring you in the face, right in front of you. The VC is reminded of it every time he drives to the office, every day of the week.

If you are interested, a recent blog post by Seth Godin about why these people are not buying the ticket to win the big prize. Image credit to Paul and Jill.

Can I use humor in an investor presentation? (Well, the question applies to all serious presentations). I would be careful. Humor is a great ice breaker when it comes naturally, even in serious presentations such as a pitch to investors. However, making it come naturally is hard to plan. That rehearsal in front of your friends in the living room sofa is a different environment from the corporate conference room.

If you used a joke spontaneously in a previous presentation, you could try to use it again (i.e., program it), in another one if you feel that mood and energy in the room is right. But only then. And never put jokes in writing on slides or in images, you lose the option to pull them out at the last minute. Also, you do not control the digital after-life of the presentation file after the live presentation.

Client: “Hey, investor presentations don’t look like this! I have seen many before. This one has too many slides, too many images, we need to fix this.”

Me: “That’s exactly the point”

A startup pitching to a giant:

• This will save you millions of cost!
• Your users are asking for it!
• We enable you to break into new markets!
• Your competitors already have something like this!

25 minutes later with 5 minutes left: “convinced?”

“Yeah sure, but we have a policy not to work with startups that might go bankrupt tomorrow…”

It is important to find out the major concern of the giant before pitching. When someone mumbles in a phone call that they have a policy not to work with startups, it is most likely not a side comment. Focus your pitch on this issue. Not explicitly, but in between the lines.

• Show your blue chip investor base
• Show the partnerships you have with very established players
• Show your positive cash flow
• Show your customer list
• Show them anything that might support the point

The real battle is here. Maybe it is a hard one to win, but at least you should try.

I was discussing a presentation for a public share offering with a client the other day and we kept on coming back to the presentation advice that the investment bankers were providing.

Every investor presentation should have a “business card” slide as page 1. It should contain the history of the company, the main shareholdings, and sales, gross margin, operating profit, earnings per share and top line growth for the last 5 years.

Investment bankers know how to buy and sell companies. They have seen thousands of investor presentations. And yes, most of these investor presentations look a certain way. But that does not mean that this is “the way things are supposed to be done”.

You can stand out and design a first page that gets potential investors sitting on the tip of their chair, getting really excited about a great investment opportunity. When the company was founded, or that 2007 operating profit was $34.2m will get addressed at same stage in the presentation, just not on slide 1.

The investment banker’s advice can actually be understood. Whenever they ask a company for the investor presentation, out comes a very long bullet loaded PowerPoint deck that takes 2 hours to go through. Instead of redesigning this monster they ask: great why don’t you put everything that is important on one page or write a 2 page executive summary? In that way they know they can get through a pitch in 20 minutes.

The secret to a good 20 minute pitch is writing a full slide deck that takes 20 minutes to present.

Overhead: “We completed this extensive business plan for our startup 3 months ago. Check! It is a lot of work, but hey potential investors want it, so we churned it out.”

Here is what investors really want:

1. A good visual presentation that helps them understand your business quickly
2. A company that knows what it is doing, has a clear plan going forward
3. More detailed data/information after 1. has been digested

None of these require a long, text-loaded document. Text is the worst way to deliver 1., the exciting investor presentation. And text is not the best vehicle to deliver 2. and 3.

There is a reason why management consulting reports are written in PowerPoint, in a style that is somewhere in between the Steve-Job-style-keynote and the densely written marketing text book.

• Business issues/strategy can best be communicated/discussed using a visual language: it is about data, relationships, positioning, pros and cons, time lines. Diagrams (even poorly designed ones) do a much better job than a dense paragraph of text
• Things change all the time, and text is hard to change. Swapping the flow of a story, adding a piece of information, updating the market shares. “We did this business plan in September, but it is already out of date (December).” A document in PowerPoint is easy to change and update.
• PowerPoint document can be navigated quickly. It is easy to browse through sections, zoom in, zoom out.
• It is very hard/time-consuming to get the exact wording of something right, especially to agree something among a group of people with different styles. In PowerPoint you cut words, leaving less room for lengthy editorial discussions
• Most business documents are written in English, most people who write them are not native in this language. For a non-native speaker, it is hard to write a good proper long-hand text in 100% good English (native-speakers probably have spotted this in this blog). Most people can reach 80% correct English, and in PowerPoint you get away with it.

This interesting file from 2007 made it to the top of Hacker News at some time during the day: the application of Dropbox for funding by YCombinator. The question/answer exchanges read like a high-paced due diligence interview by a potential investor. The answers are short and to the point, the questions are short and to the point. Learn from it and improve your own investor pitch.

An interesting post on TechCrunch today: Socialcast founder Tim Young explains how he raised $10m for 3 companies using a 5-slide PowerPoint presentation. Some of the points that stood out (please read the full post for the complete picture):

• In 1-on-1 meetings you can try to avoid the confrontational both sides of the table setting by sitting next to each other and sharing a laptop screen
• Remember what the objective of your 1st VC meeting is: get to the 2nd one, it is - not yet - about trying to tell the potential investor everything you know about your business in the hope that he will sign the check after 30 minutes. Getting to the 2nd meeting is all about avoiding “rat holes”.
• Focus your slides (in come the 5 slides he used), but have the 45-slide backup in your back pocket in case you need to lift out a slide.
• Use (real) images of faces wherever you can to introduce people that are involved with the business (instead of names). When he says faces, faces, faces, he obviously is not referring to anonymous models that are too often found in stock images.

I agree with this approach, I just would like to give a word of caution/some comments. Each startup has a different set of 5 slides. Don’t just copy the ones Tim used. Rather look through the slides and see what Tim is doing.

His 5 slides have no story in themselves, they are pact with facts. Tim is telling the story himself, without slides. Only when he needs facts he reverts to slides. “Look at the credible team and investors we have” [Very dense slide packed with names, photos, and logos]. “See that there at the bottom? 75,000 i.s.o. 5,000 users per server, let me explain” “We’re on a roll” [Very dense slide with performance metrics], etc. The exception is slide 3, an abstract graphic that you can almost draw on a napkin to explain the key idea behind the business.

Many of the readers of this blog are - like me - designing investor pitch presentations. This 30 minute talk by Paul Graham of Y Combinator gives some interesting perspectives on how the competition between “super angels” and regular VCs has an impact on startup valuations and the startup fund raising market in general. If you are here just to learn about slide design, skip the video.

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