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Investors are not always 100% rational people. The other day an investor shared one of his criteria with me. If an entrepreneur has been hit by 14 cases of pure bad luck he is convinced that it will happen again for attempt 15. “Some guys are just not lucky.”
I was asked to answer the question “What makes a compelling pitch deck?” on Quora, and here is what I replied:
You can write books about this, so without giving a table of contents (Google it) here are some thoughts:
- Something that explains what you actually do (yes, some decks don’t)
- Something that intrigues a potential investor enough to have another meeting with you
- Something that answers the big obvious elephant in the room questions (“What, that sounds like a page rank search engine”)
- Something that shows through language/visuals/style/in-between-the-lines that you are a decent, honest, professional person to work with
Before taking your pitch to your target investors it is important to practice your story for real. There are different guinea pigs available, recognise their strengths and weaknesses:
Still, each of the above has valuable input, just put it in context.
The common way to present people that endorse you is a bullet point list of names and titles. Make that much more powerful by changing that to a mosaic of faces. Avoid the uniform conference-speaker-headshot-gallery, rather:
Now this makes for a much more dynamic visualisation of the people who support you.
If you are writing an investor presentation you can Google what questions should be covered:
Or, you can take it one step further and already anticipate the most obvious questions an investor might have:
Smarter questions lead to smarter investor presentations.
Unfortunately, in 2013 most investors are still male. Coming in with a cute deck (curly flower background, pastel colours, retro-chique font, etc.) is not going to get you points. Even if your product itself has to be cute (a cosmetics line for teenage girls for example) you can still separate things in your investor deck. Use more macho graphics for the serious business stuff, leaving the cute graphics for the product show case pages.
During a project briefing I usually take the role of the potential investor and start to ask questions that are not necessarily related to the page we are on. You try to understand the company, tick off the boxes that are obvious and are left with a few questions that are not clear. A good investor presentation should anticipate the investor’s thought process and provide the answers right at the moment they are needed, but hey, we are still at the briefing phase so no need to be perfect yet.
So, in a one on one meeting (where you can accomodate a slightly more chaotic story flow), when the investor asks you a question, answer it. Skipping/ignoring it and continuing to go down the list of product benefits (we are flexible, scalable, and deliver ROI) does not neutralize that nagging worry in the investor’s mind. Answering is probably not that difficult for you, acquiring the patience to listen is.
Some startup pitches to venture capitalists are all about trying to explain a completely new revolutionary idea. Big bold images, stunning visuals, clever analogies, all needed to get the investor to understand and feel what you are talking about.
The other day, I designed one that goes completely in the other direction. An eCommerce startup with a very specific niche audience that is totally neglected by online offerings. It takes 2 seconds to explain that.
But the interesting part is to explain the VC how the magic of the numbers work. Seasoned investors in Internet businesses have seen hundreds of startups and can probably benchmark in their heads how your company stacks up in terms of LTV, CAC, conversion rates, basket size, repeat purchases, cohort developments.
To the outsider, the presentation might look a bit boring (pages with numbers), but it is the substance that is required for the discussion. To spice it up a bit, use custom fonts (watch out with compatibility) and a slightly bolder color scheme than you normally would use. Also make sure that you show the link between all those numbers: simply pulling numbers from Excel in random order will not sound and look very coherent.
A question that came in yesterday:
Jan, I have a question about presentations to investment bankers/analysts. One of my clients getting ready to go on a road show says their investment banking consultants have told them to present what I would call (ala Garth Reynolds) a “slideument” that will also serve as a leave-behind. The consultants claim this is the way it’s always done and if they don’t do it this way, their audience will disregard them. Your thoughts?
Yes, in financial services people are used to very text-heavy slideuments for fund raising and IPO roadshows. And in most cases, people will print out the full 200 page deck for each participant in the meeting room.
Now, in finance presentations you need a few pages that are dense (financial statements for example). But there is no reason why the general lessons for presentation design do not apply in finance. In the end, investors are people, and it is harder to convince people to do something (invest) with a boring presentation.
And I have seen it work myself. After the initial resistance, people were actually very impressed with a different style fund raising presentation (and proved it by wiring money).
So what to do? My advice would be to take both approaches. A fund raising roadshow is a big deal and usually people have enough time/resources allocated to it to prepare both a visual, and a dense deck. Present the visual presentation, and selectively jump to appendix charts if you have to. Let the audience read the appendix in their own time.
Tom Tunguz claims that this is the origin of the elevator pitch:
The term elevator pitch originates from the very first demonstration of an elevator with a safety brake. At the time, elevators were hazardous, routinely plummeting down shafts when their hoisting ropes fell, destroying their payloads. In 1852, Elisha Otis invented a locking system that would catch and secure plunging elevator. Unable to drive much interest in his innovation, Otis organized a demonstration in New York City. He stood in the elevator as an assistant severed the hoisting ropes and the safety brake engaged. Otis’ innovation paved the way for humans to ride in elevators. Today, the Otis company’s products transport 7B people every three days.
If true, this is a more interesting tale than the story that I thought was the source: finding yourself next to your client CEO going up in the elevator and having 1 minute to sell your idea.