Ask a VC: what is a good pitch deck?
The standard document used to communicate an investment opportunity in your project (if it’s very early) or your company (once it is incorporated) is a presentation. You can share in Google Slides, Apple Keynote, or Microsoft PowerPoint formats, but most often in Adobe PDF format.
I would avoid sending a DocSend link with no download option: it’s great that you want to see how much time a VC spends on each slide, but VCs tend to store all documents in a centralized deal flow system, and they want a copy of your document to share internally, to compare with a previous version from a previous round, and indeed maybe not share stats with you.
The purpose of a deck is to get a face-to-face meeting (in person or video) with an investor. It should not be your full biography, you will have ample time to convince the investor later of all the intricacies and minute details of your project. However, you have to convey enough information to give him the urge that it would be a good use of his time to meet you and explore the opportunity further. Usually, this decision is made on a limited set of criteria:
- you fit the investment thesis of the investor (for example you are leading a decarbonization solution startup and targeting a ClimateTech fund)
- you are matching their right investment criteria (eg: raising 1m, which suits an early-stage fund or operating in the right geography constraint when for example in Finland, the main LP is the Finnish Sovereign Fund that requires local investments)
- the value proposition is compelling according to their magic sauce.
So how should you structure your deck?
This is where again in venture capital, there is no definite answer, and where it’s more art than science. Of course, some famous folks have raised massive amounts using very ugly decks, or a random white paper, but they are the exception. This recommendation serves only the purpose of increasing your chances of getting a meeting (or a second meeting if you just made an oral presentation in a pitch competition) with the investor. As a side product, it will also help structure your thinking and business.
Different investors use different frameworks, and everyone will have a different opinion on this. I have seen over 14,000 decks in the past 10 years and I have developed this framework to analyze an investment opportunity in my head. Said differently I silently check a box next to each item in my head, and then ask questions about the missing sections.
When pitching, what you are doing, is offering to exchange a piece of your equity for money. It’s a transaction opportunity. What you should not be doing is trying to justify that you have a market, or explain now how great your product is, with all its bells & whistles. We don’t need your user manual. Most entrepreneurs spend 90% of their time doing both in their pitches, which is counter-productive.
What you should be trying to do is to get the investor to think that some of his money should go into your business because it will multiply, and generate a capital gain, under controlled risk conditions. Therefore you need, in my humble opinion, to address these 4 pillars:
- value proposition (what I call the marketing section)
- financials
- operations
- deal
Each section is as important as the other, so expect to spend 25% of your available time on each. If you get 5 minutes, 1 minute each, with some extra slack on each section. If you get 20 minutes at a later meeting, then 5 minutes on each section.
I then structure usually each pillar into 3 slides, which means you can tell your story in 12 slides (add 1 when necessary here and there, but you should keep your overall deck at around 15 slides).
I use numbers in my head for each slide, so that I refer to them by that number very easily. As Philip Kotler would say for an advertisement, there always has to be a promise and justification; and investors browse through decks very quickly. Therefore, make sure you write down what you want to say in the title of the slide; if I only read that, I get the message. Use the rest of the slide with supporting information (the justification). For example, in the team slide, don’t write “Team” in the title. It’s a waste of space, and it conveys nothing. Say “We have built an impressive core team of 3 PhDs from elite French Schools with previous experience at Google and Meta’s AI Research Labs”.
0. (updated) Title slide. Put your company name, logo, and one line that outlines what you do. Add also your name, title, and contact information (email, phone), and where your company is located (or you the CEO): City, Country.
Marketing
- Value proposition: what is the market (total addressable/serviceable markets = TAM/SAM), growth of the market, target customer segments, and pain point you are trying to solve? This should be a simple sentence: <company> is aiming to solve this <pain> for these <future clients> on a <size> market, that is growing <%> per year. You can add the Magic Sauce here or wait for the next slide. Example: Google is providing trackable and targeted advertising opportunities for brands and businesses on a $360+ billion market, growing 15% per year
- Solution: this is where you talk about your answer to the pain described previously. A screenshot (to show it exists) or small video link is acceptable. You can even include some information of the future roadmap: this is what we have, coming is V2, and then V3. In case of a product portfolio, the 1970 BCG Matrix crossing market share vs market growth is a useful tool to understand what product to abandon, to milk, invest in, and keep testing.
- Competition: before you came up with your solution, how did the market deal with the problem? Why is your solution better than theirs? (VCs tend to like a 10x better solution). Is your approach defendable over time (say 5–10 years), ie. do you have a moat? Beware of all the Gartner-type quadrants where startups always end up top right: this brings no information whatsoever, nor do tables with a list of features. Remember you are also competing over time, and cash is king. Add what competitors were financed by top VCs in other geographies, and comparative sizes of your business (for example, if you launch a new CRM solution, how do you compare with giant Salesforce or smaller Pipedrive? g2.com will help you with the analysis).
Finance
4. Business model. Remember this is not about the price rate card of your solutions. You need to include direct costs and, therefore calculate your unit margins. See this article. What is important here is to understand that each extra sale will add extra contribution margin, hence multiplied by quantity, at some point you will cover fixed costs and become profitable.
5. Financial projections. I like to see 5 years of revenue and EBITDA (better ever if FCF). Why? Because it shows you have done your homework, shows your ambition in terms of revenue (therefore market share), and shows the assumptions of the model, so that the investor and the entrepreneur have a now a basis for discussion. I’ve written a 6-part series on how to model a P&L very easily.
6. Risk analysis: I like to see from the best entrepreneurs that they understand their main risks, keep an eye on them, and that they are thinking of ways of mitigating them. You can use the PESTEL framework, but ideally, drill this down to your top risks: scaling the business technically (remember the Twitter whale?), legal issues (think Uber), competition (think Lime scooters), etc. What you probably don’t know, is that a VC writes an investment memo internally and that he has to fill in the risk section. Help him with your analysis!
Operations
7. Team: great to see all the logos of schools, previous employers, and nice pictures. Sometimes you even get full orgcharts! What I like to see here is why is this team qualified to execute in this market, on this value proposition. If you are doing RegTech for example, you want someone on the team that understands regulation. Or if you are doing drug discovery, you want someone with a pharma or biology background on the team. This is where an advisory team is useful; not just a list of fancy names of your dad’s golfing buddies, but skills that are not on the operating team, and people available with free time to help on the project. I also like a hint on who is missing on the team, and it shows that the CEO understands his needs well.
8. Go-to-market: getting people to give you money for your product or service is what will drive your business. It’s called revenue. All the other lines on the P&L are expenses, easy when you have the cash. So here, it should be a discussion on how you think you are going to find, reach, and convince people, companies, and governments to give you money. Some of the best decks show the tests that were done with different channels, customer acquisition costs, churn rates, etc. If you already have traction, show it here! It’s also an opportunity to show how you are thinking about this. It’s of paramount importance.
9. Technology and processes. Most investors you talk to are going to be technology investors. Yet, most decks never discuss any technology. Here you can present your technology stack. Explain if you are building an in-house team (better) or subcontracting. How you are thinking of scaling if business picks up (think cloud), or about cybersecurity (confidentiality of data, backups, resistance to DoS attacks). You can also talk about processes (supply chain for example) involved in the fulfillment of your value proposition.
Deal
10. What has been done so far? Many investors have geographical constraints. You need to say where you are incorporated. For me, this is a list of everything that the company has achieved to this day, that should be documented in a data room (to be shared later during due diligence): incorporation of legal documents (bylaws), contracts with employees, with clients, letters of intent, IP protection, product versions, etc. It’s easy, it’s like a picture of everything I’m buying a share of, a picture of the past.
11. Deal offered: state clearly how much you are raising see this article on how much to raise), and what is your expected valuation (see this article; it will be challenged by the lead investor that sets the terms, but it facilitates the discussion), and the instrument offered (convertible note, SAFE, equity, debt…). Write the expected timeline (see this article). Write about the use of proceeds (it should come as a percentage of the expenses in your P&L. Keep in mind you raise every 18–24 months, so you only need money until then. Make very clear the objectives you are trying to achieve, or assumptions you are trying to prove during this time with this new money.
12 Why now? This is the call to action. I won’t give examples here, but it could be a summary of all the above. That you are running out of money is not a good reason. That you are struggling to finance your working capital for example (too many orders that you cannot fulfill) is much better, or that you are doing great on your business plan execution, but with more money, you could execute faster on a high-growth scenario is also a good reason.
And there you have it. It might seem like a lot of information to convey in 5 minutes, but actually, it’s very doable. If you manage to do so, you are conveying a very compelling investment proposition, and undoubtedly you should get another meeting if you fit the investment criteria of the investor. It does however require a LOT of preparation, which means you have done your homework. It forces you to challenge all your assumptions and build a sound and solid deck.
As I said earlier, there are many frameworks out there. The Sequoia pitch deck is famous and is also on their website. If I compare my approach using the numbers of my slides :
- Company purpose > 1
- Problem > 1 (I don’t separate both, but I have the option of an extra slide here and there)
- Solution > 2
- Why now > 12
- Market potential > 1
- Competition/alternatives> 3
- Business model > 4
- Team > 7
- Financials > 5
- Vision > 1
Said differently, Sequoia insists a bit more on my slide 1, split into 3, and then we almost match. They don’t have 6) Risks, 8) GTM 9) technology/processes 10) What has been done so far. And although they don’t mention it, they probably need an 11) deal slide somewhere.
Fabrice Grinda at FJ Labs uses another framework. Keep in mind he has invested in 1000+ companies, mainly marketplaces, at all stages with a bias towards early stage. He uses 4 main criteria, and his Investment Memo template however is very detailed :
- Do we like the team > 7, 10
- Do we like the business > 1, 2, 3, 4, 5, 8
- Are the deal terms fair? > 11
- Is the business in line with our thesis or where the world is going? (this has nothing to do with your deck).
My friend Heini Zachariassen (founder of Vivino), has this great video on the ultimate pitch deck.
- Motivation > I don’t use this, but often I ask the question orally
- Problem > 1
- Solution/product > 2
- Traction > 8,10
- Market > 1
- Business model/revenue> 4
- Team > 7
- Fundraising Plan and Objectives > 11
You should have enough information here to build a great deck.
Update on 17 March 2024:
I just stumbled on a few posts by Rubén Domínguez at Mundi Ventures on LinkedIn (always give back credit ;). He posted other pitch deck structures from Y Combinator, 500 Startups, Founder Institute, and from Guy Kawasaki, the OG from Apple. Remember, there is no definite structure, but the purpose remains the same: convey just enough information so as to get that next meeting with an investor. I’ll quote his post, and compare to my structure:
Canva’s Chief Evangelist Guy Kawasaki distilled the art of the pitch down to a simple, yet effective formula.
Here’s how it works:
(1) Title: Make them remember your name. It’s your first handshake. > Of course. I did not add this but have talked about it in the past: put your contact information there! I’m updating the structure above with this title slide (it was always implicit for me).
(2) Problem: If they don’t feel the problem, they won’t see the need. > 1, 12
(3) Value Proposition: Here’s where you shine. Show your product, its benefits, and why it’s a game-changer. > 2
(4) Magic: What’s your secret sauce? Tech, patents, a killer demo.> 2,9
(5) Business Model: How will you make money? Be crystal clear. > 4,8
(6) Marketing/Sales: Your strategy to dominate the market. > 3,8
(7) Competition: Know your enemies and why you’re better. > 3
(8) Team: Investors bet on jockeys, not just horses. Show them your A-team. > 7
(9) Financials: Hit them with numbers that make sense. > 5, 10 (for traction)
(10) Status & Use of Funds: Where you are, where you’re going, and how their money helps. > 10,11
So again, no risk analysis (6), and the call to action (12) slide not completely there (but somehow in his slide 2): I find it useful to summarize the whole pitch at the end to make sure the message gets properly memorized.
Update on 22 Mar 24:
More links:
- INNW Institute : 30 Mistakes Startup Founders Make in Pitch Decks
- PitchDeck Coach: The Perfect Pitch Deck Template by Sequoia Capital
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I consult with corporates and startups and help them address issues like this and many more. Don’t hesitate to reach out at www.rodrigosepulveda.com or book a video call with me on intro.co.
