Stories are up to 22 times more memorable than just facts
Over the past 10 years the Duet team has been involved in hundreds of investor meetings. Our fly on the wall perspective has given us an unusual level of insight into what makes a great investor pitch. We believe successful entrepreneurs design their deck to facilitate the development of TRUST by triggering an informed, honest, and frank debate.
One of the most commonly asked questions we hear is “What should we put in our deck?”. We work a great deal with companies run by entrepreneurs with corporate backgrounds. The inclination here is to think of the deck as a document that will educate the investor. “Once they learn about our killer product strategy, they will want to invest”. Not so fast. Whilst education plays a part in the investor pitch it is far from the main purpose.
Let’s reset and think about the objective. The first question we should ask is “What are we trying to ACHIEVE at this particular STAGE of the fundraising process?”
The key thing to keep in mind is that fundraising is a process, NOT an event. In fact, it’s a marathon, so you have to plan this out in phases. If you don't there’s a danger you will either provide too much or too little information at the wrong point, fail to engage investors, and not be able to stay the course.
We should therefore consider the objectives for the first 2 phases of investor engagement.
The initial objective is to get the first face to face meeting. You will therefore need a teaser deck to email the investor to pique their interest and secure this meeting if they think it's a potential fit for them.
Then, when you are at this first meeting the objective is to get the investor to make an emotional buying decision and agree the next steps. Experienced entrepreneurs will say that if you are unable to trigger an emotional buying decision at this first meeting, it will likely never happen. The problem is that it’s not always clear if this has happened or not, but you can definitely optimise the conditions for a positive outcome. More on emotional buying decisions in our next article.
You will therefore need two decks, built around a common core, that will enable you to transition through these first two objectives.
In other words, you need to think of this as a SALES process.
The teaser deck is your MARKETING campaign. You will ideally be sending this to qualified and warm investor contacts. This deck should be short, visually stunning and ideally no more than 10 slides. It should be a subset of your ‘face to face’ deck described below. Send this as an email attachment, not a link, and keep the file size down (less than 10MB if possible) so it doesn't take an age to download or get blocked on the server.
Remember investors are very busy people and may be picking up your email on the move between meetings. They won’t want to open the slides on their smartphone so make sure your cover email has a short summary of the most salient points about your proposition and has clearly been personalised and tailored for them. It’s absolutely not a mail shot.
The ‘face to face’ pitch deck is your actual SALES document and you will bring this to the meeting. But if this is a sales process, what are you selling? Ultimately, you are of course selling shares in your company, but that’s not what an investor is buying during these initial stages.
To start with you are selling TRUST. And this means trust in YOU and your TEAM. The old adage ‘people buy from people first…they buy from people they trust’ is absolutely fundamental here.
Mark Suster, US serial entrepreneur turned VC, has a particular way of defining this as "..trust that you can deliver on what you say you’re going to do, trust that you will follow up when you say you will, trust that you will be a pleasure to work with, trust that in good times and bad you’ll be committed to making the investment valuable."
Trust is developed by first building rapport. This comes from being comfortable with yourself (being friendly, making eye contact, having a firm handshake etc), showing your competence and professionalism (deeply knowing your stuff, being articulate etc), and above all doing this through an informed, honest, and frank debate. A memorable conversation between humans. A moment where there is an emotional connection.
We will talk more about how you create this emotional connection during the investor meeting in our subsequent article, but for now ask yourself just one question: How will my presentation support this ‘informed, honest and frank debate’ and create a memorable conversation? In short, our take is this should be a deck that:
And last but not least:
The good news is that there seems to be general agreement in the industry about the core slides that are needed, so your job is to take the core and customise it to fit your story and the audience. Listed below are the core slides as recommended by Sequoia Capital, one of the most prolific early stage investors globally:
The first slide is critical. In fact it should only have your logo and your single declarative sentence. You don't even present it. It's simply the backdrop to your opening gambit, your initial attention grabber at the beginning of the meeting. This occupies the first 3-5 minutes after introductions and this is when you will have maximum attention from the investor. This is the (verbal) trailer to your movie. If you don't hook their interest then it may never happen. We'll discuss the opening gambit in more depth next week.
Remember, the list above is just the core and you should build these into a complete, high-level storyboard first, so you are happy with the overall flow and the headlines on each slide. Then you will need to tailor for your TYPE of business (sector, business model), the STAGE your business is at, and the TYPE of investor you are targeting.
For example, if you are a SaaS business you will have a deck that is customised in a different way to a manufacturing business. The SaaS proposition will need to include the essential KPIs (CAC, ARPA, Churn, and most critically, MRR), whilst the manufacturing business will need to set out the supply chain strategy, gross margin trends, and channel strategy.
For a SEED stage business, the emphasis will be on the Vision, the people, the Problem/Solution fit and the key Business Model assumptions.
For VENTURE stage this will shift to Product/Market fit, Go to Market Strategy, and validation of the Business Model through early customer engagement.
For GROWTH stage, it will shift again to commercial scaling and the financial momentum that is being created.
In terms of the different TYPES of investor, you will need to put yourself in the mind of the buyer. Is this a private investor, an Angel group, a VC, a Family Office, a Corporate, or a Regional Investment fund? For example, VCs will place greater emphasis on the go to market strategy and your exit aspirations than a Corporate, who in turn will likely place greater emphasis on the technical innovation underlying the value proposition.
Any decent adviser will have a storyboard that describes the key ingredients for all these scenarios. If you are not using an adviser, you must do your homework. For example, try and compare notes with other founders in your network.
Finally, remember in the end it’s not actually about the slides, it’s about YOU and your TEAM. You will use the pitch to create a memorable moment where you build rapport, develop trust and improve the odds of securing that emotional buying decision.
Next week we publish our third and final article in this mini-series on investor pitching – the pitch meeting itself.
About the author: John Hall is CEO and co-founder of Duet Partners, a corporate finance firm that provides specialist funding support to high growth technology companies. His 30-year tech career began with major US semiconductor and software companies, and was based in the Valley during the late '90's. Before Duet he was CEO of a VC-backed consumer electronics company, sold in 2009 following several rounds of capital raising. In the past 10 years he has advised dozens of founders on the startup to scaleup journey and is a retained Board advisor to a number of UK technology companies.