Former VC at Daphni, now Startup Coach at startupaction.co
In these uncertain times of Covid-19 and lockdown, it’ll come as no surprise to say that investments, as with everything else, have taken a bit of a hit. In France alone, investment was down 30% in April compared to April 2019. But, not to despair! Despite the current climate, investors are indeed still active.
“Things must go on” as co-founder Seppälä of Finnish VC Icebreaker.vc stated, “it’s a great time to start building and investing”. They know that this is a short term situation. But there is now more focus on the long term impact and so more selectivity in where they will invest their money. Now, it's even more important to create the perfect pitch deck and present your startup in the best way to attract investors.
I started my career at the French VC firm Daphni. It’s a fund with $180M under management investing in seed and series A startups. As a part of the investment team, I studied on average 20 decks per week. After a while, you start to realize which decks stand out and get the investment team’s attention.
For this month I've created a pitch deck template that gets you into more investor meetings. I share the best slides so YOU can stand out in the pile of decks that investors receive.
This deck template is a teaser that you send out to investors to introduce yourself or ahead of a scheduled meeting. The number 1 goal for this deck is that you tease the investors so they become interested and want to meet you.
1. What are they doing? (Market and/or type of technology) The investors want to know if it’s within their scope.
2. What proof do they have that they can succeed with this? (Show metrics, traction and team achievements)
3. How big could this be? (Market size and business model)
A seed investment has NEVER been done based on a deck, it’s always based on how excited you make the investor feel and the relationship that you develop during the investment process. That relationship can only develop when spending time together. This deck is only a stepping stone to get into a meeting with the investor!
1. Sexy One Liner
4. Metrics or Traction
6. Business Model
8. The Ask
A teaser deck should be preferably 10 slides, maximum 15 (including first and last slide). In this template, you will find all the mandatory slides, but it might be that your startup requires more explanations on certain points so you might add a few slides.
To download the pitch deck, click here and edit your own version of this template!
Keep in mind, that on average, an investor spends only 30 seconds on your deck. DO NOT include long texts or explanations. Visual elements are always better than text since it lets your message come across faster and more efficiently. In this template, there are plenty of examples of how to visually present your information.
In terms of design, the following slide templates are just an example. I decided on 2 types of fonts and 4 colors that work together, and then I stuck to that theme throughout the deck. You should do the same; stay consistent in your design with your brand colors and font. If you don’t have an eye for design, ask a friend who is good at that to redesign the deck for you.
No matter your brand profile, the number 1 rule is to keep your deck very airy. NO cramped slides, please!
1. The Sexy One-liner
This is the first thing that the investors see when they open your deck. The goal here is to get the investor to lean in.
On the first slide, you should already help the investor understand what you’re doing and answer the first question they have in their heads by including your sexy one-liner.
The sexy one-liner explains which market you operate in and how you disrupt that market. Hyped words such as “AI, deep tech, IoT”, etc. are very welcome here.
"Makes the healthcare sector efficient with technology”
"Replaces real estate agents with algorithms”
“Equips HR with smart AI”
2. The Problem
Before explaining what your product does, you want to set the scene and explain why there is a need for your product.
Why should the investor care about your product?
This slide is especially important if you are solving a problem that might not be well-known to the investor. Think about the profile of the typical investors you meet, how familiar is the investor with this problem?
The best here is if you can refer to a global problem that your product will fix. Investors like to help solve problems for humanity. Otherwise, you can also explain the pain that your customers experience if they don’t have your product.
You always want to use data to make the pain you explain irrefutable. Very few startups do that so here you can really stand out.
The data that you share can either come from market reports or interviews/surveys that you’ve done with potential customers. Don’t forget to link or explain how you discovered the findings.
Pick one of the following two options for your Problem Slide:
3. Your Solution
When you present your product you want to give the investor the feeling that it’s live and currently in use, that’s why it’s really good to use screenshots from your product.
Best-in-class is if you can use the template from option 1 here. You need to make the explanation of your product extremely straightforward in this phase of the investment process so the investors can feel like they “get it”. Your product is probably more complicated and has lots of fancy features, but it’s not the place to explain those here.
If you right now have a simple MVP that doesn’t at all represent what you want the platform to do in the future, you can do what template option 2 shows here.
When you explain your product, the rule is simple: Show is always better than tell. Use pictures, arrows, and symbols to your advantage.
Pick one of the following two options:
4. Metrics or Traction
When the investor gets what your startup does, it’s time to share some proof that you are successful in doing this. If you haven’t yet launched, you need to show that you will be successful as soon as you get the product out on the market.
The best is if you can put a growth chart here--a chart that is pointing upwards to the right. You’ve got three options for metrics to show your growth:
If your line is not as straightforward as in the following examples, it’s OK. That is not necessary when you’re raising a seed round. However, your growth per month needs to be 10% or more on average.
If you don’t have any metrics in your company that is growing 10% or more month-over-month, you can look at other metrics that are impressive. The next best would be to present a flattened retention curve or something else that shows how people who start using your product love it and keep on using it.
If you don’t yet have users, you need to show traction and potential some other way. See option 4. You can instead brag about any waitlist or quotes from interviews.
5. The Market
There is a framework that all VC investors use, and you should apply that here. It’s called the TAM, SAM, SOM.
TAM - Total Addressable Market
This is the market that you’re operating within. So for example that could be the retail market, the healthcare market, or the hospitality market. You want it to be worth at least $1 billion. But if you discover that it is hundreds of billions, that’s really good!
SAM - Serviceable Addressable Market
Find this by cutting out the first segment of your market; for example, the retail market becomes the e-commerce market.
SOM - Serviceable Obtainable Market
Do a second segmentation so that you have the estimate of the current market that you focus on first.
Either you can present your TAM, SAM, SOM in value ($) or you can put it in the number of transactions or users on your market. If you do the latter, your SOM estimation can be used in your business model slides.
Bonus points if the market is also growing. Then please include that, as seen in the template:
6. The Business Model
In this slide, you explain how you earn money. It is great if you not only explain the revenue part but also explain how that business model comes together with your market estimation as seen in the two following examples.
If you are not yet sure how you will monetize, you can either list your different ideas for monetization or show the first business model you were thinking of implementing.
Please note that it’s important to arrive at the number of $100 million or more of potential revenue. $100 million is the revenue a startup usually needs to be valued at $1 billion--in other words, to be a unicorn.
7. The Team
The most common error by founders for their team slide is not bragging enough. The investors might have no clue who you are, you need to tell them!
Don’t just put the name and the picture of everyone in your team. An investor has no idea if a team is good or bad based on your name and your serious face…
For every person you include:
8. The Ask
In this slide, you tell the investor how much you want to raise and very briefly what you want to achieve with this. This also allows them to see if the investment you’re seeking is within their scope.
At this stage in the process, you don’t need to explain too many details. When you meet, you will talk in greater detail about how you will deploy the capital and reach the goal. Remember that this is a teaser, this is only to make them interested in talking to you.
Download the pitch deck here (available in PPT and Google Slides) so you can edit your own version of this template and start working on how to get investors excited about your startup!