“Do you know where we are?” asked Milo.

“Certainly,” he replied, “we’re right here on this very spot. Besides, being lost is never a matter of not knowing where you are; it's a matter of not knowing where you aren't – and I don’t care at all about where I’m not."

How to Pitch Irrational Investors

Venture capitalists are not rational: you have to be at least partly insane to believe you can pick the next Google, Fedex, Netflix etc. There are a lot of great resources out there to help startups create pitch decks for investors, but almost all miss the bigger picture: you have to emotionally connect with investors and appeal to that irrational part of their brain, while at the same time appeasing their rational fear.

Three key principles for your pitch deck:

Tell a visual story. Human beings are visual creatures that like patterns and structure. A graph/picture will always tell a story much more effectively than a page full of text. Try not to put more than a line of text on most slides, team page aside. You also need to hold your investor’s hand through a continuous narrative that is clear and backed up by data. Your basic story should look something like this: 

  1. Intro (one line/graphic on what your startup is and nothing else)
  2. This is who we are (with enough info on each of the core team members such that I sit up in my chair and understand why I should pay attention)
  3. This is what we’ve accomplished so far (# users/growth rates/engagement metrics) 
  4. This is the problem we see (in a bit more detail, maybe even an example)
  5. This is our solution (preferably with a screenshot/demo of the actual product)
  6. This is how serious/big/immediate the problem is (market-size)
  7. This is how we’re going to solve it (go-to-market strategy)
  8. This is who else is doing it (competitive landscape), and why we have an ‘unfair advantage’ over everyone else
  9. This is how we plan to make this a real, big business (monetization plan)
  10. This is what we want from you and what we plan to do with it. 

Keep it short. We have short attention spans. If it’s longer than 10 slides, it’s probably too long. The more slides you have, the longer it takes to get through it and into the conversation with your investor (we like to hear ourselves speak). If you want to include more information, no problem: create an appendix and send it as a separate PDF along with the deck (or better yet, after sending the deck as a follow up).

Pull at their heartstrings. A few key thoughts around team, product and market: First, we’re investing in YOU above all else. Show us why you’re the one who can tackle this problem, and, equally important, that you would be a fun person to work with for the next few years. Be passionate, and let your hunger and enthusiasm show. Second, show us why the pain point that your product/service addresses is so painful – and immediately in need of resolving – that people won’t understand how they lived without your solution. Third, engage our imaginations, and show us a big vision while at the same time being realistic as to how you plan to get there. Finally, be sure to show us the product! We want to see it, touch it, play with it, and understand it. Eventually you’re going to have to get someone to use this product/service – show us why they’re going to love it. 

The ideal pitch:

The ideal pitch is comprised of just three items:

  1. One sentence describing what your business does in simple language. The less adjectives you have in there, the better.
  2. One sentence giving a (real world) example of the pain point you’re solving (why the status quo really, really sucks). People should have an ‘ah-hah’ moment once you say it.
  3. Demo.

It should be so quick, simple, and easy to understand that you can tell everyone: your local barista, the cleaning lady, and that hot girl/guy you want to pickup at a bar. (Really, you should always be pitching).  The beauty of 2 sentences is that you can then pause and let people ask you about it, both (a) quickly revealing what’s unclear about your value proposition, and (b) turning it into a conversation rather than a one-sided attack.

Additional Pitch/Deck Resources:

comments. 11 notes.

Startup Fundraising: Pet Peeves

As a follow up to a request from a friend, here are a few that immediately come to mind:

Pre-Investment

  • Insisting on meeting before sending a deck. I love meeting entrepreneurs, but often there are time constraints and it’s best if you don’t force a meeting without first establishing fit. Also, meetings are much more productive when we can dive into the materials ahead of time and come prepared. 
  • Sending a 50-page business plan before our meeting. While I want info ahead of time, I just don’t have enough time in the day to read a 50 page plan before every meeting. Realize time constraints – and the fact that most investors are illiterate – and send a short 10 slide deck instead. Plus, detailed business plans are mostly useless anyway. 
  • Not letting us keep the deck. Do you trust the investor you’re pitching? If not, don’t pitch them. I will not share your deck without your permission. You not letting me keep it hinders the due diligence and decision process I go through with my partners. I’ve seen this practice derail many a financing.
  • Not knowing the focus/interests of our firm and partners before reaching out. Most VCs have a very specific focus. I won’t invest in a pet grooming franchise, so please don’t pitch me one.  You can easily figure out what I care about by googling me, checking out my firm’s website, and taking a look at my AngelList profile.
  • Asking me to sign an NDA. This has been covered many times. Don’t do it.
  • Not being transparent about the syndicate. This is a controversial one that deserves more discussion, but not being open to sharing certain information is an easy way to start off our relationship on the wrong foot. 
  • Not giving investors enough time to do proper due diligence. I generally can’t and won’t make a decision in 24 hours. The best thing to do is to establish a relationship early, and give us advance notice of an approaching deadline.
  • Not making the pitch/presentation a conversation. Most investors have a very short attention span (I was never good at paying attention in lectures). When you pitch an investor – formally or in an elevator –, pause after each slide or thought, and try to engage your audience. Don’t be afraid to let them hop in, and just be prepared to ask them if you can address a non sequitur question later on.

Post-Investment

  • Not keeping investors looped. If you don’t send us updates on at least a monthly basis, we can’t help you, and you’re no longer on the top of our minds when we meet potential hires or strategic partners.  A great example and writeup on this topic can be found here. You don’t have to spend more than 30 minutes a month on it, and it’s a highly worthwhile investment.
  • Not sending materials well in advance of a (board) meeting. Board meetings can quickly shift from awesome to terrible – regardless of content – if you don’t prepare properly, and don’t get to the main points fast. I’m not yet an expert on this, but I’ve seen that the earlier you send materials the more prepared and engaged your investors can be.
  • Not being super transparent about numbers. This happens rarely, but it’s surprisingly easy to fudge or float over key numbers and metrics when you want to avoid conflict. Take the high road and be transparent - it will help us better help you.

comments. 40 notes.

Juventas Fugit  is designed and written by Justin Wohlstadter, who, when not writing in the third person, can be found in a coffee shop talking about startups, thinking about the future of education, and generally procrastinating something important.

  • Passions: startups that positively affect the world, education innovation, good design, learning, and meeting those with an equally insatiable curiosity.
  • Play: director of product design at Enterproid and partner at BOLDstart Ventures.
  • Previously: built the early-stage venture arm of Penny Black. And many other crazy, less successful ventures involving fire extinguishers, measuring philanthropic impact, and creative spaces.
  • Pedantry: most of the important stuff I taught myself or learned from friends, but I’m fortunate to have (barely received) degrees from Harvard and Oxford. At Oxford I wrote my dissertation on how internet innovation will disrupt access to higher education.
  • Procrastination: can be found on Twitter, Linkedin, AngelList and other web spaces, and be reached via email at my first name at this domain.
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