In the past 7 years, I've run 2 startups (sold one, closed the other) and helped scale a global startup program at SendGrid, where we've mentored over 1000 companies. Today I invest in early-stage startups at FundersClub. I must have seen >2500 pitch decks, in the past four years.
Most investors are busy and appreciate precision when it comes to communication.
As a matter of fact, the best early-stage investors know that top founders are great communicators.
It's a powerful correlation. Before I am thinking about your startup, I am already reasoning about your ability to communicate the basics of "why your company, why now". This also impacts the ability to recruit, lead and raise money.
Most founders over-complicate pitch decks.
10 slides are everything you need.
“It is not a daily increase, but a daily decrease. Hack away at the inessentials.”
― Bruce Lee, Striking Thoughts
Many founders are murky about what their business does. You should be concise and precise. On your one-liner, there should not be room for doubt. Skip the intro or cover slide and go straight to the point. Below your one-liner, you should insert a piece of information that shows "extreme-brutal pain".
Stick the knife, and twist it.
EXAMPLE:
PROBLEM: According to the federal government, over 93% of Americans keep coins or change in their houses/pockets/cars. The government estimates that there are almost 80 billion dollars in loose change in the US. Coinator helps people collect, organize and invest loose change.
KNIFE TWIST: If all the loose change in the US were to have their fund, it would be the size of 0.5 x Wall Streets and move close to one trillion of capital on a daily basis. At Coinator, we are building the largest hedge-fund in the world, without having to raise a single dollar.*
"It's people meets Wall St, with loose change. Power to the Penny!"
Founders that build a memorable first impression, usually sustained by a great story on the "why" they decided to start this business, tend to stay in your mind. You don't have to be as fascinating just tell us who are you and why did you start this company.
This is an example:
A. Two friends from [insert school/city/country/company] that were tired of keeping a safe or counting coins and (B.)decided that there should be a simpler way than going to the bank and filling one of these. [Insert image of these coin holders that banks give you, preferably with you filling it].
By now I know what is your product, a little about you and what motivated you to start this company. This slide is the slide that you must explain how it works.
Example: Coinator collects change in digital and physical form. People can use "real-world change" or allow us to withdraw micro-deposits on a daily basis via SMS requests, once they connect their bank account with the app. We have an offline coin station network in 250 locations in 4 cities, which is growing at 30% MoM.
Did you see the little bits and pieces of data that I just "dropped" there?
You should include top-down and bottom-up.
EXAMPLE Top Down: There are over $100B in loose change in the world. We believe we can get 2% of that into Coinator. Given our margins and fees, we would be looking to be a $700M company in 5 years from now.
EXAMPLE Bottoms-Up: We are growing at 10% week over week, and collecting >$1000 in loose change a day. If we continue at that pace, given our margins and fees, we can become a $700M company, 5 years from now.
For a great way to communicate your bottoms-up, read Case in Point.
Time to show, not tell. We receive an absurd amount of decks with pretty slides but no metrics. Or even worse, the metrics come in cumulative charts, without context or in clearly manipulated charts.
Include the metrics that matter for your business, but most important: make sure that they are a clear indicator of growth and at what cost that's happening.
Still to happen the day that a startup does not put itself on the top-right quadrant of their competitive matrix. We get it. But more important than that is to have a slide that gives competitive context. Recently we invested in Waggl. They had one of the best competitive slides we've ever seen.
Drop the matrix, bring in the context.
Be real, talk about other startups and the incumbents. Talk about the potential indirect threats you might have. Being open about risk is not seen as a negative, just makes look like you know what you are doing.
The team is not the #1 factor for a startup. Market and quality of the product come first since they are a step function to success in the first place. Nonetheless, we care a lot about how you met your co-founders and your previous experience. There always is a mutual beer test going on.
You should expect that your deck will be passed around, so don't include confidential information or things you are sensitive to. What constitutes a good summary of the financials deck for an early-stage company:
How do you plan to use the money and where this investment will take you.
On the final slide, you should be transparent about the stage you are in your round (i.e how much is committed), when you expect to close and provide reference checks for clients and other investors. Make it look like we must act now, or you'll be part of our anti-portfolio.
ps- I am not counting your "cover" or the "thanks" slide where you put your contact information in the end.
*I did not research data, this is just an example
As we approach significant milestones at Atman, it is time to have an office again. We are all going to adapt to a hybrid way of doing things.
The compounding power of putting in an extra 6-10 hours a week for the last decade helped me tremendously on the quest towards Munger/Naval freedom.
In this episode, we had a very delightful debate about social causes and how we contribute individually to make a better society.
