Creating a Compelling Pitch Deck
Focus on who you are going to help...and who needs it most urgently...
One of the most common mistakes that founders make is trying to get to talking about their “widget” as fast as possible. It is, after all, their “baby” and they want to show it off to the world. The problem is, investors look at countless other “babies” every single day and frankly, little sets one apart from another when they look at so many. Hopefully this will help you “rise above the noise”
The Rules
Here are a few rules (and reminders) to follow when you create your Pitch Deck:
Less is More - most first round pitches are limited to 5 and sometimes 3 minutes, so you have to get them to the front of their seat VERY QUICKLY.
Demonstrate Empathy for Your Target Customer - the more your investors feel the pain of your target customer the more of their attention you will get. As quickly as possible get them “feeling the pain”.
The Goal Isn’t a Check - It’s Another Meeting - your pitch deck is NEVER going to get you a check…so don’t even try. Your goal is to create enough intrigue and urgency that you get another meeting.
12 Slides or Less - think of it this way…if you have 5 minutes total, that gives you 30 seconds per slide if you have 10. Again, “less is more, so you need to figure out how to make each point as quickly as possible. If you have more than 5 minutes, don’t add slides, unless absolutely necessary. If possible, make sure the slide makes the point and embellish upon it with your commentary.
The Outline
In my experience there is a particular way to tell your story that is more likely than others to gain traction (again, get you another meeting). Here’s what has worked for me and many of the companies I’ve worked with over the years:
Problem Statement
Vision Statement
Mission Statement
Market
Solution
Team
Opportunity
The Ask
Keep in mind that you’re going to try to articulate all of this in 12 slides or less.
Also, don’t try to answer every question that you anticipate coming from your audience in your slides or your remarks. A great pitch creates more questions than it answers. More questions means they are interested and want to know more.
Problem Statement - this is the “why” for the business…the reason you decided to undertake the torture of building and launching a startup. Being able to articulate a compelling problem with substantial economic value, that you can address will make or break your pitch. This needs to be 10 words or less, and include the following:
Who - has the problem
What - is the problem
Why - the impact of the problem (which creates the urgency)
Example: “X million people are dying without access to clean water”
It may be hard to believe, but your pitch is made or broken with this first statement. This also applies to every presentation you’ll make to any and every other stakeholder you meet. You show that you “get it”…or not…from which they open up or shut down.
Vision Statement - this is an articulation of the utopian view, the “perfect world” that will exist if you solve the problem in its entirety. Again, being able to articulate this “perfect world” effectively creates aspiration in the mind of the investor, that you are going to make a real impact on your market. Again, this needs to be 10 words or less, and include the following:
Who - is realizing the dream
What - problem has disappeared
Why - the impact of the problem which creates the urgency
Example: “A world where everyone has free access to clean water”
Mission Statement - your Mission Statement starts to describe the specific approach you are going to take to “solve the problem”. Here you may start to make reference to specific customers, product framework, outcomes. You have a little more latitude on the length of a Mission Statement, but still keep it tight:
What - are you going to provide
Who - to whom
How - it will alleviate the pain they face absent your solution
Example: “To develop and deliver solutions to Problem X for Customer Y in a way that accomplishes Benefit Z better than what is available in the market.”
Market - quantifying your market is the first test of your credibility. So many entrepreneurs fall into the “billion dollar opportunity trap”, thinking they aren’t investible if they can’t do billions of dollars in sales. While a billion dollar exit is certainly great, not everyone can achieve it, and tens to hundreds of millions is still nothing to sneeze at. Revenue is not always a corollary of valuation, or vice versa.
A good method to use to present your market is the TAM/SAM/SOM framework:
TAM (Total Addressable Market) - the total demand for your product or service if you had 100% market share.
SAM (Serviceable Available Market) - the segment of the TAM targeted by your products/services and within your reach (e.g. geographically, demographically, practically, etc.)
SOM (Serviceable Obtainable Market) - the portion of SAM you can realistically capture in the near to medium term.
Remember that the dollars and market share percentages you present are the first test of your credibility. It’s one thing to be confident, it’s another to say you are going to capture 50% market share in a market where the top 3 competitors combine to own 40%. BTW, this is the “top down” perspective of the opportunity your venture presents.
Solution - finally, after you have built up your audience presenting the magnitude of the problem you plan to address, you can discuss your solution. This can be the most difficult aspect of a pitch, the easiest point in time to get off track with your timing because you’re so in love with “your baby”. There is so much that you can tell your audience about your baby, but it’s critical that you boil it down to the absolute most critical features, in the simplest manner possible. Specifically:
What - is your product or service? 3 bullets talking about how it solves “the problem”.
How - is it different from the competition? How will you sustain that competitive advantage?
Why - does someone need it? How urgent is the need? What is the impact, e.g. ROI?
Team - most investors will tell you that they invest more in the team than the specific solution. They recognize that things change, that pivots and changes of tactics are necessary. The need to know that the team is capable and experienced enough to understand and adapt to those changing conditions. They need to know that the team is resolutely committed to the vision but adaptable with regard to the means of achieving that vision. As with the product/service, it’s easy to spend a lot of time talking about the amazing team you’ve assembled, but again, “less is more”. Key points to make:
Who - are they, what are their credentials and what is their role?
How - much experience do they have?
What - have they accomplished that is relevant to this venture? The more that is quantifiable and at a a scale that equates to this venture’s potential the better.
Opportunity - this is the close, and where you can present your goals more specifically. I usually use this slide to present my “bottom up” view. Typically, you will project 3 years out, but other markets, especially those with long product development and/or sell cycles may require 5 years. Beyond that it’s too much speculation. Key numbers to present:
Product / Solution Sales (for each year) - for your key offerings. Remember to either present or be ready to describe, “X Units at Y Price translates to these Revenue of Z“. Remember to be reasonable in your sales ramp. One of the first questions is going to be “how are you going to achieve those sales?”.
Market Share - what market share do the above projections represent? Be sure to be prepared to defend this relative to your competition (again, be realistic).
Basic Financials / ROI - expenses for COGS, SG&A, etc. to illustrate the profit levels you expect to attain, from which an ROI calculus will take place (and justify or fail to justify your valuation).
The Ask - finally, you have to “ask for the order”, in this case how much money you’re looking for and what you are willing to give up for it. Key elements of this slide:
How - much are you asking for? (don’t get caught up in valuation or share allocation, this gets negotiated later)
What - are you going to do with the funds? BTW, it can’t be 100% to finish the product. It does nothing to have a product and no resources to market it.
Why - should they invest in YOU?
When - is our next meeting / what are the next steps?
The Final Deck
This is where the best of presentations often get derailed. Founders try to tell the entire, complete story, cramming every possible bit of information into the deck. They compound that miscue with lots of pictures, diagrams, pictures, colors, etc. At the risk of sounding like a broken record, “less is more” is especially critical here.
While I learned much of this “the hard way”, there a couple great points of reference that articulate these lessons better than I can. First, there is Cognitive Load Theory (CLT in short), developed by John Sweller in the 1980s. Weller based CLT on the idea that our working memory is limited. If instructional material overwhelms it, learning suffers. CLT breaks down cognitive load into three types:
Intrinsic Load – the inherent difficulty of the material itself (e.g., learning calculus vs. basic arithmetic).
Extraneous Load – the unnecessary mental effort caused by poor instructional design (e.g., cluttered slides, irrelevant graphics, redundant text).
Germane Load – the productive effort invested in building and organizing knowledge (schemas) for long-term memory.
This is further refined and expounded upon in Richard Mayer’s 12 Principles of Multimedia Learning (I’ll let you read that separately). A few simple rules I’ve culled from these article and my own experience:
Backgrounds - NONE - simple white background, maybe a colored header for contrast in your brand colors, small company logo in the bottom right for memorability.
Bullets - there should be NO PARAGRAPH TEXT, only bullet points. Your narrative is the paragraph text. They should fit on one line if at all possible (in read.
Graphics - no graphics unless they truly illustrate a point or help the audience to digest your narrative and the bullets on the screen. Some presentation require images, charts or diagrams, that is understandable, but use them judiciously. A few other points regarding graphics:
Brand Colors - where possible in headings, diagrams and illustrations use your brand colors where highlighting is necessary. If you need other colors in diagrams, chose your colors intentionally and use them consistently.
Fonts - Use sans-serif fonts…again “serifs” require additional processing in the brain to read them.
Long story short, don’t give the audience anything on the slides that requires their eyes and consequently their minds to have to process.
The Actual Pitch
Congratulations if you’ve made it this far in this post…it’s a lot to absorb. I can (and later will) dedicate a post to making the actual pitch. It’s an art in and of itself. For those of you that are reading this because you have an imminent pitch to make, are a few guidelines (some are “cardinal rules”):
Don’t Read Your Slides - this will put your audience to sleep. Don’t EVER read what is on the screen unless it is a quote or key statistic that is absolutely necessary to make your point.
Practice, Practice Practice - for a few reasons… First, to make sure you have your choices of words made in advance to ensure a smooth presentation. Second, make sure your timing is ON! Nothing worse than not having the time to finish or rushing your last few slides. Typically, time is allotted for Q&A, which gets cut into when you go over. Q&A is more important than presenting.
Q&A - this is the most valuable element of your pitch! It’s also where you can get tripped up and lose the “next meeting”. A few bits of advice:
Be Open - you might learn something that will not only improve your pitch but your business’s chances of being successful.
Remain Committed to Your Vision - and the problem you are trying to solve. Don’t defend, not matter what is suggested - it’s intended to be helpful and/or to test your commitment and there’s a fine line between commitment and defensiveness.
Don’t Pivot on the Spot - it says you’ll do anything to get their money and that you aren’t committed to your tactical plan. There are two answers - either “we’ve looked at that option and we believe this is more viable”, or “that’s a good suggestion, we’ll certainly take a look at it”.
Maintain Your Perspective and Remain Positive - it isn’t about convincing every investor (or stakeholder) to align with you. It’s about finding the ones that are already aligned…you have to go through a bunch of “no’s” to get to the “yes”…it’s an unavoidable part of the process.
At the end of the day, remember that very few investors say “no” overtly…they just don’t say “yes”. They do this because they don’t know if you’re the next Musk, Gates or Zuckerberg, they just don’t believe this is the venture that will vault you to that status…and, they don’t want to alienate you if/when you come up with the next Tesla, Microsoft or Meta.