Haje regularly ‘tears down’ investment pitch decks submitted by tech startups and this week he opened up all 85 of the ones he’s done so they are no longer behind a firewall. Check them out for yourself.
Looking through these will be really helpful if you are looking to raise money yourself, but even if you aren’t, as an exercise it’s not a bad process to go through as it forces you to be clear about what it is you are doing, the problem you are solving and your plans to compete and succeed.
I’ve read through the tear downs and have summarised my key takeaways for anyone thinking about raising money themselves.
1. How long should the deck be?
Whenever I’ve been asked to review draft investor decks, often this is the first observation: it’s waaaaay too long. Guy Kawasaki created the 10/20/30 rule which I love:
An investor deck should have 10 slides, last 20 minutes, with a minimum 30 point size font.
In reality, these rules are really hard to stick to. In an attempt to get down to fewer slides, people stick more content into each one, which breaks the font size rule. But even though it’s hard to completely adhere to, as a target it’s not a bad one.
Looking at the decks that were reviewed they were generally in the late teens/early 20s. The shortest deck I saw had 11 and the longest had 31. Personally, I would try to keep it below 15 if you can.
Guy Kawasaki’s article that I referenced also gives an outline of what you should include, so is a great place to start.
2. Keep it simple
In both content and design, simple is best. We’ve all seen slides with half a novel written in tiny font size (see Guy Kawasaki 30 point rule). I’ve witnessed Investor Decks like this myself where I’ve been asked to give feedback.
What I’ve found is that founders who like to produce decks like this, also find it hard to do anything else even when advised otherwise. I think it’s the desire is to give as much information as possible to make your case. But the effect is the opposite because now none of it will be read. If you can keep it short, you have some hope that it will be understood, but writing paragraphs on one slide and expecting that people will bother to trawl through it, means they most definitely won’t.
I also have a sneaking suspicion that for some people, good design doesn’t matter to them and so they don’t understand why it should matter to others. A bit like how I really don’t care about reality TV shows (especially celebrity ones) and so can’t contribute to the debate about the contestants. My inability to grasp it doesn’t mean that it’s not significant to others. If this is you, I really urge you to defer the layout to someone who believes that design matters. And if they say ‘there are too many words on this slide’, take their advice.
An example of this from Haje was Diamond Standard’s $30m Series A Deck. Slides 6 and 9 are especially terrible.
3. The need for a narrative
If you haven’t come across this before, you really should read Andy Raskin’s The Greatest Sales Deck I’ve Ever Seen post. It explains the power of the narrative and how it should be structured. OK, this is a Sales Deck, not an Investor Deck, but the principles are the same: you need to drive the narrative along a simple path so the recipient gets why you exist.
Rather than ‘here is the problem, here is our solution’, take your audience on a bit of a journey. Explain that there is a change in the world and that there will be winners and losers and only the people who properly embrace the change are going to succeed.
When you think about any great talks you’ve heard, I bet they often begin with a story rather than just jumping into an agenda. Simon Sinek has delivered one of the most popular TED Talks ever about the importance of asking yourself why you do what you do rather than starting with the ‘how’ or the ‘what’.
He doesn’t begin his talk by saying “today I’m going to be explaining my concept of the Golden Circle which encapsulates the following benefits for leaders”. Instead he begins by asking why Apple is so innovative when they have the same access to talent and technology as everyone else. He then talks about his own epiphany when he started to find commonalities between what he calls the greatest leaders. This narrative, this story-telling approach, brings the audience along with him on his journey. By the time he gets to the theory, they’re already bought in. That’s what we want from an investor deck.
4. A clear vision
Haje highlighted opening slides that had a strong sense of mission or vision. It has to be bold, but it also has to be meaningful. One example was StudentFinance whose first slide simply had one sentence:
We are building the fintech infrastructure to secure the future and ensure economic prosperity for 100 million people by the end of this decade.
This is both bold and specific. It gives the audience a clear idea what the big end goal is.
5. Traction and Opportunity
There has to be something in the deck that demonstrates traction to date (if you have any) and the size of the opportunity. It’s rare that someone would produce a deck without numbers in it, but they have to support the narrative. There’s no point in just chucking a load of numbers out there if it’s not clear why they matter.
If your narrative is about the size of an untapped opportunity then you want to be able to demonstrate that with numbers: size of the Serviceable Market, number of companies relying on outdated technology (for example), predictions around CAGR over the next few years in the sector you are targeting, etc.
If the narrative is about the historical success you have had to date, then use the numbers to highlight that: YoY growth, LTV:CAC, Net Revenue Retention etc.
In short, don’t think of your numbers page as tick box of metrics you need to show, hoping that the audience will deduce something positive out of it. Instead make them bring your story to life. “We’re the fastest growing SaaS in our sector. And here’s the data to back that up.”
6. Show, don’t tell.
This is a phrase Haje uses a lot and it’s a great one to have at the back of your mind. An example is a company who had a slide with a map with coloured regions. But there was no explanation as to why. It was left up to the audience to make their own conclusions that, presumably, global expansion was the plan. Instead, if they had shown what the plan was over a timeline (as part of this fundraise, or for a future period), this would have been less ambiguous.
Looking at the deck for Prelaunch, there’s a nice example of how they used product shots to illustrate some features, as opposed to lots of bullet points. The slide titled ‘Intelligent Analytics’ is brought to life by it being ‘shown’. Compare that to if ‘Intelligent Analytics’ had been a bullet point with a sub-list of functionality that it provided. If you were being shown that, you’d probably be looking forward to them skipping to the next slide.
7. Product
Which leads me onto product. I think there is probably a mismatch here often between the founders’ desire to show off their baby and the investor’s interest in getting into the weeds. For the Founder: their pride and joy; the thing that they have poured their life and soul into for the last however many months or years and the thing that they are supremely confident in demoing, why wouldn’t they want to spend a load of time on it? For the investor they just want to get to the point. They have to assume the product works and has an interface that people are happy to use. They’re not there to assess your UX (although that could be a turn off if it’s appalling).
What will they be interested in when it comes to your product? Think more along the lines of how effective your product has been at solving a problem. For B2B SaaS it has to do one or more of: saving people money, making people money or keeping them compliant. If it’s none of these then it’s a ‘nice to have’.
So, show how your product makes your customers money, if that’s what it does. If you are creating something that is going to increase your revenue/customer, then show that. If you have several products, show how they amplify one another.
That’s way, way more interesting than a list of features.
8. The ‘ask’
This is a pet peeve of mine. I have written before about the fact that on the slide where you say how much you’re raising, investors don’t want to see a shopping list when it comes to what you are using the funds for. Something vague like ‘add more marketing staff, scale our Go To Market, or deliver on our roadmap’ aren’t helpful.
When in doubt, come back to the narrative and be specific. If you believe that you can continue to grow your business by 200% a year and that’s why you’re raising now, explain that. “We’re going to double our investment in Outbound and Account Based Marketing initiatives, hire 3 SDRs in North America and appoint our first VP Marketing. This will deliver an additional $XXXm in ARR by 2026.”
Two other important points to note:
1. Don’t put your valuation on your ask slide. It may put people off and/or it may actually limit you if you get into a bidding war and can push your valuation higher. Investors will know roughly what sort of dilution is realistic and can figure out an indicative valuation from that.
2. Don’t talk about your exit. It’s likely too early and it’s just wishful thinking at this stage. It’s kind of ridiculous to say that you are going to exit for $1.3bn in 5 years time by selling to Google, when today you are doing $1m in ARR. I mean, who knows, we might all be living on the moon by then.
9. Don’t forget about the competitive landscape
I’m not sure why people miss this out. I suspect it’s to do with either being worried that the competition is better or that it may illustrate the market is saturated, or maybe even that investors will be tempted to go and invest in someone else in the market instead.
Positioning Guru, April Dunford makes the point that any B2B business that has sold a product in a market with more than one vendor has Differentiated Value otherwise they wouldn’t have been chosen by their customers. The key is to work out what that is and how to articulate it.
In your competitive landscape slide, you need to show how you are different/better than the competition for the customers you are serving. If you are part of a Gartner Magic Quadrant then great (assuming you’re in a good position). But assuming you’re not, you can still demonstrate visually where you kick your competitors’ backsides.
10. Don’t have a vague closing slide
One of the tear downs, Honeycomb, had what Haje called a disappointing closing slide where they had the words:
We make the impossible, possible.
It sounds catchy, right? But what does it mean and how is this any different to every other company that is using technology to solve what was previously a tricky problem?
The closing slide needs to be direct, specific and inspirational. Again, I would say think about your narrative. If it’s all about opening up a new channel or market, then reference that in the closing slide. If it’s about expanding internationally, then it should be a nod to those ambitions. Don’t turn your great pitch into a damp squib by placing something meaningless, even if it does sound catchy.