Here’s a hot tip for your pitch deck: try to make it fail before sending it to a single investor.
The reason? Investors are a finicky bunch. They like to reject pitches quickly and send hopeful entrepreneurs on their merry way.
It’s not because they’re jerks (or not usually). It’s because they’re busy. Seasoned investors get a lot more pitches than they could ever handle. As a result, they don’t spend more than a few minutes studying pitch decks, even for the companies they end up funding.
The job of your pitch deck is to get a fair hearing for your startup. You want investors to read the whole thing. That’s all. If your deck accomplishes that much, you’re halfway to Vegas.
In order to get a fair hearing, you wanna account for all the obvious and subtle ways in which typical pitch decks fail. That means critiquing your deck like an investor. For example, since brevity in pitch decks is important, you could remove a slide to test whether the remaining slides make sense. If the whole deck unravels like a ball of yarn, then you know that slide is a keeper. If the deck holds up, you drop the slide.
Of course, investors don’t operate by pure logic and rational thinking. The truth is, every venture capitalist and angel investor has passed on a company that he or she later regretted. All because of something they couldn’t see. The oversight usually comes down to one of these reasons:
Market
No interest in market. Most investment firms and angels stick to particular markets. Check what markets they invest in before contacting them. No expertise in market. It’s too risky for investors to fund companies in markets they don’t understand. Instead, they limit themselves to markets in which they have experience. Addressable market is hazy. The total addressable market (TAM) should be a quick metric to locate. If the investor disagrees with your calculation of market demand, he or she may stop reading on the spot. Market already covered. Investors usually balance their portfolio so that one sector or market never becomes too important. Market is capped out. This may be related to TAM, SAM (Service Available Market) or SOM (Service Obtainable Market). Sick of your market. It’s them, not you… really. Tech bubble. It’s very hard to get around this objection without doing a deep dive into economics . One clue about their feelings might be if their investments have been declining year over year. Too late. Investors may sense a changing of the tide, new technology or user habits that make your product obsolete. Too early. Investors think the necessary supporting infrastructure for your product (e.g., 100% self-driving cars in 2016) isn’t available. Opportunity isn’t big. Your product might become the #1 in a deeply fragmented market (e.g., Underwater Pyromaniacs”), but not big enough to convert the masses.
Product
No MVP. Investors will say no if you haven’t built, tested, and learned from at least one minimum viable product . No obvious unfair advantage. Investors are skeptical of any company they think is missing an unfair advantage . It means vulnerability, which is a revenue killer. No revenue stream. Investors are leery of products that have yet to attract paying customers. They know most free users will never convert to paying customers. No traction. Investors often have VERY different definitions of traction than startup founders founders. If you can’t demonstrate traction, they won’t be convinced that their money will solve for the problem. No social proof. Social proof is a key component for swaying investors to take the next step. Your pitch deck should include some combination of glowing testimonials, massive social shares or virality. No proof of concept. Some investors want to see documented studies to back up your product’s claims. No patents. Patents are one way investors protect their money. If your product is truly unique, a missing patent raises a giant red flag. Non-defensible technology. Investors like the companies they back to have enough of a technological head start, that rivals and upstarts won’t be able to duplicate them. Oversimplification. While investors like simplicity in a product, they don’t like it TOO simple. That’s to say, it should probably look simpler than it really is, otherwise anybody can come along and disrupt you. Bad targeting. Your product hasn’t distinguished itself sufficiently in a crowded market.
Pitch Deck
Too wordy. The dense copy in your deck may signal to investors an overly complex product or an inability on your part to isolate the big problem. Too long. Your pitch deck should be as short as possible, but as long as necessary to make your best case. Remember, the lizard brain’s attention span is about 8 seconds. All hype. Investors have sharp BS detectors and nothing soils a pitch deck like Barnum n’ Bailyesque shouting. Boring first slide. Start your pitch deck with a bang, so they want to see the second slide. Deck drags. Your pitch deck is not a novel, with an introduction or extended back story. Say what you have to say quickly ; cut right to the chase. Vanity metrics galore. Vanity metrics have no place in pitch deck. Investors can spot them easily and will think you’re a rube for including them. Plain ol’ ugly. Ugly design is a turnoff to investors; it hurts attention spans and comes across as mildly insulting — as if you didn’t think enough of them to pretty it up. Zero charts, graphs, diagrams and pictures. Investors think hard all day; they don’t wanna expend brain cells on reading if they can get by using visuals. Missing appendix. Investors want to look deeper into companies they’re interested in. Give them that opportunity early, by including an appendix. No story arc. A pitch deck that tells a story by tracing your journey, is more likely to pull investors in. Stories get investors emotionally committed to startups. No unifying thread. A pitch deck has to work as a whole package. Jarring, disparate slides are confusing and make investors question your vision. Ripoff idea. Investors are not interested in “me too” offerings. Your pitch deck has to be different from other ideas by at least 25%. Product described as “X for Y.” This description still works but it’s overused. A lot of investors have heard this so many times that they assume the presenter is full of it. CTA is missing. Not a huge problem, but investors expect you to come right out and ask for the money. Never play coy or forget to include a call to action at the end of a presentation. No teaching moment. Investors are life-long students. At minimum, your pitch deck should teach them something they didn’t know as a reward for reading it. Awkward analogies. Analogies are supposed to make ideas easy to understand. The problem is that they’re subjective, and open to debate/arguments. One long analogy. Analogies should be used in certain places to drive home a point . Investors will think you’re living in a hypothetical fantasy world if you extend the analogy too far. See no risks. All products carry risk and it’s your job to honestly identify them. Investors will notice if you leave them out of your pitch deck. Competitors are MIA. Like risks, all products face competition. Investors will think you’re blind or sleazy if you don’t include them in your pitch deck. No solution for risks. Investors know how hard it is to build a successful company. They want to see some indication that you have the tenacity and drive to overcome hurdles. “Reason Why” isn’t compelling. Your mission statement (“why this matters”) doesn’t excite investors, or tap into a larger trend (“ Open Source freedom!” ). Problem isn’t painful. The problem you’re solving for isn’t in the Top 3 issues for your users, making it easy for them to ignore your solution. Flawed go-to-market strategy. Investors see fundamental problems in your distribution plan (e.g., mail order ice cream). Unrealistic valuation. Maybe you’ve raised money before. Your valuation should represent the added value, with demonstrated facts. Too vague about money plans. Your pitch deck should make it absolutely clear where the new money will go (e.g., hiring 6 full-time engineers, office space in SoMa).
Founder/Team
Don’t like you. If you offend them in any way (e.g., joking about green technology), they may pass before even considering your deck. Read up on all the people you’ll be presenting to. Founder’s paycheck. Investors aren’t keen on founders who pay themselves above and beyond the “normal” rate. Point blank: they don’t want to fund your lifestyle . No reputation. It’s easier for investors to say no to a stranger than it is to an acquaintance or friend. Bad reputation. Investors may not even open your email if you’ve burned a few bridges. If your reputation stinks, start repairing it now. Technology team is weak. Good coders are rock stars . If your tech team doesn’t have an impressive resume, investors will probably think you’ll have trouble attracting top talent. Think you’re unteachable. This is particularly important for investors who actively advise the companies they fund. Help wanted. It’s always harder to get funding if you still have key positions to fill. Key people not on your team. Investors are leery of founders without technological expertise or deep sales experience. Team lacks experience. Startups face all sorts of hazards, that can’t be predicted. Veteran founders can at least draw from their experience. Investors always prefer their founders to learn on someone else’s dime. Team of strangers. First time collaborations are shaky because of the stress and strain inherent in startups. A team that’s worked together before has already overcome the tricky human side of business.
Investor quirks
Too busy. Not much you can do here but scream “Fire!” Investors miss out on a lot of companies because they’re bogged down with other projects. It sucks. Wait n’see game. Investors have a lot of moving parts, with money tied up here and there. Their interest in you probably is dependent on how their portfolio companies are doing. No faith. They don’t believe you have the ability to scale up, convert, navigate the market hazards, etc. No FOMO. Fear of Missing Out (FOMO) is a powerful persuader. If your pitch deck lacks inevitability that this WILL happen, getting funded is gonna be a hard sell. No end game or exit. Some investors want to know where you see the company going 5, 7, 10 years into the future. If you don’t “know,” they’re not interested. Asking for too much money. This comes down to valuations and they’ll wonder why you haven’t been more eager to bootstrap and get creative. Money doesn’t solve every problem for startups. Reference person is a bum. Fact: you’re judged by the company you keep. Investors give less weight to warm introductions from people they don’t like or respect. Clashing investment styles. Investors expect you to research them before contacting them. If they see in your deck a business plan that contradicts them, they’ll pass. No cannibalizing rule. Investors will back your startup if it directly competes with one of their current companies. Fear of going first. Some investors will be afraid to be the first to invest. They think if nobody else has funded you, there’s probably something wrong with your product. These investors lack confidence in their own skills. Late to the party. Investors have fairly exact timelines for when they’ll invest in a startup. Once past that timeline, they don’t see much of an upside. Normal personality. Some investors like a delusion, megalomania , and anger in founders. If your pitch deck presents you as normal, they might take a pass.
Whoa, that’s a mouthful! No need to nail everything on this list, some of it probably doesn’t apply to your startup anyway. The point is, by trying to make your pitch deck fail, you’ll end up making it 67X stronger.
