How to modify your investor deck to A round
Written By: Tal Dekel, Allon Sasson, Gal Shefer
In the previous article, we’ve explained why it is important to tailor your investor deck to the specific fundraising stage of your startup in order to improve your chances of getting an investment. We addressed three different phases of the fundraising rounds — up to the end of the Seed phase, first round (A) and later rounds (Growth).
We have defined for each stage the four necessary elements (marked green) in that stage, focusing on which best meet the expectations of the investor, and we have also shown the ranking between the various stages and the necessary components, as can be seen in the following drawing:
If you came across, you are probably in the A stage round, then just for you we have written the following detailed report describing each of the presentation components necessary for this stage, and the two “backup” components.
The necessary components in the A round investment stage:
Round A is a critical stage in the company’s life cycle — the stage where the you meet with serious funds. Startups that are in these stages have a detailed list of expectations from it, in terms of product maturity, realistic business plan, transition from production costs (BOM) perspective to cost of sales (COGS) and one or two major customers who were willing to pay for the “pleasure”.
At this stage, the entrepreneurs need to show how they plan to implement the program, in which channels they will reach the market (Go to market), how the solution is suitable for its customers (Product market fit) and if possible —gain feedbacks from the customer (Voice of the customer). If the intention is to produce a Disruption in the market — that’s the time to introduce it.
Value
What does this component include? The contribution of the product, from the customer’s point of view. Customers at this point are innovation endeavors, so its important to present the value they see in your product within the evolving problem world they solve. It is advisable at this stage to also discuss the customer’s KPI and try to quantify the value offered for them, as part of the overall value chain they provide.
Why at this stage? That’s it, the stories are over. You have reached the real world — boarding a plane, meeting customers, creating marketing channels, meeting the competition in your field in real F2F… If you do not bring value, you fly out of the game.
Tip 1: It is desirable that the person who testify to the value will be a reputable customer in the market, for example one of the 10 largest manufacturers or service providers in the target market.
Tip 2: If there is an evolving regulation in the field that is expected to increase the value of your product — its time to point it out.
Business Plan
What does this ingredient include? A description of the value chain in its business aspects: costs, risks, pricing. Expected to describe the distribution channels and logistical questions (such as how the product reaches the customer). It is very worthwhile to show how your business model fits the customer’s business model, and if it is a disruption in his business model it is better to give an example to a customer who was willing to make the change.
Why at this stage? The investor wants to see seeds of a real business, i.e. the ability of the product to adapt to the market not only in the technical aspects but also in the ability to generate revenues. Customer involvement at this stage indicates maturity and allows entrepreneurs to target and filter features for those who make money compared to those who are nice to have.
Tip: Do not display PoC or receiving a grant as a success sale. Get out of the comfort zone and close one good deal. A story of how you did it is worth more than 5 slides on your future to take over the world.
Competitors
What does this component include? Who else is playing poker around the table? Competition at this stage is significant for investors. Start from the assumption that the investor has several options and must choose with whom he puts the money. The analysis of competition in its view should be multidimensional: development costs, your focus compared to that of the competitors, technological barriers, market barriers and differentiation of each competitor.
Why at this stage? This is a good time to examine the competition: if there is no competition at all — perhaps this is an indication of a lack of need. If there is a competition and the developer does not know it — this is a different kind of problem…
Tip: Do not try to reduce the competition. Good competition = a good market is not a cliché. There is room in the market for several competitors, and not everyone will want or be able to purchase the competing product.
Opportunities
What does this component include? Timing is everything! Why you? Why now? What has happened or is expected to happen soon in the market that makes your customers have a strong need to adopt your solution? Is this a trend that is sweeping the market or a new regulation that creates an opportunity to integrate into existing solutions or replace them? Perhaps a significant acquisition of one of the great players that left others unprepared?
Why at this stage? Until now you may have been in a search phase. You should now have a relevant solution that is expected to be a promising offer in the market. Missing an opportunity now may prevent you from getting to the next rounds.
Tip: Creating a sense of urgency is important at this point, but not at the expense of credibility. A serious investor will easily recognize an opportunity that its emphasis is “marketing” rather than real business.
Why did we mark Team and Investment required as backup components for this stage?
Relevant management team is an asset if it knows how to support this funding phase — working with clients, meeting client requirements or selling to an enterprise.
The A round of fundraising is the most expensive for the entrepreneurs, so the breakdown of the investment should explain how you will reach the next round in a much better condition, when all the new sales components are weighted into it and allowing the company to achieve new milestones.
If you have additional insights that you’ve identified in regards — please do share it with us.
You can examine investors decks of hundreds of past and present startups, including companies such as LinkedIn, Google, MySQL, Airbnb and many more — click on the link here
So far for this time…
הגרסה בעברית: https://www.alsa.co.il/fundraising-presentation-seed/
Gal Shefer is living in the worlds of technology for over 12 years, consulting growth start-ups, was an innovation scout for a global auto-maker and worked in a growth stage VC. MBA with honors.
https://www.linkedin.com/in/galshefer/
Allon Sasson is a consultant on entrepreneurship and business development, with many years of experience in research and technological strategy at the Prime Minister’s Office. MBA with honors.
https://www.linkedin.com/in/allon-sasson/
Tal Dekel is a senior innovation manager at BOSCH GMBH and an entrepreneur who accompanies start-up companies in the early stages of working with corporations. Tal is currently working on a PHD thesis on the benefits of open innovation and the involvement of international corporations in remote ecosystems.