Note: This post was co-authored by Tomas Reimers. (Medium won’t let us add co-authors.) Definitely check out his profile!
After our previous post on the questions we ask founders, some readers asked us to discuss how successful founders address the questions in their pitches. We thought we’d take some time to flesh out the ideas a little more, and suggest how to convey them in your deck.
For everything that follows remember not to worry too much about design. We care more about your ability to design your company — not your deck. (But, if it’s really pretty…)
Inevitably every deck starts with a title slide. It’s simple & clean: just name and logo. Sometimes founders include who they’re pitching to as well, especially if they’re tailoring the deck to each VC.
Most pitches start with something like: “Hi, we’re Startuply, this is where we go to school and what we study.” Some folks just say their names at the beginning and then list their credentials at the end if they really want to focus on the company (or downplay the team). You should include team members, roles, current occupation / school, and maybe past internships / jobs.
We care more about whether or not you have the expertise, insight and hustle to pull off the startup than we do about flashy titles / work experience. Though the halo effect is definitely a thing, you’re always better off if you can simply connect your background to what you’re working on right now. Likewise, fancy titles — looking at you Mr. VP of Happiness — are unnecessary; just tell us who does what.
If you start with the team slide, remember that we’ll see the rest of the presentation through the lens of “who you are,” so this is a great opportunity to establish credibility.
Also, definitely include how the cofounders know each other and if you’ve worked together in the past . Cofounder dynamics can play an important role in evaluating a super-early stage team.
Also called the “Problem Slide,” this is where you let us know what you’re working on. At an early stage, most companies are anchored around a narrative: “this is why we’re passionate about the space” or “this is how we discovered the problem.” So, build pathos and then…
It’s surprisingly easy to trick yourself into believing that something is a problem when it’s not. We like to see slides that try to estimate the severity of the problem. You don’t have to use terms like “Market Size” or “TAM”, but it’s nice when there are numbers backing your claims. How many people does this affect? How badly does it affect them?
That said, if you have detailed financial models, it’s often best to keep them in the addendum, especially because these are often quite hand-wavy at an early stage. In any case, teams don’t usually have time to walk through a whole spreadsheet and can only go over 1 or 2 numbers — maybe TAM and beachhead size (size of starting market / foothold). That said, if your estimates seem way off, we may dig in at the end.
Keep in mind that the worst founders are self-delusional. Why is it rational, given your personal preferences, for you to work on this?
If you’ve thought deeply about the problem you’re solving, and find it compelling enough that you’re willing to dedicate years of your life to it, you should be able to convince us you’re not chasing stardust fairly easily.
About your company
Next we’ll want to know how you’re going to solve the problem. Try to keep this concise. Focus on the high level first, and then explain details as necessary. This doesn’t mean we don’t want to hear the details — we do — just that you shouldn’t get lost in the weeds in your first pass. Especially if your product is technical, you should be ready to do some teaching / address very specific questions on a second pass.
Also, be ready to explain why you’re doing what you’re doing. The best companies have carefully tested different hypotheses and versions of their products. What is the logic behind your intuition?
Go to market
So you’re solving this problem, and you’ve got a viable solution to it… How are you going to get your first users and start to scale? We’re looking for market-specific, insightful approaches to growing your user base. If all you’ve got is “content marketing and facebook ads,” you’ll need to explain why you believe it will work well for your startup specifically. (And why you’re likely to be better at it that competitors doing the same thing.)
The most insightful founders are often able to leverage specific dynamics of the markets they’re tackling in their business strategies.
It’s also a good idea to chat about CAC, LTV and give us a reasonable idea of how your plans are sustainable.
Remember that selling to whole organizations is almost always more difficult than solving a problem for a small group of users within your target user base, and allowing product usage to grow organically. At least for the moment, most early stage startups aren’t in a position to hire mammoth sales teams à la Wolf of Wallstreet (looking at you, Zenefits). Remember to tell us specifically who at the organization you’ll be selling to; the names of your customers alone won’t carry the conversation.
If you’ve already released (more common to see in logistics companies where the core value is ability to get traction and not conceptually difficult technology), definitely go into what traction you’re seeing so far. People measure traction with: users, pageviews, interactions, transactions, conversions, churn, revenue, etc. Please distinguish between paying users and non-paying users.
If you’ve already got traction, you may also want to swap this slide with go to market, and use the time to show off your pretty up-and-to-the-right projections for future growth.
Bonus: If you have any customers who demonstrate your credibility, definitely mention them.
This isn’t a slide per se, but if you have a demo, definitely don’t be shy! We like to play with things, so show us what you have. If you’re worried about your ability to explain the product without the demo, keep this slide somewhere in the middle of the deck. Otherwise keep it at the end. Sometimes VCs end up asking a lot of rabbit-hole-style questions which can use up precious pitch time / break down your momentum / beg questions which you intend to answer in later slides anyway.
It’s our responsibility to know startups. When you pitch us, one of the questions we’ll ask ourselves is who your competitors are, and how likely you are to outcompete them. Definitely feel free to address this upfront. If there are “no competitors,” you should have a good reason for why. Remember that competition isn’t intrinsically bad; sometimes it can help your case by demonstrating the validity of the market.
A lot of people like to do this comparison with the classic consulting 2x2 matrix. Pick 2 attributes, plot them, and explain why the competitors are different from you. We’ve also seen folks use Venn Diagrams. If formulating your thoughts like this helps you, go for it, but remember that we care more about your reasoning than the presence of a pretty graph. Personally, the notion that 2 dimensions can usefully capture the subtle differences between businesses is a little fluffy… so definitely be prepared to go into more detail than “we are better at social, but also at business, as this graphic clearly shows.”
Remember that defensibility goes hand-in-hand with competition. Once you start proving that your product is valuable, what’s to stop others copying you and stealing your users?
Talk about where you’re going. When do you plan to launch? Privately? Publically? Are you working on this? Full-time? When do you scale the team? What benchmarks do you intend to hit in the upcoming future. What are you eating for lunch?
We also love to hear about your proudest achievements of the last three to six months. What’s your momentum like? How hard do you hustle?
Advisors / Partnerships
A lot of teams like to go into their advisors and partnerships. This slide is basically an extended version of the team slide. Many folks merge the two. Keep in mind that for hard science startups, advisors are normally very important. And in general, if it’s clear that your background doesn’t fully fit the narrative of the problem you’re trying to solve, who on your advisory team has the experience to complement yours?
This slide can also be harmful if the advisors you’re working with aren’t notable.
Budget & Ask
Having shown us everything, what are you asking for? Both in terms of capital and other resources? While our primary use is capital, we can be helpful in terms of exposure, network, advice, advisors, etc. Because both of our funds are mission driven and have a mandate to help students, often before they’re ready for institutional investors, it’s nice to know that our investment / partnership with you will meaningfully impact your business.