The Pitch Deck Roadmap Tool for Every Startup
Our goal at 10xU is to help entrepreneurs launch and scale their companies rapidly. This often requires raising money to accelerate growth. But the fundraising process can be confusing, and it’s hard to get a straight answer — or even an actual “no” — from investors. There are lots of templates online, but nothing that tells you how to improve your specific slides. What founders need is a pitch deck roadmap.
So we’ve created one. You can grab it here for free.
You can use the 10xU Pitch Deck Roadmap to quickly identify where your strengths are, so you can:
- Highlight your startup’s best attributes in your pitch.
- Fill in any missing info that you already have.
- Identify opportunities to improve your business over the next few months.
What Investors Want
Professional investors may look at 1,000 startups per year — and invest in three. How do you make sure you stand out?
The secret is to show investors that you’ll make them rich. This means reducing the amount of risk — by increasing the amount of validation that your plan will work.
At 10xU we call this, “Show, don’t tell.”
You can expect to have several conversations with anyone who eventually puts money into your company. People invest in patterns, and your first meeting is simply one dot. Your next few meetings create your pattern — so your job is to actively manage this process.
Always show up talking about new things you’ve accomplished without the investor’s money. This creates FOMO while also highlighting your hustle.
We recommend always running the “No money plan” while you’re out raising money. We’ve seen successful entrepreneurs sit down ahead of time and create a calendar of good news that they’ll talk about during the raise.
The short story is that great companies are able to raise money — so how do you create a great company?
The Pillars of Startup Success
First, we took data from CB Insights on why startups fail and mapped it to six main areas of focus to help startups not only succeed — but grow exponentially.
The six pillars of startup success are:
- Vision — Solves for “Lack Business Model” and “Get Outcompeted”
- Product — Solves for “No Product / Market Fit”
- Execution — Solves for “Not the Right Team”
- Growth — Solves for “Poor Growth Strategy”
- Investment — Solves for “Run Out of Cash” and “Pricing/Cost Issues”
- Technology — Solves for “Poor Product”
These form the foundation of our 10xU roadmap. We believe in these six pillars so much that we built our entire Cobuild Course around them!
We want to help entrepreneurs find the path to success, while avoiding as many of the pitfalls as possible. One of the founders we work with says it best:
“Starting my own business is like being lost in the ocean in the middle of the night. I have no idea which way to swim to get to shore.”
These six pillars are the roadmap, and they also complement the approach of our colleagues at the $150M Rokk3r Fuel fund. We want to be able to share information back and forth with them about the startups we’re both working with.
So now that we know where we’re going, how do we get there?
What Investors Say
The thing about investors is that they often won’t say “no” if they’re not interested. Instead, they’ll say things like “Please keep us updated on your progress,” and “Let’s re-connect in six months.”
Those are actually examples of investors saying no, but it doesn’t feel that way. That’s because investors don’t want to shut a door on something that may eventually turn out to be awesome. So from the investor perspective it’s better to defer.
This makes it hard for entrepreneurs to get detailed feedback about their pitches from investors.
We created the 10xU Pitch Deck Roadmap to help. It highlights areas where a company is strong, uncovers things that founders may have accidentally forgotten to include, and lets entrepreneurs know where they need to focus on making changes to the actual business.
The Pitch Deck Roadmap
So now that we know what investors look for — along with what makes startups successful — we can use the 10xU Pitch Deck Roadmap to see both strengths and areas for improvement. Once we know our strengths, we can re-organize our pitch decks to focus on them while minimizing the opportunities for improvement.
Here are the results when we ran a test on Front’s pitch deck for their Series A raise:
The goal is to give the entrepreneur a map of what their pitch deck is telling investors, not to be confused with the actual strengths and weaknesses of the company. In fact, our summary often reminds entrepreneurs that they simply forgot to include great information that they already have.
The goal isn’t to get 100% in each category, but rather to understand where the strengths and opportunities for improvement are. So the results are typically:
- See which strengths to focus on
- Uncover existing information that should be included
- Determine where to focus on improving the business over time
It’s exactly the feedback that founders want when they pitch investors, but often don’t receive.
Here’s a video walkthrough of how to use the 10xU Pitch Deck Roadmap:
A More Detailed Pitch Deck Roadmap
In order to refine our pitch deck mapping system we further detailed each pillar. Here are the attributes of successful companies, along with a brief description of each:
- Story — Does this company have a compelling massive transformative purpose that will attract the best talent, customers, and investors?
- Problem — Is this company tackling a proven problem, meaning competitors exist with real revenue already exist and/or the founders have done extensive customer validation interviews? Counterintuitively, companies that tackle proven problems tend to be the most successful.
- Competition — Does the investor get a clear understanding of this company’s position vs. its competitors? The answer is often no, which is a red flag. The most promising startups have competitors and can clearly articulate how they differ.
- Solution — Is this solution 10x better than existing solutions? Ben Horowitz famously states that your solution has to be so much better that people are willing to go through the pain of changing their behavior. It’s tough to win with only a marginal improvement unless you’re already an established player. The point of an MVP is to deliver one thing that customers value so much that they’re willing to put up with a crappy experience, which you can improve over time.
- Business Model — Does this company have a proven method to make money at scale? We see a lot of pitch decks where the idea is to build a big audience and figure the revenue out later, but this usually doesn’t work. Even Facebook knew how they were going to make money, and it’s still incredibly expensive to build a free audience large enough to generate meaningful advertising revenue.
- Team — Is this a rock star team with founder / market fit, diverse skills, and preferably at least one person with a previous exit. This is often the #1 thing investors look at, especially in early-stage companies. Vinod Khosla recommends using equity to attract and retain “magnets.”
- Advisors — Does this company have world-class advisors with relevant experience? Reach out to leaders in your field until you find some who will help you. This has the benefit of forcing you to keep improving your value proposition along the way.
- Advantage — Is this company creating strong barriers to entry in terms of unique selling proposition, unfair advantage, IP, etc? Or can it be easily copied and outcompeted? Nir Eyal points out, “There are only five ways to defend your market from competitors: economies of scale, network effects, regulatory protection, brand, and habit.”
- Market — Is the potential market large and growing? Is it clear who the early adopters will be? Think about Uber going after the entire taxi / black car market, and first targeting young techies in San Francisco and New York City. Smart investors look for rising tides that will lift all boats — which reduces the risk that this particular company won’t be well-run.
- Marketing plan — Does this company know how to acquire customers at scale? Smart entrepreneurs have already done marketing tests and figured out channels that do and don’t work, along with CAC (cost to acquire each customer), churn (what percentage of customers leave each month), and LTV (average lifetime value of each customer).
- Traction — Has this company found product / market fit, with evidence in the form of strong KPI growth (engagement, revenue, etc.)? Marc Andreessen famously states that a startup’s only job is to find product / market fit, and that you’ll know it once it happens because it feels completely different. Your goal as a startup is actually to create a working business model — not simply a great product — and traction is the proof that you’re succeeding.
- Exponentiality — Does this company have a solid MTP, the potential for engaged community, access to shared resources, and/or is it creating and utilizing big data? We’re particularly obsessed with exponentiality at 10xU because it allows smaller teams to have an out-sized effect on the world.
- Buzz — Are there lots of happy customers and/or articles in the press? The most effective form of marketing is word-of-mouth, and investors often want to talk to actual customers as part of the due diligence process.
- Technology — Has the company created awesome technology (if applicable)? Is there a strong development team, preferably in-house? A startup’s access to great product managers and developers, along with its process for running sprints, determines its success over time. Assessing this area usually requires due diligence rather than simply looking at a slide in a pitch deck.
- Current Investors — Are world-class investors with relevant experience already involved? In their pitch deck, Front lists Stewart Butterfield, the CEO of Slack, as an investor in the current round. Think of how getting into Y Combinator or Techstars can set a startup up for future success.
- Financial Projections — is there a clear, achievable path for the planned use of funds to generate at least 3x the valuation for the next round? It’s harder to find investors when you’re saying, “Give us the money and we’ll figure it out.” It’s easier to raise money when you’ve already built the rocket ship and you’re just asking for fuel.
- Growth Potential — Does this company have the potential for an IPO or other large exit by being acquired? Professional investors are looking for big wins, because they know that most of their portfolio will turn out to be losers. Friends and family, on the other hand, may be more willing to invest in you personally regardless of how big the opportunity is.
- Burn Rate & Runway — How much money does the company burn through each month (total revenue minus total expenses), and how many months before they run out of cash? Investors want to know that their money is being spent wisely on things that will maximize success.
- The Ask — Is the company making an appealing offer, with attractive terms and valuation? Startup investing is a market like any other, which means investors are usually looking for reasonably-priced deals. In the same way that you can’t make up a price when selling your home, you’ll want to be in the same neighborhood as other comparable startups in your area. Ask your lawyer to provide some insight, since she sees deals all the time.
Is It Awesome? And Is It Proven?
We use a scoring scale of zero (least) to three (most) for each attribute. This intentionally doesn’t allow a neutral score — because zero and one skew toward “least” while two and three skew toward “most.”
We then score each attribute on a combination of “Is it awesome?” and “Is it proven?”
- Is it awesome? How amazing is what this company is doing, especially compared to the 999 other pitch decks we’ll look at this year?
- Is it proven? Does this company have data proving their claims are real? Your business plan is actually a set of hypotheses and your job is to validate them or pivot when needed.
Here’s the drill-down for Front’s pitch deck:
Again, the goal isn’t to get 100% in each category. In fact, Front used this pitch deck to successfully raise their $10 million Series A round without mentioning a single world-class advisor. But they were strong in most of the categories, and had data to back up their claims.
Strengthening Your Pitch Deck
Our pitch deck roadmap gives you a quick snapshot of areas where you’re strong, as well as areas that could use improvement.
Sometimes “improving a pitch deck” means re-working a slide or two. You simply forgot to tell part of your story, or to mention some data you already have. That’s easily fixed in a few minutes.
People connect with stories, so you definitely want to spend some time giving your pitch a story arc that gets your audience excited about what you’re doing. You win when you make them feel emotions, especially passion.
Other times “improving a pitch deck” means actually working on parts of the business. It may take weeks or months to design effective experiments and collect the data you need. You may need to find and work out an equity deal with a co-founder. You may need to acquire your first paying customer and build a pipeline of ten more qualified leads. You may need to run several two-week marketing sprints to figure out which are your most effective customer acquisition channels along with CAC (cost to acquire each customer).
Show Don’t Tell
The main thing is “show don’t tell” wherever possible.
Lots of entrepreneurs say they’re going to change the world (just as soon as they get the money).
Very few entrepreneurs show they’re already successfully changing the world.
Investors love this second group precisely because they’re so rare. Remember that angels and VCs may look at a thousand pitches each year and invest in three.
One thing we didn’t include in this model is weighting the different categories according to their importance. For example, most investors consider the team to be more important than the solution and the business model. A good team can pivot and still succeed.
Vinod Khosla says that he will almost certainly invest in a startup if he’s impressed enough by two of the founders that he can picture himself investing in their next companies, regardless of what the current business is.
“People invest in teams, not ideas”
This is probably how most investors make their decisions:
If you think of it from the investor’s perspective: they want to bet on people who are likely to win even if the business model changes, they want proof that this plan is going to work (vs. the 999 other pitch deck’s they’ll look at this year), and they want to see that other investors have already done the due diligence and put money in.
That being said, you still have to get the business model right in order to generate traction, retain a rock star team, and attract the right investors.
Your three best friends when raising money are scarcity, social proof, and momentum — which can best be summarized as FOMO:
- Scarcity — This investment is a great opportunity and the window is closing quickly. Finding a lead investor and setting a time limit on your current round both accomplish this: “We’re raising $500k in the next 30 days and we already have $300k committed.”
- Social Proof — Your rock star team, your world-class advisors, and the investors already on board combine to make people feel comfortable giving you money. Front’s Series A pitch deck lists Stewart Butterfield from Slack in their current round. Doesn’t that make you want to invest?
- Momentum — What are you accomplishing right now, without raising the money? You’ll have multiple conversations with investors before they put money in, so make sure that you always have something new to report. At 10xU, we call this “Running the no money plan,” meaning that you keep hustling no matter what. It’s much easier to raise money when you don’t actually need it. And all of that momentum creates FOMO and helps you land investors.
Phone a Friend
The 10xU Pitch Deck Roadmap tool is designed to be easy for you use BUT it’s hard to be objective. For best results, you may want to have a trusted advisor fill it out for you.
Or you can reach out to us and we’ll take a look.
The founders we work with are already finding it very helpful:
“Really appreciate the feedback, this is very detailed and specific, it’s like a pitch deck ‘health check’.”
We’re just starting to use the Pitch Deck Roadmap, so please let us know how it goes. We want to hear your feedback so that we can make it even better.
You can download the 10xU Pitch Deck Roadmap here:
Originally published at blog.10xu.com on July 26, 2017.