The Use of Proceeds Slide is Dead

A Closer Look at a Startup Venture Presentation Part 1

Knowing your audience is an essential part of any effective presentation. Pitching to potential venture investors is no different. This is the first of a three-part series where I will discuss what information I think is necessary, and unnecessary, for an effective presentation. There are many ways in which different firms, or even different partners at the same firm, want and expect different things. As a result, learning as much as you can about the audience — what they know and don’t know, what sectors they focus on, and what type of entrepreneurs they are attracted to and are successful working with — is essential for success. Some investors want to be told a story; others want a detailed factual description of the business. It’s often hard to understand that from outside research (without talking to a portfolio founder/CEO), but you should do the basics. And the basics are knowing the current portfolio and (when possible) when (at what stage) the firm invested.

It’s also critical to make the best use of the limited time (and slides) you have. I have written about “The Missing Slide” before and will explore TAM1 slides in part two. But first, I want to debunk the use of the old-fashioned use of proceeds slide. I think someone probably got this from an investment banker in the 70s. $4m into product development, $1m into marketing, and $2m into sales tells an investor absolutely nothing about an early-stage company. What we want to know is what you’re going to do with it. What milestones will you hit (when and with what degree of certainty)? What an investor is thinking is: “This financing will last 18 months. If we’re raising money in 15 months, what will the company look like? Will we be in the money? If things don’t go quite according to plan, will we be able to raise money?”

When you realize the perspective of your audience, you’ll have a much better chance at answering the right question.

Read A Closer Look at a Startup Venture Presentation Part 2: All TAM Slides are B.S. here and Part 3: The Competition Slide here.

1 Total Addressable Market

By: Greg Sands, Founder and Managing Partner