Inside a VC’s Head: The Pitch

Chiyoung Kim
Feb 14, 2020 · 9 min read
Photo by David Matos on Unsplash

For this one, let’s take a peek inside my head. Specifically, let’s take a peek at what’s going inside my head when I first meet an entrepreneur live.

Let’s talk about The Pitch.

The Pitch is something probably every entrepreneur agonizes over — how do you get the wording just right; how do you know the investor will 100% understand what you’re saying; what happens if they ask a question I don’t know and I’m put on the spot to say something and it makes me look like I don’t know anything and…

Stop. Take a deep breath.

The Pitch is just another interview — it’s an interview to be accepted into a firm’s portfolio of companies. Like any company you might interview at, firms look for different things. Here’s a short list of some of the things VCs might want to check the boxes on when looking at your company:

  • Deal stage
  • Raise size
  • Deal terms
  • Industry
  • Company performance
  • Target Customer Profile
  • Business Model
  • Growth Dynamic
  • Competitive Moat
  • Strategic Alignment
  • Timeline of the Deal
Or cash flow!

…among many other things.

Before I go any further, I need to add a caveat that this is how I’ve learned to personally operate over the past year. Venture is an industry that is super people-dependent. Each VC likes to look at investments in their own way and, because of this, often emphasize different aspects of the companies they look at. That’s what makes this weird, weird industry both exciting and frustrating.

Back to our regularly scheduled programming.

Every interview needs a resume. For The Pitch, you need a deck.

Your deck should not be 20 slides of densely-packed 10-line text blocks of size 10 black Calibri font .

However, I’m not saying you need to have a person on your team dedicated to meticulously crafting a slide deck that undergoes 80 cosmetic wording changes a week. That is overkill.

Animations in your deck are also overkill.

I don’t want to parrot every post on the internet dedicated to The Perfect Pitch Deck, so I’m just going to say this: A deck should be a crystallized essence of The Pitch. It can herald your business, declaring the key points in an easy-to-understand format, or act as a great reference for in-depth conversation, the perfect companion to The Pitch.

As a good reference, I saw these decks for Front recently — these are exquisite decks:

*chef’s kiss*

Here are the key elements of The Pitch, and the meat of what you should put in your deck:

  1. The Story (if relevant)
    Your story as it relates to the problem (if it’s relevant). Part of this is a great place to talk about your experience in the industry.
  2. Description of the Problem and Purpose
    This is pretty straightforward. Why should I as the investor care about the problem? What is the purpose of the business? Ideally, state this in a single phrase — for example, the purpose of MiniLuxe, one of Cue Ball’s flagship investments, is “to make self-care an everyday luxury in a clean and conscious way.”
    Your purpose should set the tone for the rest of the deck and help me get a sense of what your strategy might look like.
  3. Overview of the Company / Product
    Or: how does this solve the problem and why? I want to know what your product does. To me, a vague phrase is a yellow flag signaling you don’t have a concrete summary of your business’s core proposition and product. What exactly are you selling to make money? Where is this money being made? Online? In stores?
  4. Business Model
    How does your business work? What is the ultimate goal you’re playing towards, and what are the simple unit economics that you’re tracking that define your threshold of success? How do you make money?
  5. Competitive Moat
    The competitive moat differs between industries, but the core question boils down to “What’s so unique about what you do that it’s so hard for others to do what you do?” If it’s a unique method of data capture, proprietary hardware, or even relationships / exclusive partnerships you’ve scored for your business, those should all be highlighted. Whereas the business model addresses the “how,” the competitive moat addresses the “why.” Why will you make money?
  6. Traction / Growth Dynamic
    You’ve gone and told me how you’re going to make money and why you’re going to make money, but you haven’t told me who those customers are or when you’ve made money from them. Do you have a profile on what kind of customer you’re catering to? Do you have data that can help illustrate the virality of your product in this market? Who are these superfans? When have they used / purchased your services?
  7. Team
    The team section isn’t for a full-page biography of each of your team members. Here, I want to understand who the core members of your team are, what their roles are, and what their backgrounds are that make them relevant for the role they have and what your strategic priorities are.
    Is your cousin Brody (who is deathly afraid of speaking on the phone) right for that sales job, even though he’s your favorite cousin? Similarly, while your friend Jasmine would make a kickass CTO, is she a necessary hire if your company sells hand-crafted brass knuckles for babies online?
  8. Historical Cash Usage / Financials
    What is the financial state of the company — is there any basic set of numbers you can share with me? Additionally, what can you share about historic cash burn? Are you an extremely lean, low cash burn team? I’d like to know about these things here.
  9. Raise Details and Use of Cash
    Finally, how much are you even raising? What are you looking to use the cash on? Are there any other details (e.g. valuation, round terms)?

These sections each merit further discussion (which I hope to cover in future discussions). They simplify the business into its essential levers, and these levers suspiciously mirror the pillars of Front-End Customer Strategy:

  1. Unpacking Growth
  2. Customer Count + Revenue Contribution
  3. Customer Retention
  4. Inventory Turnover + Hero Product
  5. Utility and Dependence
  6. The 3 Minute Rule

Beyond The Pitch, there are a couple of peripheral things to consider:

  1. Professional Presence
    The Pitch doesn’t stop at the voiceover and the deck; rather, a large part of it is how you present. How are you carrying yourself? Are you dressed appropriately for the meeting?
  1. Thank You
    We don’t really expect it, but it’s always a nice surprise to receive a little thank-you note after the meeting. It’s also a great way to follow up and include additional color or answer any outstanding questions.

So you sent the deck and the investor asked to chat live. If you get to this stage, congrats! That means the deck carried your message, loud and clear. However, this means I get to ask you questions on the spot during The Pitch, and these questions are most likely going to expand on aspects of the deck or clarify my understanding of the business / the industry.

It’s probably a good idea to have some answers prepared for these aspects of your company:

  1. Your Take on the Industry
    Hot takes welcome! What is your view on the industry and the position your company has within it? How do you view competitors, outside threats, and how the industry will evolve and progress in the next few years? This is an area that the deck and The Pitch will naturally touch on, but most VCs will expect you to have a deeper understanding of the industry that you can dip into during the inevitable Q&A session.
  2. “Path to Success,” including Defining Success and Critical Mass
    When do you know your company is successful and can self-sustain without needing more and more cash infusions? Is it when you’ve sold your product to half of the Fortune 500? Is it when every influencer is on your sleek new social media platform? This is hopefully something you’ve thought through and have a directional sense of, and should be an input into how you plan your company strategy.
  3. Making Sure You’re Watertight
    Know 100% all the assumptions and content you have in your deck. Investors will pressure test your assumptions and try to poke holes in your argument — don’t take it personally. It’s about understanding what the strengths and weaknesses are so we can properly underwrite the deal and have a well thought-out mental model that frames the business. No business has no weakness; the best businesses are those that know their weaknesses well and understand how to prepare for the worst.

No matter how well you’re prepared, sometimes you don’t have enough confidence to fully answer a question. In that case, it’s okay to say you don’t know, and follow up later with a better answer.

Except for the industry. You really should have a point of view on your industry when you’re talking to a VC.

As the kids say: sHiFt ThE pArAdIgM

In The Pitch, you’re also interviewing the investor. Here are some things to ask about and consider in a potential partnership with them:

  1. Introduction to the Firm
  2. Industries of Focus
  3. Investing Process / Timeline
  4. Average Investment Size
  5. Activeness as an Investor

FAQs:

  • But what about my market size?
    Market size is something that every pitch deck guide will talk about, but especially in the early stages, as long as it’s a decently-sized market, I really couldn’t care less. Unless your market is super-niche, I’m going to skip your market size slide.
    What do I do with it?
    If you can’t Marie Kondo it, put it in the appendix.
  • How long should my pitch be?
    Part of it depends on what the VC allocates for your time. As a rule of thumb, prepare 15–20 minutes of presentation and leave the rest for Q&A. Q&A will shrink and expand to fit whatever time has been set aside.
    What if we end early?
    Ending early is not a sign of disinterest.
    Let me say this again: Ending early is not a sign of disinterest.
    It can boil down into things as simple as not knowing enough about the space or not having the right questions to ask at the moment.
  • What if I have a co-founder?
    Ideally, it should boil down into a representation of the dynamics at the company / how you expect to work going forward. If you have a co-founder and you two split everything evenly, feel free to show that dynamic and share the presenting roles between you two. If you have a co-founder who prefers to play more of a tech-focused CTO role, that’s fine.
  • Is it okay to ask for feedback after my pitch?
    If you have a good working relationship with the VC, it might not be a bad idea to ask afterwards. The scenarios I’ve seen where we provide the entrepreneur feedback has generally been in a pass scenario — ideally the VC will provide feedback on what they would have liked to see in the deck, which also provides a data point for what other VCs might like to see.

Breathe.

Cue Ball Capital

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