Pitching a start-up is as easy as A-B-Z
When start-ups are preparing a pitch deck, it’s difficult to get the right messaging across. You want to show the grand vision, while at the same time presenting goals that are humble enough that they could be achieved within a reasonable time frame. The way to broach all of these issues is to follow the A-B-Z framework.
A = Where you are
B = Where you’re going to go with this round of funding
Z = Where you want to end up eventually
A = Where you are
Explain where you are at the moment, what level of traction that you have and how you got it. Investors need to understand how entrepreneurs got to the idea that they’re working on. Was it internally driven (“I’ve got a problem that I need to solve”) or externally driven (“People asked us to fix a problem and we created a system to do just that”)? The more that you have thought about the problem and potential solutions, the more likely that you will adopt the most elegant solution.
Take some time to highlight the traction that you’ve achieved to date and how you achieved it. Referrals are worth a lot more than paid acquisitions. If you have been able to create acquisition flywheels that aren’t reliant on aggressive marketing spend, then this needs to be told as part of the story.
B = Where you’re going to go with this round of funding
When I’m speaking to start-ups, I like to use a metrics matrix to see whether the funding from the current round will be able to achieve a 3–5x uplift in the key metrics that investors use to judge the company. This tool is useful because it incorporates the pitch deck from the current fundraising round, the pitch deck from the subsequent fundraising round, and some information from the financial model in one place. It provides a check on the assumptions that are being made.
The pitch deck should include what you’re going to spend the money from the current round on — how many people will you hire? What features are you going to roll out? What metrics are you going to be tracking? When you include all of this information, it makes it easy for investors to envisage the next step. To a certain degree, creating a business is like walking up the stairs at night. You don’t need to be able to see the top as long as you know that you’ll get there. You just need to be able to put one foot in front of the other and tackle the next step before worrying about the rest of the staircase. That brings me to the final point…
Z = Where you want to end up eventually
You should include some information about what it looks like at the top of the staircase. What is the grand vision that you’re trying to achieve? If everything goes to plan, what would the company look like? Given, the end goal might change over time but you need to have a target — if you never aim at anything you’re bound to hit it. If you’re able to tackle the total addressable market that you’re going after, what would the company look like when it reaches that end state?
Conclusion
Often pitch decks will cover either B or Z and fail to cover both scenarios. Ideally, investors should have a thesis about the future and should allocate in an attempt to create that future. However, recently, in a number of discussions that I’ve had with investors, it has become quite obvious that they struggle to envisage what could become or what should be. As a result, it’s important that entrepreneurs are able to paint a picture of what the future could look like so investors are able to incorporate or adopt it into their paradigm. Don’t be afraid to tell people what the future will look like and why you’ll be the one shaping it!
Read more at www.endeavour.ventures
