The “Five Slide” Cyber Investor Pitch Deck for Start Ups
Are you an angel investor in cyber security companies? Are you currently fund raising for your new cyber security company? Do you work in venture capital and invest in cyber? If you’ve answered yes to any of these questions, then you are either producing slide decks which are or you are spending time looking at slide decks which are . In this blog post, I offer some tips to dramatically cut down the amount of slides in your cyber pitch decks so you can focus on your message.
Last year, I switched from being a cyber security executive to a venture capitalist focusing on early stage cyber companies. I had always been supportive of the start-up community and had done a bunch of angel investing of the past few years. In 2016 I started focusing on seed investing full time and in 2017 I launched Gula Tech Adventures which is a fund focused exclusively on cyber security.
Over the past twelve months I’ve gotten to look at more than 200 “pitch decks” in cyber security companies. Many of these decks are too long and don’t convey the investment opportunity, even though the founders pour their heart into the slides. In this post, I am going to describe what I feel is the ideal pitch deck and what can be left out and why. It is an austere approach to pitching your ideas, but one that I hope can help new start-up companies channel their excitement and passion into an investment opportunity.
The basic concept is this side by slide:
- Pitch the “What”. What problem does your solution solve?
- Pitch the “How”. How does your solution work?
- Show some “Proof”. Show some sort of evidence your approach works.
- Use of funds. How much are you raising and what will you accomplish with it?
- What is your vision? What do you want your company to be when it grows up?
SLIDE ONE — THE “WHAT” In one slide, describe succinctly what problem you solve and why people will spend money with you.
That is it. There is a strong temptation by founders to include dozens of more slides, but much of this information is only relevant if the investor is interested in these five things.
The remainder of this post discusses strategies for each slide and for what not to put in there.
The bolder of a claim the better, but be prepared to back it up with the next slide, “the how”. This is the most difficult slide of the deck, but it is the most powerful. Being too generic is a big turn off to investors.
An investor wants to see passion and some sort of experienced pain point that the founder team has dealt with and now has a better way to help others.
Angel investors and venture capitalists look at a lot of pitches. Even if they aren’t technical, they are very savvy and easily see patterns. You should assume that you are not the first type of solution a potential investor has been pitched. Even if you are the first, the investor will likely look for other companies in your space for comparison.
Being generic or secretive are all very poor strategies in cyber security. Saying that you’ve solved cyber security, you increase ROI, .etc isn’t enough to get an investor excited these days. Their next question will be “how?” or “so what?” and these conversations can take you into a theoretical discussion and away from your core message.
“Your pitch should pay homage to the competitive landscape”, says Tom Kellermann, CEO at Strategic Cyber Ventures.
If your “What” slide helps you differentiate from your competition, this makes it easier for an investor to get excited, but be careful to not be defined by your competition. If you truly are an innovative company, won’t have lots of direct competitors.
SLIDE TWO — THE “HOW” In one slide, describe how you do your “what” without giving away any proprietary secrets but conveying your ability and comprehension of the problem.
Honesty and humility also go a real long way with investors. Calling out exactly what your advantages are is something an investor can work with.
“ Simon Sinek would say you are ‘Starting with Why’”, says Rick Gordon Managing Partner at Mach 37, “We give that book to all of our new companies and have generally found it’s easier to explain why you are solving the problem from the perspective of its user.”
Many pitch decks I see completely skip the “what” slide and start with the “how”. I see many entrepreneurs dive right into the “how” as a first introduction to their company. This can be hard for an investor to figure out exactly why you are doing something or why a customer would want to spend money with you on your solution.
The “how” slide should answer many of the basic questions without being evasive. Questions that may need to be answered include topics such as:
- Cloud or on-prem. Which components are cloud?
- Don’t say artificial intelligence or machine learning. Instead be specific where you algorithms run on which data and how they manifest in the customer.
- Agents or no agents?
- How is it deployed?
- If you parse logs, which vendors are supported?
- If you have open source or commercial components, call them out.
- If it is a cloud solution, does it support true multi-tenancy?
- Does the solution require a technology such as Splunk, Active Director, Palo Alto firewall logs, .etc
The point here is to be direct and not evasive. Own your solution and succinctly describe how it works, what data it works on and how it is deployed.
If your technology or solution isn’t complete, don’t be evasive about it. An investor isn’t expecting a start-up to have a solution that is 100% ready and supports every sort of use case.
SLIDE THREE — PROVE IT In one slide, show any type of relevant proof that your approach, technology or solution actually works.
For example, lets say there is a machine learning next-gen SIM company that adds something special and unique to Palo Alto firewall analytics. An investor would not expect a start up to fully support all of the other firewall vendors such as Fortinet, Cisco, .etc.
However, I see many pitches where the vendor is evasive about supported firewalls. It’s not a bad thing to be truthful about what you’ve accomplished to date if it points towards proof of competence and what you will be doing with the funds, which are the next two slides.
As you write your deck, you should imagine an investor skimming the deck. I’ve spoken with analysts and managing partners who see 5–10 decks a day! If you have 20–30 slides in your deck, they won’t get the attention you think they deserve.
If you’ve done your job on the first two slides, the potential investor has a good idea about the problem you solve and how you solve it. The next thing I like to see is some sort of proof.
SLIDE FOUR — FUNDING USAGE In one slide, describe how much money are you raising and what will you do with it.
Proof can be anything at this point. It could be a customer reference. It could be reports of your own testing in your lab. It could be an awarded patent, although many investors don’t consider a patent as “proof” that your solution is something customers want. The point is, you should show some other information to a potential investor that your technology works as advertised.
If you are pre-demonstration of actual technology, you should have some really good evidence or substance that your approach is unique and worthy of consideration for an investment. Simply pointing out a list of deficiencies in an industry can prove that there are problems and an opportunity for a solution to fix it, but it does not prove your solution is unique or give any evidence that it works.
I’ve seen pitch decks that don’t accurately talk about what the use of funds will go for. I’ve also seen pitch decks with spreadsheets of cash flow, which are too detailed to convey the funding requirements.
As a potential investor, I’d like to know if you raised your funding requirements, how long will this last you and what state will the company be in when you reach that goal. For angel or even series A investments, I’d like to see general statements of hiring developers or sales people, doing marketing or buying capital intensive resources.
Justin Label of Inner Loop Capital says “To me, this is the critical information, more so than use of funds. The number one thing I am evaluating as a seed investor is: Will institutional investors be beating down our door to invest in this company at a higher price, before these funds run out?”
If you are lucky enough to have a working product and you want to hire sales people, this is where you should have some sense of sales and marketing plan, otherwise known as a “go to market”. I often see sales decks where there is a hockey stick of sales growth, but no corresponding investment in sales, support or other things required to win and close customers. Very rarely do any start-ups have an accurate way to predict sales. They can predict customer needs and vacancies in markets, but not actual revenue forecasts or pipelines except in rare cases.
SLIDE FIVE — VISION In one slide, set a final statement that shows your vision for your company.
If you are developing a product, it is very good to show a schedule and milestones which can include hiring developers and delivering a minimum viable product for a proof of concept at an actual customer.
There should also be some mention of future fund raising and cash-flow requirements. You don’t need to have your series A, B and IPO planned out on one slide, but if you feel you know about the needs for series A and you’ve put some thought into it, share it, but if you haven’t, don’t make up numbers and timelines.
In slides one through four, you’ve hooked a potential investor, but now you want to close and get them excited about what you are doing. This last slide is your opportunity to make a bold statement and leave the investor with a bigger impression than what you’ve done so far.
WHAT IS NOT IN THE DECK
The vision can state your company’s beliefs, how your technology could extend into other markets, what a successful company could do to a market with disruption, could identify why a certain vendor is your obvious choice for an exit, .etc. The idea is to leave the potential investor with a clear sense of your technology or solution and how you see your company working in the future.
You should not make statements such as “And Therefor, we are the next Cyber-Security Unicorn” or “We are the Uber of Cyber”. These are very high level and will be met with skepticism, even if you have a business plan that could make those claims a reality. Instead, try to focus on a message you would envision an investor using to tell your vision to other people. It has to be something believable and easy to convey, but be a bigger message than what you claim on slide one.
You may be asking where are the other things typically in a pitch deck. Consider the following list of potential topics usually seen in a pitch deck:
- Market size and growth
- List of Advisers and Board members
- Funding to date
- Biographies of the founders and team
- Media interviews of the founders
- Media stories about the market
- Competition slides
- Go to market and pricing
Each of these slides is something you should have in an appendixor as a more in-depth presentation suitable for due diligence. When this information is mixed in with the five slides I am suggesting, it dilutes your message.
Conclusion & Food For Thought
Considering each of the above points in similar order, here are some negatives on why showing them in a deck actually hurts your pitch:
- Market size and growth — Many investors have their own views on niche markets in cyber security. If your pitch is viable and in an area they are interested in, you will likely go to diligence. You won’t go to diligence if you tell them about the growing $4 billion cyber market.
- List of Advisers and Board members — Listing your board members and advisers won’t get you an investment. It will give a potential investor a list of people to speak with. This is a clearly a diligence item. You should highlight your most active advisers or board members as a reference.
- Funding to date — This is another slide that I see getting over used. The fact that an angel, investment firm, incubator or some form of government investing program funded your team or research isn’t a reason to invest by itself. The hidden message most founders try to convey is that these guys are smart and you should be smart and invest in us too. I’ve hardly seen an investor swayed to invest based on the original seed money into a company.
- Biographies of the founders and team — There are two situations here, first time start-up executives and serial entrepreneurs. For first time executives, your background will already have been discussed with your first few slides as you demonstrate “passion” about your solution. For serial entrepreneurs, your reputation will proceed you.
- Media interviews of the founders — This is also great for reference material, but it can take you off message very quickly. The chances are that if you did get into a media interview of some sort, it is only partially relevant and not 100% on the message of your pitch. This can hurt the first impressions and focus of the overall pitch. Investors don’t invest in companies because the founders gave great interviews.
- Media stories about the market — An investor will likely have already read up on these sorts of topics. It’s great to have a list on a slide of relevant headlines, but the majority of times I’ve seen founders do this, they are just googling and putting up images of the stories. It can be effective to show how your solutions would have prevented these attacks, but those details may be hard to come by. Also keep in mind that many cyber security companies seeking investment will all claim to stop the Sony, OMB or DNC “hack of the day”.
- Competition slides — I’m not a fan of listing a competition slide in the first introduction to your company. The reasoning is that you should be disrupting a market or offering a better or cheaper way of doing something that is currently being done. In the first case, if you are really doing something that is something new to the market, listing companies that compete with you will make you seem more like them than and less innovative. And if you are doing something specifically better or cheaper than existing vendors, you would have pitched this in your “What” slide and your “Vision” slide. You will have to eventually have a conversation about competition with your
- Go to market and pricing — I used to include the go to market when I suggested the pitch, and it was six slides but I eventually stopped recommending it for companies seeking seed investment. If you are going for an A round and looking to expand your sales and market share, then this is a must, but for start-ups looking to enter the market, claiming they know exactly how they will sell a solution and how they will buy it assumes a great deal of things. Even if you do know this, it is very easy to turn off an investor who doesn’t like certain markets that are too concentrated on a market, are only on-premise based, .etc.
I hope you have found this information to be challenging and thought provoking. While getting feedback on this blog, I got a variety of feedback including:
- A desire to see a slide about the founders. Some investors won’t invest unless there is some sort of track-record with the founders. I feel this should be conveyed in your first slide in that your experience dictates your solution.
- Sometimes the “go to” market is very relevant to a business, if it is just starting out.
Much of this can be applied to any seed company seeking financing and is ideal for quick “shark tank” style presentations. However, the point is to focus on your message and convey it at quickly and succinctly as possible.
Originally published at https://www.linkedin.com on March 9, 2017.