January 21, 2011
by John Backus
The purpose of this blog post is to help entrepreneurs avoid looking “canned” when they pitch VCs. Every entrepreneur is passionate about their business, and a pitch to a VC is an important moment in the life of most startups. I hope that this post helps entrepreneurs see their pitches through our eyes — and when you show us the charts below, that you think through the second order questions behind the slide.
My partner Todd Hixon did a GREAT blog post last year on tips for entrepreneurs pitching to VCs. He even had a sample pitch deck. It is a great resource. Please check it out here: http://navfund.com/blog/tips-for-a-good-first-pitch
Pitch decks from entrepreneurs arrive by email every day. Probably thousands across our firm for the year. I personally sit through 100+ new pitches each year. Most ideas are very different. But many slides are the same.
Sitting in our partners meeting this week, we were talking about a company that had pitched us (which shall remain nameless) — and one of my partners asked a question about their growth prospects. Flippantly, I answered, “They have a slide for that.” Laughter ensued.
I love those Apple commercials that feature all of the apps available for the ipad and the iphone…..it was their tagline, “There’s an app for that,” that inspired this post.
Which started me thinking about the 5 Powerpoint slides we see in every pitch deck. Sure, the slides all look different — different colors, bar charts, pie charts, line graphs. But, basically, they tell the same story. So if and when you use these slides, use them at your own risk — because we’ve seen them before!
For the examples below, I am including real charts from real pitch decks (sanitized of course to protect the innocent.)
1. The Hockey Stick: Every pitch I see ends with a hockey stick financial graph. Revenue starts out low and then it grows exponentially. $100M in revenue in 5 years. Wow. Oh, and never mind the relatively flat growth of the last 2–3 years. We’ve changed our business model! What I want to understand with this graph is the HOW. How will you make these numbers? How will you find the customers? What are they buying now? Do you need salespeople or advertising to do this? How many or how much?
2. The 2 X 2 Matrix: The upper right corner is the place to be. The horizontal or vertical axis can be many things. Size of market, ease-of-use, growth rate, cost, and many more. Just make sure that your company is the only one that is up and to the right. But be prepared to answer why your competitors chose to be where they are. What would they say about your positioning? Does the customer look at the market the way you do?
3. The Stoplight or Harvey Ball Chart: Lots of balls filled in for your product and lots of gaps (or red balls) for your competitor’s products. You choose the features that make you look good (while making your competitors look bad at the same time.) What matters though is why you chose those features for comparison. Are they the same ones that your customers would choose?
4. The Diagram: The more complicated the better. This chart is used to explain the inner-workings of your product, service, network or whatever. The more lines and boxes the better! But unless this diagram is built on core intellectual property that others can’t copy, it is nothing more than a visual aid. I have seen more entrepreneurs — especially techie founders — get bogged down on this slide than on any other. Beware!
5. The Logo Chart: Lots of logos of lots of big name customers. The more logos the better. The more recognizable the better. But be prepared to explain what the underlying deal is with each “logo.” If you put Google up there, your relationship had better be more than just buying Ad Words from them!
I hope this helps you be better prepared for your next presentation! Good Luck!!
Originally published January 21, 2011 at navfund.com.