The “Perfect” (Pre-) Series A Pitchdeck: An Investors Wishlist

Nate Sztrum
May 14, 2019 · 9 min read

We would like to address one topic some founders seem to struggle with and hope we can be of minor help: What information should you include and how should it be presented in a pitch deck you send to a potential investor? This question obviously highly depends on the current status and traction of your company and might also vary slightly by the investor you’re approaching. Also, it can only be answered on a very high level as companies, products and business models are too different to give exact advices. However, we like to keep it simple, so we made a few assumptions in the beginning to give good advices at the end.

Let’s assume your business is in the B2B SaaS space (which we love 😊). You had an intro to a VC through a friend (or sent a cold email, which is totally fine with us), but you didn’t talk to anybody from this VC yet. They asked you to send a pitch deck with the main information about your startup. You don’t have more information about the VC than those you get from its homepage.

Let’s further assume you want to raise a (Pre-) Series A financing round in about 3–6 months (don’t approach later as due diligences take time). Your business is running well, between 40–120k€ MRR, however sales is mainly done by you and you burn 50–100k€ per month. You would like to raise money for the next steps: Onboard the sales team and professionalize the sales process, strengthen your product, attack new markets and be prepared for an (international) Series A/B round in about 18 months (by coincidence this is also pretty much the Senovo sweet spot 😍). With these assumptions you reach out to different VCs you found over your network and through online research.

We believe there are some main topics every pitch deck should address by well-structured and easy to understand slides (10–20 slides max) which we will cover in the following. The order of the slides is regardless, it should just fit your storytelling — think about pitching it in a call or a meeting. However, a nice summary slide to start, with an eye catcher (great KPIs, impressive customers, promising growth, etc.) is something which will help you grab attention.

History

Give some general information on the history of your company. When did you found the company, what happened until today? Who else invested, when, and how much? Were you bootstrapped in the beginning and did you e.g. finance the founding by a consultant in your space (something we often see). Did you invest some of your own money? What were the key achievements and what were the key challenges until today? Are there any important reasons for your good or not that good traction until today?

This information helps potential investors to quickly understand your business and the stage as they might compare it to other startups they have seen or invested in.

Team

Who are you and who are the key people in your business? What’s their CV and why did this CV bring the core team to founding your startup. Why is this team the best possible out there to build your startup and turn it into a rocket ship?

Keep in mind that investors always “invest in teams”, thus, this information cannot be overestimated and is a crucial part of every pitch deck. As a rule of thumb, you can say that the earlier the stage the business is in, the more important the team is. Usually companies never evolve as predicted, so investors need to have a good feeling of an agile team that quickly adapts to new challenges which will for sure occur.

By the way, the same due diligence you should do the other way around on your potential investor. You want somebody in the board you well get along with and that helps you build and grow your business in the best possible way.

See e.g. our blog on the topic https://medium.com/senovovc/choosing-the-right-vc-an-investor-s-perspective-335f57d39f99

Product

Of course, this is a key slide! Obviously, investors need to understand your product and especially the USP. So, try to answer these two questions in an easy way: What’s your product doing (what problem does it solve, through use-case) and why is it better (what’s new about it)? What’s the value proposition and the ROI of your customers?

What’s your vision of the product and where should it evolve within the next years? Keep in mind that investors are interested in a great exit in 4–7 years (at this stage). So, it’s crucial to understand why your company will have a high value in future based on which product and which customers. Are there any other important aspects that highlight the value of your product (e.g. patents)?

Competition

One slide about competition is also essential as it helps investors to quickly understand how founders position their product. Who do you consider as competitors in general and how do you position your product against them? Many founders present those in a x-y diagram, however also insightful is a feature-based comparison in a table format — this very much depends on your business and which key statement you want to make. What’s your USP (now and in the future) and why is it hard for your competitors to copy it?

Market

There should always be one slide about the market(size) you address. Even though these calculations are always debatable, this slide gives investors a good feeling of how the founders position their product within which market (segments). Especially for niche products this slide is important as investors might not know any comparable deals/products where they already have a gut feeling about market size and competition.

Business Model

How do you earn money? Address this question comprehensively as investors will need to have a profound understanding of your business model (SaaS, transaction-based, commission-based, etc.) They will only invest if they believe in a strong (financial) growth, which is directly connected to a working business model.

Customers / Prospects / Pricing

Show the growth of your customer base. How many customers are using your product? Do you have some lighthouse customers? If you are allowed to show them, do so (investors love logos). What kind of prospects do you currently focus on and has this, or will this focus change over time? What’s a typical customer journey? What promising POCs are currently running? What’s your current pricing and what’s your strategy behind it?

See e.g our blog about pricing strategies https://medium.com/senovovc/learnings-from-b2b-enterprise-saas-pricing-strategies-927df7df210f.

Some founders also present the sales pipeline on a high level. This is something a VC will ask for if you get in touch, however, keep in mind that you will also be challenged on this pipeline a few weeks or months further down the road.

Traction

In B2B SaaS the most important KPI (at this stage) is the MRR. It helps investors to quickly understand where to position your business traction wise. Often the MRR is a good indicator of what has been achieved in the past and what challenges founders will presumably face in the future. It’s also an important indicator for valuation. Make sure to explain your calculation (signed or booked MRR, POCs included, etc.). Also highlight your other revenue streams and show the total revenue of your business.

Of course, with revenues, there are always costs and the much dreaded burn rate. Cash efficiency is also crucial to understand as its directly connected to traction. A 50% MRR growth (on a yearly basis) is much more for a bootstrapped compared to a VC-backed company that had more capital to burn.

There are more KPIs (depending on your business model) you could show. However, if you do so make sure to explain your calculation (e.g. in a footnote).

  • ARPA: what are different pricing schemes. How much consulting and one-time fees are connected
  • CAC: a crucial KPI to understand how scalable your business is, or might be after the financing round
  • Churn: also, an extremely important KPI. Really useful on a cohort basis
  • Usage KPIs: the usage of a software is often correlated to its value (e.g. dau, wau, mau)
  • Marketing / Pipeline conversion KPIs
  • Team size (evolution)

Compare our blog post on B2B SaaS KPIs https://medium.com/senovovc/the-key-b2b-saas-metrics-every-start-up-should-track-7ab75222a336.

Financial Plan

Investors want to invest into a successful business. So, it’s absolutely crucial for them to understand your prediction and the usage of their investment. Show your financial goal for the next 1–3 years. What are the underlying assumptions (for the growth) and how authoritative is the forecast? Where do you want to spend the money (tech, sales, marketing, etc.) and why do you believe it has the biggest impact there? Ideally, this prediction is built on a comprehensive financial model that you could share during the due diligence.

See e.g. our financial model https://medium.com/senovovc/b2b-saas-financial-model-v3-0-e6962c538d14.

Financing Round / Captable

VCs are exit driven. Explain your main thoughts on this financing round and the actual captable (money raised so far, etc.). If you already know the valuation of this round (e.g. an existing shareholders already committed) make sure to highlight this information.

How long should the money last, what’s the goal, breakeven or next financing round? Usually we recommend raising enough money that lasts for about 18 months, so founders have sufficient time to concentrate on execution rather than the next financing round. Do you have team advisors and who is currently sitting in your startup board?

Why now?

This is a question that shouldn’t be underestimated. Often the founders, the product and traction are great, however 2 years too late for the current stage. Sometimes product and vision are great but there are not yet enough market participants that are willing to buy. So, try to answer the question “why now” is the perfect timing for a VC to invest into your company. What are the market opportunities, what have you reached in the past, why is your company ready to boost sales with this financing round?

Why this VC?

Know the VCs you approach! Which business models they invest in, focus region and stage. It will save you and the investors a lot of time and effort. As you will not “spam” the VCs with pitch decks they will not be interested in or they are by default not focusing on.

This question might not be answered in the pitch deck, but it should be addressed in the email: When investors have the feeling that the deck was sent to another 50–100 VCs out there with a similar email like:

Dear Senovo,

Please find our pitch deck attached.

With best regards,

Understand that the investors are not likely to have a “warm” feeling when they start reviewing your deck. Of course finding the right VC often works like a sales funnel (investors are aware of that), but if you don’t get an intro to a VC and send a cold mail, make sure to know the VCs you send your deck to and highlight this in your email.

Your goal is to get an answer that is based on a proper understanding of your business. Thus, your goal is to educate the VC in a few slides so he can make the right decision whether it makes sense out of his perspective to spend time on further meetings. It’s extremely annoying for every founder to spend time and effort on investors that don’t understand the business or should have seen yellow or red flags much earlier within the due diligence process.

We are aware of this and always try to decide fast but well informed. However, our decision is always hypothesis driven and decisions on further meetings or due diligence must be taken on the information provided.

Summary

Let’s wrap things up:

  • Your overall goal is to get in touch with a VC who will understand your product and your vision.
  • You want to create curiosity through the pitch deck: excite the reader, don’t overload your deck (less is often more), confusion leads to a lack of interest, think big but be honest and realistic.
  • Keep in mind: investors spend 5–20 min on your deck (they invest in approx. 1 out of 100 companies they screen). Don’t take a rejection as a failure, if it’s based on a well-informed decision.
  • A pitch deck is a living document, learn from VCs rejections, and adjust your pitch deck according to their feedback.
  • Make sure to address most important aforementioned points: but only those who are crucial to quickly understand your business. Skip the rest and be prepared to answer them on request.
  • If investors reject due to (early) stage: keep them informed on a half yearly basis. This gives investors trust in you and your predictions, and will help you in a later stage of your fundraising

Keep in mind: The pitch deck is only one (often the first) part of the overall funding process. It’s “only” the door opener but might end the due diligence process before it really started. There are many more questions that need to be answered further down the road.

If you have any questions or comments to this blog or you’re build an interesting B2B SaaS business, we love to hear from you! nate [at] senovo [dot] vc

Nate Sztrum

Written by

Early-stage VC | Enterprise Investor

senovoVC

senovoVC

We're a European early stage VC Fund focused on B2B SaaS investments.

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