Building the Best Investment Pitch Deck

Early Pitch Decks Of 10 Startups Before They Became Billion-Dollar  Companies | Robin Hood Ventures Philadelphia

This is a Guest blog post by William E. Dyess, “Pitchmaster General” and Principal at TXN Advisors, a Washington, DC-region business consulting firm that provides corporate development, marketing and strategic advisory services.

This post is an analysis of the last 50 pitch decks we received at The Dyess Group’s deck review portal and our strategy on building a winning deck.

The Basics of Deck Building

At The Dyess Group (TDG) we generally follow the Sequoia Pitch Template when building decks for clients, but with our own spin. Whether you use the Sequoia template or not, it is important to follow a thoughtful narrative flow that induces and compels the reader to take the desired action. There are several effective, proven models and suggestions such as the Dale Carnegie Transactional Selling Steps from the 1950s:

  1. Attention (What is the sizzle?)
  2. Interest (Why does it matter? Why does the world need you? )
  3. Desire (Are you better than a traditional solutions to the same problem?)
  4. Conviction (How do you handle objections, what’s the traction?)
  5. Action (Ask for the order, go for the close!)

The important practice here is to design a narrative flow that you believe fits your company the best and make it yours. Below we will present what we have found are the elements often forgotten, missed, or misunderstood when building an effective narrative flow. We do this using the first three slides of the Sequoia model.

Tip #1: Make sure people understand what you do, as quickly as possible (Don’t Waste Your Title Slide!)

We usually don’t hear about what the product or service does until the 5th slide.

The single most important thing you can do in your deck is to make sure people understand what you do. It needs to be in layman’s terms — meaning without using a lot of “marketing speak” and it needs to happen immediately.

When an investor, or any audience, clearly understands what you do, it provides much needed context to the rest of your story. The following is a front slide example from a deck The Dyess Group created for its client company Guac.

An example front slide from a Dyess Group deck

Here is another example illustrating how a very small amount of information immediately helps the reader (e.g., investor, partner, customer) orient themselves properly for the rest of the deck. This is for our customer, Socrates.

Tip #2: Find ways to combine key information into your narrative to make your deck more concise

Roughly 20% of the decks we review have the “Market Size” slide as the one of the first 3 slides.

And it almost always says one thing…the market is big. Unfortunately, putting this information so early is often disruptive to an effective narrative flow. Although Market Size is important and relevant, it is tangential information that can be a distraction at odds with understanding the opportunity. An alternative technique for getting attention with the size of the market is to combine the information with more important aspects of the narrative flow.

Tip #3: Combine traction and the solution to drive conviction to invest early

Only 15% of the decks we review feature customer referrals or actual market traction in the first three slides.

A solution without traction is really just an idea. You haven’t proven that you’ve solved anything. You want to eliminate as much risk from your offering as early as possible by enhancing the reader’s conviction. Introducing your product without any supporting traction in the same slide, or soon thereafter, doesn’t help the reader understand how far you’ve come in solving your problem. Inline with embedding statistics into the narrative, consider including some of the following along with your product:

  • Customer Testimonials
  • Success Rates
  • Total Users
  • Growth Rates

Applying lessons from User Experience (UX) research techniques to your pitch deck

UX research is the unsung hero of your favorite apps. A world leader in research-based UX consulting, Nielsen Norman Group have researched and documented the effectiveness of many UX techniques. We apply their forward-thinking UX methodologies to pitch decks we build for our clients.

UX Techniques

VCs only spend about three minutes reading your deck before a meeting. People can only keep seven things (plus or minus two) in their working memory. You have limited time and space to make your point, so raise the bar with respect to what information makes the cut. Key things to keep in mind through the body of your deck:

  • Reduce the hard work for consuming key information (Rate of Gain)
  • Don’t over-burden the reader with information (Cognitive Load)
  • Be as succinct with your messaging as possible (“BLUF”)
  • Organize information for max understanding (Progressive Disclosure)
  • Give the deck some design basics for strong ethos (Halo Effect)

Each of these is discussed in greater detail below.

Rate of Gain

The Rate of Gain is the value a reader gets from new information divided by how much work that user needs to do to get it.

A measurement used in User Experience to measure ease of use and value to users

In the case of your pitch deck, the user is an investor, partner, or customer, and Rate of Gain measures how valuable the information on each page is divided by how many words are on the page.

This would mean that a good slide would have the most valuable information possible in the least amount of words.

How to have a high Rate of Gain in your content

One of our partners hired a highly coveted speech writer for a Series B raise and the main piece of advice — delete more words.

The best piece of free advice we can give you about your deck is to delete more words.

Cognitive Load

It’s well documented that there are limitations of one’s ability to remember things while doing a task, aka working memory. People have a very finite working memory to consume the content of your pitch. This is why you should use techniques to be as succinct as possible to convey the most value.

A reader may naturally try and determine what information they need to know in order to preserve their working memory. This means giving the reader the ability to triage a page to decide whether or not they need all of the information is a good technique for keeping a user’s memory free to remember the main points.

This really forces you to boil down the words on a page to the point where you keep track of the cost and benefit of each word. Each additional word adds additional cost to the reader to try and understand.

Bottom Line Up Front (“BLUF”)

There is a concept in journalism called the Bottom Line Up Front, you can also think of this as TL;DR (Too Long; Didn’t Read). It’s the same reason that we put an abstract at the beginning of a research paper, or an executive summary at the beginning of a business plan. Respect the reader’s time and tell them the main point up-front so they can triage the page and decide if they need to look at the details or not.

If you use a “headline” based approach you will allow readers to skim the page and decide if it’s something that they think they need to invest the effort to further investigate. If the reader avoids taking in more information than they need, they can arrive at the end of the deck quickly having only read the information they cared about. This will reduce frustration and increase retention and overall satisfaction.

Progressive Disclosure

The concept of progressive disclosure in apps defers advanced or rarely used features to a secondary screen, making the learning process easier and less error-prone. For applications, this means showing the most important features front-and-center and leaving the seldom used, or less important features to be shown later or at the users request. This removes added complexity of needing to understand more features than may be necessary.

Take Google for example. The home page is literally just a search box, and the ability to search (or click I’m Feeling Lucky like I always do).

Now you’ve given the user the option, should they want more information, to go find it. In deck-writing, progressive disclosure serves two ends: keeping the deck clean and succinct, but also allowing the user ready access to any information they would need — perhaps even in an appendix.

Halo Effect

The halo effect is a phenomenon that causes people to be biased in their judgments by transferring their feelings about one attribute of something to other, unrelated, attributes. In the case of decks, the overall aesthetic and cleanliness of the deck will set the sense of sophistication to your reader. The easiest way to create this is to be concise; use abundant white space and be consistent throughout.

  • Consistent margins (white space is your friend)
  • Consistent use of font sizes (we use 32pt and 18pt fonts for everything)
  • Consistent messaging (Whatever you call it, call it that every time)

We’ll cover this topic in more depth later in the series.

Pulling It All Together

The slide design below does a good job implementing the UX techniques we just covered.

  • Rate of Gain: With only two to three lines (tops!) for the main message, the value of the information is high, and the workload to obtain it is low.
  • Cognitive Load: By using the headline approach, we allow readers to triage whether supporting information below the headline is worth further investigation.
  • Progressive Design: Byincluding the path to more information, you let users know that there is a way to learn more. In doing this you also free their minds to focus on the slide at hand.

Fundraising is always hard. Fundraising in the current climate is harder. There has never been a better time to make sure your company can stand out, effectively deliver its message, and spark the interest of investors who will be more selective than ever before. Use the Sequoia Pitch Template and our techniques outlined here to make it easy for them to understand what you do and why your company deserves to be at the top of the stack.

William E. Dyess is “Pitchmaster General” and Principal at TXN Advisors, a Washington, DC-region business consulting firm that provides corporate development, marketing and strategic advisory services. We work in partnership with executive management to save them time and advance the corporate mission by helping them create killer pitch decks, management and investor presentations, board reports, corporate dashboards and the underlying business strategy and messaging to maximize growth and value. William can be reached at wdyess@thedyessgroup.com

Email your deck to deck@thedyessgroup.com for a free deck review.

2021: The Year to Get Funded

This is a Guest blog post from Ines LeBow.

RIP Tony Hsieh. This article is dedicated to you and the inspiration you provided to me and so many entrepreneurs, helping us to put our passion and focus into the vision and values that led us to our start-up dreams. The investors and the funding are out there!

$69.1 billion! That’s how much has been raised by entrepreneurs in venture capital funding in the US so far in 2020 according to VC, PE and M&A news outlet PitchBook. This figure represents a new high, breaking the record set back in 2018.

And it’s not just in the US that businesses are getting funded. PitchBook also reports early-stage and late-stage venture investments in Europe are booming, riding a wave of optimism from both established VC firms and non-traditional investors who look to put their money into sectors that have thrived during the pandemic and into pandemic-proof technology innovations.

Here are some other key stats for 2020 that indicate a solid and growing foundation for investment in 2021:

Seed Pre-Money Valuation

Although there have been declines in deal valuations and a rise in equity ownership stakes with angel investors, the velocity of value creation for seed-stage companies has been very strong. Overall, pre-money valuations for seed-stage companies is strong compared with 2019, which was a strong year too. In addition, valuations for the smallest and largest seed deals have both increased over 2019, with the middle two quartiles holding steady.

  • Median seed-state pre-money valuation is consistent with 2019.
  • Top and bottom quartile seed pre-money valuations at historic highs.
  • 44% annualized growth in seed-stage company valuations.

Early-Stage VC Activity

Pre-money valuations for the median early-stage venture capital investment set an all-time high in 2020, despite many believing that Covid would hinder the market. The one major impact that the pandemic has had in VC funding is an increase in the time between funding rounds for early-stage companies. There are some indicators that VC investment in early-stage companies is slowing a little, including the step-up multiple and the velocity of value creation, but the drops in those metrics are from the all-time highs set in 2019 and are consistent with performance in 2018.

  • Early-stage venture capital valuation is at a record high.
  • Median time between funding rounds for early-stage VC investments has increased to 1.2 years, meaning entrepreneurs are running leaner to extend their runway.

Late-Stage VC Activity

Late-stage venture capital investments continue to dominate the US market, with almost 69% of total deal value in 2020. The average deal size is up from 2019, driven largely by an increase in mega-deals.

Non-Traditional Investor Activity

Non-traditional investors have been highly active in the venture market throughout 2020, including their participation in mega-deals at a rate of 96%. When it comes to early-stage funding for non-traditional investors, the pre-money valuations have remained steady with 2019, which was a banner year in that regard.

Deal Terms

One other area to keep an eye on when it comes to the funding environment is deal terms. Terms on deal sheets that are “founder-friendly” continue to proliferate, as cumulative dividend terms are at a 10-year low.

The bottom line is that now is the time to get your business funded. Exit values have recovered and are gaining strength, meaning investors will have more capital to invest throughout 2021.

This year, I’ve published a group of articles to help you get out there in front of potential investors, including content on creating and delivering a digital investor pitch (“Now’s the Time to Get Your Business Funded: Coronavirus Edition”), on unique ways to attract potential investors (“How Far Will You Go to Get Your Business Funded?”), and on featuring the sustainability of your business in any market (“Pandemic-Proof Your Funding Pitch Deck”).

What are you waiting for?

To learn more on how to stand out with an epic fundraising story, contact Ines for a complimentary consultation by phone at 314-578-0958 or by email at ilebow@transformationsolutions.pro. You find Ines on LinkedIn Profile at http://www.linkedin.com/in/ineslebow or her ETS website at http://www.transformationsolutions.pro.

5 Keys to Convince Investors Your Product Can Make Money

This is a guest blog post by Ines Lebow.

Even if you’re too young (or too old?) to know where the line “show me the money!” comes from, everyone knows the phrase “follow the money”. When it comes to attracting investors and getting them on board with your vision, it’s all about the money potential.

Many entrepreneurs, especially in the tech field, are under the mistaken impression that it’s all about the product. If the product is sexy, fresh, or disruptive, investors will be falling over themselves to put their money behind it. That couldn’t be further from the truth.

Consider the case of Bombas. What was their big idea? Socks. Hardly disruptive, right? Yet the co-founders of Bombas went onto the show Shark Tank and secured $200,000 in funding to launch their idea. Yes, they presented some nice ideas about making a better athletic sock, but they were still trying to pitch a sock. So what made Bombas so attractive to invest in?

Laser Focus

The co-founders of Bombas had a laser-focus on their product and market. From personal experience and lots of interaction with potential consumers, they understood that people were generally unhappy with the comfort of socks, especially for athletic activities. After lots of product testing and user feedback, they identified several areas of improvement for their future products.

Sales Record

By the time Bombas reached Shark Tank, they had already been through two funding rounds. Before their official launch, they secured more than $140,000 through crowdfunding. In the year after their launch, they raised $1 million from friends and family. They also had a track record of sales to show to eventual investor Daymond John, offering a better understanding of the potential return on investment.

Unique Business Model

At the core of Bombas is a business model committed to giving back. It’s not a marketing gimmick but part of the guiding principles of the company and its founders. For every pair of Bombas socks sold, one pair is given to the homeless. Not only does this uplift the spirits of consumers who are willing to pay $12 for a comfortable pair of socks, but it addresses a real need in the community, as socks tend to be the single most requested item at homeless shelters.

Take a Punch

Bombas proved that they were ready to take a punch, from consumers and in the market. Their extensive work in market research before even creating a product provided them with a network of targeted consumers who were willing to give detailed opinions and feedback on a product and how it was delivered. When the Bombas team created their initial prototypes, they were applauded for creating a better sock, but willing to listen and make changes to the product. Their team of consumers didn’t disappoint, but came back punching hard. As a result of the critical market feedback, Bombas made two additional improvements to their products before a general market launch.

Leadership Team

The co-founders of Bombas were able to convince investors of their ability and dedication to execute on the business vision. So while the product was “just socks”, the co-founders had a vision they were able to articulate to investors that made them consider “but look at what socks can do.”

Through these five areas, Bombas was able to convey who was driving the bus, who the competition was in the market, the investor’s potential for a financial return, and how consumers would relate to the product, their company, and their marketing model. As a result, Bombas grew from zero in 2013 to $4.6 million in 2015 to $46.6 million in 2017. In 2019, Bombas exceeded $100 million in revenue. By April 2020, they have donated 35 million pairs of socks.

What will your story be?

To learn more about creating an epic fundraising story for investors, contact me for a complimentary consultation by phone at 314-578-0958 or by email at ilebow@transformationsolutions.pro.

Ines LeBow is the CEO, Transformation Executive for ETS. She is a known catalyst for business operations, bringing 30+ years of hands-on experience. Ines has a long history of being recruited into senior executive roles to improve the execution of business operations and to drive revenue growth. You can see her LinkedIn Profile at www.linkedin.com/in/ineslebow, view the ETS website at www.transformationsolutions.pro, or email her directly at ilebow@transformationsolutions.pro.

Getting Funded: Now is the Time

This is a Guest blog post from Ines LeBow

 

Napoleon Hill Quote: “Are you waiting for success to arrive, or ...

 

It’s still happening. We hear about companies that are shutting down, laying off workers, or filing for bankruptcy because of Covid-19 or our sputtering economic re-launch. What we don’t often hear is that investors are still looking to put their money into action.

Even if your product or service isn’t targeting the “Covid economy”, this still may be the best time to get your business funded. Your competition for investor dollars may be back on their heels or simply waiting for what they perceive as a better environment to secure funding.

In recent articles, I outlined a Blueprint on How to Open Doors to Start-Up and Next-Stage Growth Funding and a companion piece on Telling an Epic Fundraising Story, Starting with the Value Proposition. The basic principles to getting funded remain the same, but there are some additional considerations you’ll want to address in your fundraising pitch:

  • Prepare (and practice) your pitch using digital solutions.
  • Include information on the business and financial impacts of extended government mandates related to Covid (work or school shutdowns, travel restrictions, economic depression, unemployment, supply chain shortages, etc.).
  • Consider ways your product or service can disrupt the existing market.
  • Highlight members of the executive team or advisory board who have experience helping companies to navigate and thrive during tumultuous times.
  • Showcase the market opportunity presented by changes to the competitive landscape or potential changes from government or industry regulations.

Now is the time, because if not now, when? As the Nobel Prize-winning novelist Doris Lessing said, “Whatever you’re meant to do, do it now. The conditions are always impossible.” Or, as Napoleon Hill, the controversial self-help author on success, said, “Are you waiting for success to arrive, or are you going out to find where it is hiding?”

To learn more on how to create an epic fundraising story for digital presentations to investors, contact me for a complimentary consultation by phone at 314-578-0958 or by email at ilebow@transformationsolutions.pro.

Ines LeBow is the CEO, Transformation Executive for ETS. She is a known catalyst for business operations, bringing 30+ years of hands-on experience. Ines has a long history of being recruited into senior executive roles to improve the execution of business operations and to drive revenue growth. You can see her LinkedIn Profile at www.linkedin.com/in/ineslebow, view the ETS website at www.transformationsolutions.pro, or email her directly at ilebow@transformationsolutions.pro.