There's been a bit of a trend in submissions recently, and I should know that as I go through tons of them. Presentations include fewer slides with less information, but getting the right message across is key.
Reading between the lines of DocSend's latest report on venture capital activity in 2023, it's clear that getting to the point and staying on message is the way to capture an investor's attention.
“Pre-seed founders have responded to investor pushback by creating shorter pitches. They are rearranging the opening slides in a way I haven't seen before,” says Justin Izzo, research leader at DocSend.
Founders are abandoning narratives about purpose, problems and solutions. “Instead, they go straight to the 'why now': here's our product and here's how we're going to monetize that product. It's a very abrupt read if you're used to a little more narrative, but pre-seed founders these days know that investors don't spend a lot of time reviewing documents.”
Founders are actually submitting 16% more pitches than this time last year, which means VCs have a lot to read. Investors want to get the information they need to make a decision early on whether they will dedicate more time to a company.
From 2022 to 2023, VCs spent nearly 20% less time (2 minutes and 12 seconds now, compared to 2 minutes and 42 seconds a year ago) reviewing pitches. If you have 2 minutes of their time, make them count. How much does this matter? DocSend data indicates that 40% of successful pre-seed teams had shorter documents than average; 65% of the teams that were not successful had them with more slides than average.
Founders must be ruthless, both with the number of slides in a presentation as with the number of words on each slide. As of 2022, the average slide deck has plummeted from 19 slides to 16. That means you need to be very intentional about what to include.
The 16 slides that are necessary you need
Introduction: Features your company name, logo, and a captivating tagline or image that gives an immediate idea of what the startup does. It also helps to indicate the size of the round you hope to achieve.
Mission: It's good to start presentations with a mission slide or a summary slide that draws people in. Good storytelling is done in layers: first offering the 20-kilometer-high view and then focusing the spotlight on different aspects of the business that will help you gain a deeper understanding as you progress through the document.
Problem statement: highlights the important market problem or pain point that the product or service addresses.
Solution: shows the product or service and explains how it effectively solves the problem posed. The solution slide should be strategic and should ideally not change for the duration of the company's existence.
Products (perhaps as a demo) – Provide screenshots, a short video, or a live demo of your product in action, emphasizing its unique features. Most founders spend too much time on their product story, so keep it simple and trust that investors will ask questions if necessary.
Value proposal: Who is experiencing the problem you are trying to solve and what value is placed on it? For some companies, this is pretty straightforward, while others may have to be a little more creative about what the components of that value are.
Market opportunity: It quantifies the size of the market the company is targeting and how much it plans to capture. You have to be clear about what the metrics are and try to measure the right things.
Business model: Explains how the company makes money, including details on pricing, sales, and distribution strategies. It may also make sense to include cost of goods sold (COGS) or costs associated with providing your service, if that is significant. You have to be careful not to fall into the temptation of having 20 business models; It sounds confusing to say the least, but it is seen on quite a few occasions.
Marketing strategy: describes the plan to acquire customers and achieve market penetration. What is the reference market? Where are you going now? How can you separate portions of the market where you have a great opportunity?
Drive: provides evidence of momentum, such as number of users, revenue, partnerships, or any major milestones achieved. Avoid vanity metrics and, if you don't have revenue, use early-stage traction to explain how you've de-risked your business.
Competitive landscape: identifies the main competitors and explains the differentiating elements and competitive advantages of the startup.
Financial projections: shows a snapshot of past financials (if available) and future projections, emphasizing revenue growth and profitability. It is advisable to leave spreadsheets as spreadsheets (not create summaries that may be unclear or opaque) and summarize growth and milestones in operational plan mode.
Machine: The team slide is possibly the most important slide. If the company has extraordinary founder-market fit and team, this should probably be one of the first slides. Highlight key team members, their backgrounds, and why they are uniquely qualified to take advantage of this opportunity.
Funding request: indicates the amount of financing being sought and what type of investment (e.g., stocks, convertible notes). It may also be helpful to summarize how much has been raised to date and who led or participated in those rounds. This is often combined with the use of mutual fund slides.
Use of funds: provides the breakdown of how the raised capital is planned to be allocated (e.g. product development, marketing, hiring). Most founders get this slide wrong. It should not be expressed as percentages. It is key to remember that most investors do not care about the length of the journey to the planned end, they prefer to visualize the milestones that they intend to achieve along the way.
Thank you, Questions and answers and contact information: It is often a good idea to include a slide that summarizes some of the key points you want to convey. It helps to leave a good last impression.
You don't need to have these slides in any particular order: start with what's most unique or special about the company, then go from there, guided by the narrative arc of your fundraising story.
