To go to market, one would think that it is impossible for startups to grow without angels or institutional investors. That is not entirely correct.
Going far enough back in the history of investing, a comprehensive business plan was needed to raise funds from institutional investors. Here there is a guide on how to create one. The exact details of what goes into a business plan vary, but often include history, market analysis, strategy, product and service descriptions, organizational charts, competitive analysis, management team, financial plans and projections, along with all research to support each section.
That's all well and good, but by the time you've completed everything, the business plan has blown into the pages of a novel, even before all the graphs and tables are added. Business plans are great for teaching business basics and dynamics, and mistakes in a business plan are a great way to show potential entrepreneurs how to avoid problems before they happen.
The problem is, it'll be out of date before the ink dries, and the financials will be inaccurate long before you hit print. It's not that startups operate on different dynamics than other businesses, but they are essentially the agile equivalents of the old dinosaurs. Build it, test it, iterate it.
Essentially, startups are similar to how software is built these days: Instead of spending six months writing an entire product specification that will be wrong before you write a single line of code, release an MVP version of the product and adjust from over there.
There have been some proponents of doing business plans differently, including Guy Kawasaki, whose "you only need 10 slides" argument may be too minimalist, but at least it's more useful for weaving a pitch narrative than a 90-page business plan. . In short: the pitch deck was to the business plan what agile software development was to waterfall software development.
From there, the market evolved further and some founders they chose not to use a platform at all.
“History is very important,” said Tom Hacohen, executive director of webhooks as a service company Svix, who recently raised a round of financing from Andreessen Horowitz without using a presentation. “Investors are not webhook experts, so they need to understand the story. To do that, we had to tell a great story, and when we did, they really started digging into the business. They understood our metrics and started talking to a good portion of our customers. At that point, the platform alone will help me guide them through what they already know."
Let's see how to tell your company's story without relying on a PowerPoint!
The core of arriving at an investment decision is reaching conviction among those who will sign your term sheet (and later the investment check). Some people find that a presentation is a good way to make sure they cover all their bases. This may have a place if your story is very visual or if you have a lot of graphs and tables to convey your data. These days, however, many companies have dashboards, and it's so easy to open them when you're talking to your investors instead of exporting and re-importing the data on a slide.
Other stories, like Hacohen's webhook startup, just aren't very graphically appealing; the product focuses on the plumbing that powers the internet. Very important but not terribly visually exciting.
Before a launch, it is emphatic to say: “I have a presentation, but I do not need it, and we are going to embark on a very emotional journey together. Should we talk like people?
“A lot of founders start by submitting a document, but honestly, I hate that and have never done that in my life,” Hacohen explains. “I want to control history. I want to break when I want to break. I want to tell something compelling at my own pace. And a presentation with information does not do that. Another part of it is that I'm a solo founder, and I don't really have time to do a document."
Think about why you need a presentation in the first place, and whether you need it to tell the best story. Do you need it to showcase your competitors, or can you just talk about them? Do you need it to showcase your product, or could you do a live demo or let investors try it out for themselves? For finances, there is often a better tool (for example, a spreadsheet), and for your business metrics, if you have a set of dashboards or something similar, why would you change the story from that tool to another?
I often start with startups and their founders by asking them a question: What is your story? What is the best way to tell that story? What do you need to tell that story in a way that helps investors get where they need to go?
Realistically, in many cases, it is useful to have a document; it is the most common way of conveying the specific set of information that investors expect to see in order to decide whether to take the next investment step. But there may be other ways to convey the same information, and if your startup is good enough, the deal will likely speed up anyway, as Svix experienced.
“Andreessen approached us after […] the YC demo day we did a couple of years ago, but we had already closed a round at that point,” Hacohen explains. “Over the years, investors kept trying to catch up. I always say 'no', because we are not Raising funds. But Andreessen feels a note that caught my attention; They had done some research on our space and wanted to hear my thoughts on it. We ended up jumping on a call and from there we ended up going up a round.”
