So much to say, so little time to say it.
That’s one of the predicaments entrepreneurs face when they go into a meeting with a potential VC investor.What information should be included in a pitch deck? What questions should founders be prepared to answer? What aspects of the business don’t investors need to know about when they’re considering an investment?
To find out, the Ohio Venture Association put microphones in the hands of Mark Kvamme of Drive Capital, Mike Stubler of Draper Triangle Ventures and Steve Haynes of Glengary as they listened to a mock pitch at its Eighth Venture Capital Summit on Friday. As Intelligent Mobile Support’s John Steidley gave his presentation, they interjected with questions, suggestions and praises and answered questions from the audience during the pitch.
They didn’t always agree on what they like to see and hear during a pitch, but their feedback touched on some common questions entrepreneurs might ask themselves when preparing a pitch deck.
Should I tell my startup story? If the startup was formed out of a personal experience or a success with a previous project, tell the brief version of how the company came to be. Stubler said that demonstrates to the VCs that the entrepreneur is truly passionate about what he’s doing. Haynes added that he listens closely to the pronouns entrepreneurs use in their pitches. The words “we” and “our,” rather than “I” and “my,” signal that a founder knows the importance of collaboration and has built a team he trusts.
Is it good to use buzzwords (big data, SaaS)? The panel was split on this one. On one hand, those words help investors better understand products and market potential off the bat. But if they’re used too many times without more detail, it might suggest that the entrepreneur doesn’t have a more specific vision or has unrealistic expectations based on the buzz.
Should I talk about my customers? “In the first three to four slides, I’m really trying to understand his business,” Kvamme said. That includes not only what the product and business model are but who the customers are. Who is the company’s biggest customer? How much of the company’s revenue does that customer account for?
Should I include their endorsements? Logos and testimonials are good, especially if they’re big companies, the panelists said. “Validation of customer adoption is critical here, especially when they’re big companies and there are more than one,” Haynes said. “These are the people we’re going to make reference calls to.”
How much financial information should I show? Definitely include the company’s revenue, monthly cash burn and how long the money being raised will last. Other figures that should be included in the deck depend, of course, on the type of company and its business model.
How far should I project? “In an early-stage company, I don’t care about years four and five,” Kvamme said about entrepreneurs that show five-year projections, so three years is enough.
[Photo from graur razvan ionut]