A pitch deck is a key part of raising venture capital – it is the first thing an investor will see of your business, and potentially the last if it doesn’t make the cut. DSW Ventures’ Eleanor Boardman gives some tips on how entrepreneurs should maximise the effectiveness of their first communication with VCs.
There’s already plenty out there on what to include when writing a pitch deck, so this guide will assume that you have the basics covered. Instead, we will dive into some common themes we often see when reviewing decks and give some tips on how to present investors with the best possible picture of your proposition and get them interested from the start.
- Make sure it stands on its own two feet
Sometimes after reviewing a so-so deck we can be torn on whether to meet with the founders. On occasions when we have a meeting with the founder team they bring the business to life and help everything fall into place. Whilst keeping things simple is key it’s crucial that investors can gain a real understanding of the business from your deck without the need for commentary (but without it becoming war and peace). If we read a deck and still don’t understand what the business does or why it exists, chances are that any initial excitement will start to fade.
As a founder it can be easy to auto-fill gaps in your head that others won’t be able to, so be explicit. Also, get someone with a critical eye from outside of the business to read it – if they can understand it, we probably will too.
- Be clear on your traction
So, you’ve explained the problem and how you’re going to solve it, but where’s the proof? Understandably this is trickier for pre-revenue businesses, but it is essential to give VCs an idea of any external validation you have so far. If you are in revenues, show some detail – how many customers are buying it? How much for? Have they made any longer-term commitments? A specific ‘Traction to date’ slide is a great way to get these points across without them getting lost in the rest of the deck.
If not in revenues, what evidence of product-market fit do you have? What conversations are going on? Who is desperately waiting to use the product?
- Know your competition
A well-thought-out competitor matrix goes a long way – it’s an essential exercise for any founder of any business. Including it in your deck shows the investor that you know your market and what you’re up against. This analysis also helps to identify and describe your USPs – why are you better than what’s already out there? Who do you see as your main competitor and what are their weaknesses?
Every business has some form of competition out there, which should be acknowledged and addressed in the deck.
- Don’t skip the financials
VCs can’t make a decision without seeing some numbers, so make sure you include any historics and a high-level financial forecast. The figures should tell the investor what they need to know about your business in particular – different revenue streams? Split them out. Mid-way through a financial year? Show us the run-rate and year-end forecast so we can see where you’re at. An analysis of near-term forecast in the context of order book and long-term in the context of addressable market also frames the forecast in clear and demonstrable metrics.
KPIs are also always welcome – they demonstrate a working knowledge of how to run a business as well as providing VCs with the opportunity to reference against the market and benchmark in the context of their portfolio. If you want to get a VC really excited, include LTV / CAC ratios (customer lifetime value to customer acquisition cost for the uninitiated).
Financials are an essential part of a deck – even if you are not a financial specialist, it is worth getting a friendly accountant to help you out. Also, remember that even in the VC world margins, overheads and cash are important – it’s not just about revenues.
- Create a detailed ‘Team’ page
Give us some detail – names, roles, experience. A vague bio will plant seeds of doubt in the investor’s head, so again, be specific. Tell us why you are the best people to grow and make a success of this venture. Add in any industry experts or other non-execs; just ensure it’s balanced – small companies can’t support a cast of thousands.
VCs invest in founders as much as the business, so be sure to sell yourselves too.
We at DSW Angels invest in venture capital rounds of up to £2m – if you have a pitch deck you’d like to send us (or even if you have a question on preparing a pitch deck), please email me at email@example.com or from our contact us page.
Investment Associate, DSW Ventures