What makes a good investment deck? While you’ll hear loads of different opinions, the problem is that much of the advice given is subjective and not backed up by data. Add to this the number of bad habits picked up by the industry and you can see why many entrepreneurs create bad decks that put investors off investing.
DocSend and Harvard Business School researched where investors typically spend their time looking at a pitch deck, which we have combined with our own experience, we will share these insights so you can avoid the costly mistakes that many entrepreneurs make.
1. Don’t limit yourself to one
It would be so much easier to have a one-size-fits-all deck, but this approach simply doesn’t work. You will need one of three documents, depending on which investor you’re trying to engage and what stage your conversations have reached. Here are the basic tools you need to support your investor communications:
- The Exec Summary: The taster document that tells investors the core info they’ll need to know before deciding on whether they’re interested in learning more.
- The Presentation Deck: The one with no words. You’ll just use images to present in person or by video on Skype, Google Hangouts, etc. One reason TED Talks are so effective is that they only allow the use of words to emphasise key points. It’s nothing personal, but if you put words on a screen people will read them instead of listening to you!
- The Investor Deck: The bulkier document that most founders create when they try to fit it all into one. Without context, this overload of information would make the core opportunity tough to spot and not much fun to find. This is a document to leave with investors to mull over. It’s not to send out to the masses and certainly not to present over (again, words are distracting!).
We've created this handy flow diagram that shows how and when it’s best to use these documents in order to vastly improve your investor engagement levels. Now, a few grumpy, traditional investors have told us that this only slows the whole process down. That’s only the case when you leave out any of the key info in your Exec Summary, present your pitch in the wrong order or power through the whole thing while skipping much of the detail.
2. Get your deck in order
Your Investor Deck must be in the right order for it to be effective. It can mirror the order of your Presentation Deck, which makes things a little easier. This DocSend / Harvard Business School study of 200 startups that completed their Seed or Series A rounds is a great reference point to start with. It tracked the impact of 200 decks and concluded that this is the optimal order in which to put your slides:
- The Purpose: What do you do and why should they care?
- The Problem: What problem are you solving and what’s the market opportunity? (Try to avoid negative language).
- The Solution: How and why your solution is best placed to solve this problem.
- Why Now?: Was the market not ready previously? Does new technology make it possible? Are you offering an evolution or revolution?
Many pitches fail because they’re either bad ideas, ahead of the market or genuinely original. So, make sure you don’t fall into the first category and that you have a good explanation for why your idea hasn’t already been scooped.
- Market: How big is the market, what are its current trends and how are you going to tap into it?
- Competition: Who are your rivals? Don’t miss out any competitors, as if the investor spots one they’ll think you haven't done your homework. It actually pays to have a competitor or two as it takes time, money and clout to educate the market about a solution.
- Product: Give more detail about your product and any sales you’ve made to date. This is the place to unload your evidence, stats and any testimonials.
- Business Model: How are you currently making money? How will this change in the future? How do you market your solution and how does this sit in the overall model?
- Team: Why is each member of your team relevant? If they don’t add value, then they’re probably redundant. If your team lacks expertise in any area, find an advisor or Non-Exec Director to fill the knowledge gap. The team section can also go higher in the deck if you feel it’s particularly strong.
- Financials: A financial summary. Pinpoint key areas instead of unloading your entire financial model. This includes a summary of where the investor can expect to make a return.
3. Don’t neglect the human angle
Most investor guides out their tell you how to influence an investor’s rational decision making. However, just like you, investors are people and so their investment decisions are ultimately emotional ones.
We all like dramatic up-and-down stories with interesting side notes, but they’re also a means of creating empathy with the protagonists (in this case the entrepreneurs). So tell the investor a story, try and trigger some emotions and have them imagine themselves in your shoes. All of this will make your pitch more compelling and help the investor relate to you.
4. Make it about them
When you communicate your pitch, do it from the perspective of the investor and not yourself. It’s not an easy job, even for professional marketers, but here are a few ideas to help:
- Visualise your perfect investor and start addressing them in first person throughout your documents.
- Read your documents out loud. Does it flow, or does it sound robotic? If it sounds more conversational, it’s going to be much easier to take in.
- For everything you write, ask why an investor would care. If you don’t know, then either trim the section or remove it entirely.
- Be concise. Opt for shorter words and sentences without removing the core essence of the opportunity. This should get easier the more drafts you do.
- Personalise your deck. This is an important point that merits its own section...
5. Personalise your deck
When you’re meeting an investor, do your research and cater your pitch materials to them. Their LinkedIn profile should reveal a thing or two that will help you quickly demonstrate you’ve taken the time to do some research. Do they seem like they’re more likely to invest in people ahead of an idea? If so, put your team slides at the start. If they look like they base decisions on feelings, then start with your backstory. They might also be known for using a scoring system. If so, hone in on stats and other evidence. Finally, even the small act of putting their name on the front of the document can make a huge difference!
The 50 or so companies we have helped through our Crowdboost programme have all used this approach to help get funding. We're confident it will significantly boost your chances of winning over investors as well.