As a corporate lawyer for entrepreneurs, I am often asked to review pitch decks. A “pitch deck” is a collection of PowerPoint slides created by an entrepreneur in order to raise funds from (i.e., “pitch”) investors. They can be sent to investors as a stand-alone document (e.g., via email) or they can be used in conjunction with an in-person presentation. I am generally happy to give my input with respect to pitch decks — with the caveat that I’m a lawyer, not an investor. That being said, here are five common mistakes that I see:
Mistake #1 — Too Many Slides. Having too many slides is probably the number one mistake that entrepreneurs make. I recommend 10 slides or less. Indeed, Fred Wilson, a highly-successful and well-respected VC, recommends six slides in his post here and aptly points out that: “Like many things in life, less is more in fundraising slides. You can explain your business in mind numbing detail or you can inspire an investor and let them imagine. Guess what works better?”
Mistake #2 — Too Many Words. Most decks not only have too many slides, but also too many words. Decks should be as visual as possible (with charts, tables and pictures) so that each slide can convey its purpose in 5 seconds, not 30 seconds. Investors are not interested in reading memos, with rows of bullet-points (nor are they interested in hearing you read memos to them). Remember the old Chinese proverb: “a picture is worth one thousand words.”
Mistake #3 — Failing to Tell a Story. Another common mistake is failing to tell a compelling story. Like everyone else, investors love stories; it’s in our DNA going back to the early humans sitting around a campfire. So tell an exciting story about your startup and arrange your slides to reflect that story. As the guys at Venture Hacks describe in their excellent e-book Pitching Hacks:
This sequence of slides tells a story:
We have a mission and a team that is taking us there. Why? We discovered this large problem and solved it with a product that has this amazing technology inside. We’re going to market and sell it to these customers, with these advantages over our competitors. In particular, we’re working towards these milestones over the next few quarters. In conclusion, this financing is a great investment opportunity.
This is a good sequence for a written deck. But don’t take this sequence too literally when you’re presenting.
Mistake #4 — Not Identifying A Big Problem. You’re not going to get investors excited unless you have identified a big problem (or opportunity) in the marketplace. You must address this issue head-on in your pitch deck: What’s the big problem? What’s the solution? This is the core of your pitch and this is where your demo comes in, as discussed below.
Indeed, as Randy Komisar of Kleiner Perkins notes in the Forbes article, “Seducing A VC”: “In my business, I look for the biggest problem because the amount of resources, time and money that go into solving a small problem is pretty comparable to the amount of resources that go into solving a big problem. Why not solve a big problem?”
Mistake #5 — No Product Demo. A final common mistake is not demonstrating your product. If you’re presenting in person and you’re pitching a product, you must demo the product first thing. Indeed, demos trump every form of presentation. As Jason Calacanis, a very smart and successful entrepreneur (and angel investor) notes in his blog post, how to demo your product (part one):
The longer it takes for you to show your product, the worse your product is. Folks who have a kick-ass product don’t spend five or ten minutes “setting the stage” or “giving the background.” Folks with killer products CAN’T WAIT to show you their product. Their demos start with their homepage and quickly jump into the users experience. If a picture tells a thousand stories, then a product demo tells a million.
Most of the foregoing is covered in an excellent article, Perfecting Your Pitch, by Guy Kawasaki, managing director of Garage Technology Ventures, co-founder of Alltop and a smart investor and marketing guy. In addition, I have set forth below a good example of an effective pitch deck via Dave McClure, another smart investor and the founding partner of 500 Startups (though there may be too many slides and, as Dave notes, the demo should be done first). Many thanks, Scott