256. Everything You Need To Know About Pitch Decks and Pitching in 22 Minutes

0:00Okay, so you want to raise funding and you need a pitch deck and to have to pitch effectively to do that. I've invested in several companies as an angel investor. I'm an LP in a couple of venture capital funds and I've seen thousands of pitch decks. So I'm going to give you my best advice in a short amount of time as I can to help you on your way. First, there's four things you need to be thinking about. You need to be clear, credible, contagious and capitalist. That is what your aim is. Being clear. It shouldn't be confusing. People should know exactly what you're building. They should know exactly what every slide in your deck means.

0:36If you're confusing them, you've lost them, they're not going to invest. Credible. You've got to prove you're the type of person that can build a successful company they want to invest in and they can make money off of. And this is through your background, this is through the different areas. Third, contagious. They need to understand that this is an idea that's going to spread. This is an idea that's going to go incredibly well. they want to be feeling the energy they want to see you and if they can get the energy from you they think other investors are going to get that too they think customers are going to get that too you can feel the excitement in my voice right that's what you should be making them feel like you should make making them feel like you've got an idea and you're the type of person that's going to make them have something which goes viral the fourth part capitalist is really important and people forget it.

1:26You've got to make them money. You can have the best idea in the world. How is it going to make them money? Because as an investor, their job is to make a return. Especially if you talk to a venture capitalist, their job is to make money for the people that invest in them. If you can't prove that in your deck or you just gloss over that, they're not going to be interested. Their job is to make money. So remember, keep those four clear things in your brain as you go this process and when you're assessing whether or not you have a good pitch or a great pitch, that's what you need to be assessing against.

1:58At the earliest stages, the most important thing is a team. They're investing in you. Can you make this happen? As you get further on, the data becomes more important. Once there's more data in place, so what's your traction, what's your revenue, how quick are you growing? At the later stages, they're going to assess much more on that because your credibility at the beginning is usually based on your past or what you've started to build but once the actual data is there that's going to take precedence. So I think a lot of pre-seed founders get this wrong is that they're pitching their idea, they're pitching their solution, investors are investing in you and you need to prove to them that you are the right person.

2:38As I go through the slides one by one now remember that the order should change based on what's the most compelling case for you. If you have 10 million in revenue completely bootstrapped in two months, that's your first slide. Nobody cares about the rest of the slides if you have a killer slide like that. So as you're thinking about this, put the precedence and the order of the slides and the order of your messaging to reflect what is the most compelling thing to the investors on your experience so far. So let's go by the slides. First slide, welcome slide, simple, clean, what's your name, what's the startup's name and a one-liner that just tells everything they need to know in a very quick way.

3:20From that one-liner they should know what industry you are, they should know roughly what problem you're trying to solve and that's the bit that when they refer to you to other people, oh that company that does whatever, they should be able to tell that just from the front cover. Second is usually the problem slide so be clear and easy to understand. if people in the room haven't experienced a problem themselves can you get across them why this is a really urgent problem we call it hair on fire problems it needs to be solved now and the customers that are going to be facing this problem are going to pay for this solution don't be too vague or broad we're going to revolutionize health how what exactly do you mean we're going to revolutionize banking again what exactly do you mean how are you going to do what part of banking is broken.

4:06As you're getting this idea across and the problem across, there's two different main mechanisms, right? A really amazing story or a really incredible stat. So whichever one you use, and if you can use both, go ahead and use both, but you don't want to overload it with too many different things. So let's say you've got a story where somebody's really suffering of an issue and it costs them X amount of problems and you can get that emotional feel, get the get the person who's listening to your pitch to really feel that pain or you can have the stats wise where maybe it's a stat that shocks people right maybe people don't realize that this many people suffer from a problem so a classic one in the femtech space endometriosis is that for someone like me because i'm seeing the decks i'm seeing the news i can tell that's a huge problem for many women if you're talking to an investor who doesn't understand that make sure they know that's a problem make sure they know there's a big audience for this and make sure they know it's a problem that needs to be solved.

5:03For extra points here also cover why now. Is it something which has changed over time? Is it something particularly about this moment in time which means that it can be solved today or is worse today than it's been in the past? Next slide is a solution. How exactly are you solving this problem? And it's got to be directly related to the problem you just mentioned. This is the problem, this is the solution, it should be obvious to anybody about why your solution is the solution to that problem. If it's not obvious, if it's not clear, again, you've just lost the investor. That's it. Bye. And it should be 10 times as good as anything else that the person can do to solve the problem.

5:42You don't want to be a bit better. It's got to be much better, all the magnitude better. And again, what makes it so good is something unique about it. And that takes us to the next slide, the product slide or the features slide where you're going to a little bit more depth and really showcase what makes this solution so unique, what makes this game changing and again if they can't tell from that slide why is this game changing, you're done. If you've got a demo here, use it. If you've got screenshots, again use it just to make it feel real and tangible and the screenshots where you've got it, where someone's using it, whether it's like that as well can really help.

6:20If you go down the story route for the problem you can finish that story off by somebody who's using your product today and what that now happens to them. If you've got patents or you've got some defensibility again put that in here you are the one who's got the patent for this new technology which is game changing. Next is the team slide and as I mentioned in most pre-seed decks this is the most important slide they're investing in you and you just putting logos on there doesn't mean anything. so this team slide the focus should be on the co-founders if you've got advisors or a board you can put them on there but only put them on there if they're truly exceptional by the mere fact that you have them on board is going to change your perceptions of you right so if for example you're building a cancer charity or a cancer product and the head of cancer research uk is on your board that's worth putting in right it shows that you have access to network that's the only reason to show the board on there otherwise the board and advisors can just be like nobody really knows how involved they are if they actually care what's going on there the co-founders is the key focus and for those co-founders what matters more than the logos is what you've actually done because if for example you put the logo of google on there right well i think half a million people have worked at google all time if you put deloitte on there again what a million people have worked it to learn in the last 10-15 years, these aren't showing that you can potentially build a transformational company.

7:50Whereas if you say, for example, you led this project at Google and that project was worth X billion, now you're talking, now the investor is interested, right? So you've got to be thinking in that manner, what am I putting on this slide that helps convince the investor I am somebody worth investing in because I have a track record that proves that. So looking at what makes you exceptional, even if it's not in the business space, it could be your national level sports or international if you're a former olympian the fact that you were able to get to that level showcases grit determination discipline so many important features it could be in dance it could be in so many different areas you can prove let's say you're building a cancer startup again deno women's in cancer today but that cancer if you were a cancer survivor and you came through that again you're proving that you've got real strength in your mentality to get through something like that and keep going and keep thriving, right?

8:47You're showing the investors your sun motivation back. You can add team members to this slide too but again only where it actually benefits you. If you were able to recruit somebody who's of really high caliber to work for you, that's a good signal to an investor that these people are willing to give up their really highly paid jobs to back your mission and what you're doing. So team members can be really useful in that sense because you're ticking that box to the investors that you're somebody who can attract high quality talent to work for your startup. Next slide to cover is the traction slide.

9:22Now pre-c is an interesting game because originally it was supposed to mean that you didn't have any traction yet you just had an idea and people are going to back you. The reality is that the world is so much more competitive than it was in the past and with less easy money with interest rates all these different things and with the advent of AI too means that what investors expect from you at these early stages is now much higher. The only way you get to skip traction is if you're a former existed founder you help build a scale up or a unicorn or something like that or you just come from extreme wealth.

9:56For most other people you're going to need to prove traction to prove that you aren't just asking for money straight away you've been able to build been able to dedicate time to this and you are truly obsessed with the problem you're trying to solve. As a general rule, the less credible you are from your previous experience, the more traction you need to show to get investors. And what does traction mean? The best traction is revenue and even better in revenue is recurring revenue where people are continuing to pay and having low churn rates, right? That is really showing investors this is a sticky product that people love.

10:30You can show user numbers if it's a more of a free product, testimonials so if you've got high caliber clients who really love what you're doing and even if it's a consumer product for example if you've got a consumer product for chefs and the top chefs in the world are using your product that's great right it's showing real traction it's showing that the people that others look up to and people who others will follow and trendsetters if they're backing you again that's a really good signal to investors if you're earlier stage wait lists and again wait lists are a level below revenue because people aren't actually paying yet but where people are paying and if you can have a wait list where people are pre-ordered and paying in advance again really showing the investors this is a hair and fryer problem because people are willing to pay before the solution is even ready so when you've got traction awards and stuff like that don't really count to be honest what really counts is customers caring about your building and customers willing to pay for what you're building now we look at market size and market size for me is one of the most controversial slides because for most people it's just completely made up and it doesn't show me anything at all because if we look at it so market size like what the idea behind the slide is to prove that you have a big enough market that means that the investors can make a large return if you were able to grow and take some on that market and generally it's presented as three different numbers so that's your TAM which is total adjustable market your SAM which is your serviceable adjustable market and your SOM which is a serviceable obtainable market.

12:04These numbers are generally so made up that they become almost useless but let's dive into what they actually are. So TAM is if you were to overtake the entire segment of what you're building then that's how much market size it is right? So let's say you're building trainers and you look at the entire trainer market. So every single person in this world were your trainers. What would the market size be? Your SAM is your serviceable, adjustable market. So that's looking at what segment are you actually going for? So let's say you're going for luxury high-end trainers. What's the size of that market?

12:39If everybody who buys luxury high-end trainers, how much would that be? And then your SOM, your serviceable training market is what do you actually think you can get in the next few years so if the luxury market for trainers is making up a number here let's say it's 10 billion if you could get 10 of that in the next five years that's 1 billion now what in reality what happens and this is where people do things in ways which don't really serve them is you can have different approaches to working at these numbers so what many people use is a top-down approach. This is where you find the number from a report online or you look at, okay, this is the size of the market and then you just do fractions of that to work out your different numbers.

13:24What's actually much better, even very fallible itself, is bottom up. So as you're looking at, okay, this is the size of the population. If this percentage of them bought my product, this is what the number would look like. And that's more reasonable because you're actually going from okay how this look what would the numbers look like here and you can kind of prove okay let's say i'm building a let's say i'm building a health tech device a wearable you're then working okay my wearable costs this much and then trying to work out what percentage of people potentially wear that wearable and that size of your market the whole point of this slide is just to prove that your market is big enough right nobody's really gonna go too much of the details but you are going to be questioned if it seems like you're doing something unreasonable because what i often see for example is somebody's building something in fintech and they'll say the social size the market is 100 trillion and it's like well you're not really targeting anything to do most of that and it just becomes a bit unreasonable right so where you can have it more grounded more reasonable the better the other key thing to look at when you're looking at market sizing is the trends if something can become more popular or a problem is becoming more acute that's really interesting too so say example of something i servicing elderly people in japan where the elderly population is continuing to grow at quite an increasing rate that's a very interesting market because if you get it now then that marketing continues to grow by itself and if you maintain market share you're going to do pretty well now for a slide about marketing and distribution and it's often gets overlooked by many people in their pitch deck but if you're saying that you're going to get this percentage of the market in your market sizing slide you need have some way of proving how you're going to do that right what's your plan how are you going to reach those level of customers how you're actually going to get to that spot and i think it's underrated because without this slide you're basically just spouting out numbers without any real substance so it's looking at what sales channels are you going to use have used them effectively so far if you're looking at cac for example you can increase this here so cac is customer acquisition cost if for example you've been running ads how many well how much you're spending on ads for every customer you get these kind of things will be really useful but understanding how especially with a unique distribution channel if you can put that in here that can really help your case and one thing that people do here for example is if you're looking at say like Instagram and TikTok if you're looking to consume a brand great that's what's reaching your customers but if you've got a social media presence and none of those people convert not very interesting to any investor.

15:59The competition slide can be really misused as well. So competition is just how you position the market. Again, it all should relate back to that market size slide where if you're saying you're going to capture this part of the market, who are the other players and how are you different, right? So when looking at competition, what people tend to do is either two things, either they have the x y axis like that and they're in the top corner, they're the best obviously, or you have a table where you're talking about different features. Now, what really matters to investors here is actually not that you're better than everybody else.

16:35It's that you're different, that you've got a different angle. That means that you've got a blue ocean, right? Nobody's really servicing that part of the market for whatever reason. The classic one in corporate strategy is Southwest Airlines, where everybody was targeting the high end of the market and Southwest went for the low end and they're able to gain market share there really rapidly. So when you think about competition slide, try to avoid things which are objective. So avoid that like, oh, best customer service or best speed or something like that, right? Where it can really just vary.

17:13What you want to be saying on this thing here is that there are other players in the market, but the way they're positioning themselves isn't the same as how we're positioning ourselves and we're slightly different. we're going to be more focused on this area and that doesn't make sense for them to follow because of their niches that they've carved out the other interesting thing too is that it can be good to have competitors who are in the same space as you but who you can out compete so if for example there's other people in your particular area but in the consumer brand area let's say there's people with different smaller brands but then you're somebody's got 10 million followers in instagram then even though there's other players in that market you can crush them and why it's good to show you've got competition it shows that there's demand for this area because if nobody's ever thought of your idea then the investment will think well what's going on here is like is it not a good market is there something wrong of it why have other people tried it and the hope is other people have tried it and failed but it's because they don't have the skills and the competency that your team has next we have business model so quickest way to look at this we've got another video on this channel about business models and you've got nine that come from YC, Y Combinator, so one of the world's greatest accelerators and try not to reinvent the wheel here, right?

18:31What's your business model? How are you going to make money? What's your pricing? Why have you chosen that pricing? So this is the key thing about business model. It's not just about how you're going to make money, it's about why you're making money in that way and expect to get a question on that by the investors. If you're saying you're going to charge this amount, you've got to work out why am I going to charge that amount and you can simply say we're doing this research at the moment we're talking to customers we're looking at the competitive and other brands in this market and we think we can charge this because of this reason but expect when you put the revenue model on here for these numbers to be crunched and for investors to look at this as does it seem reasonable do I think okay they've said this can this actually make money or not.

19:11Revenue forecasts are some which are included by many founders but any investor who's worth their salt will know that at the early stages it's meaningless because there's so much uncertainty. So you can include it if you want or you can put it into a appendix but revenue forecasting is so inaccurate but what it can do is open up to questioning. We have to defend why did you say that this is where you're going to get to. The final slide and the most important slide is the ask. How much money are you looking to raise? What percentage of it have you already raised? What are you going to spend that money on?

19:48And again, when you think about how much you're asking for in the valuation, you don't necessarily need to put a valuation on the slide, but generally think about at the early stages, you're giving away, say, 10 to 15 % of your company per round so they can backwards work out what the valuation is of that and if it talks to a venture capitalist for example generally you're going to be a price taker not a price maker unless you're a really hot round where you can have different offers and you can choose which one is best for you but it's asking slide it's really important to be super clear because you'd be surprised how many pitch decks i get but i don't know how much they're trying to raise if i I don't even know, I can't do any of the calculations or any of the math to work out if this is a good investment or not.

20:33And one final side note is that in the age of AI, expect to have to justify why you're raising the money. Because if you say, okay, we're going to raise this amount of money because we need to do this to hire people, could you use AI? How are you using AI effectively? And founders are increasingly asked questions on this because you want to try to increase the revenue per employee as much as possible. You're also going to be questioning your own salaries. if you've put in their staff costs and you're paying yourself 200k a year at pre-seed before you've got any revenue or any customers you're going to be laughed out of the room and i've in the past i've rejected founders because of this if i know that they're asking for huge salaries but they haven't even proved their product yet then what you're trying to show is that you're going to be taking a below market salary because you believe in the upside of this which makes it worth your time.

21:24If you don't think it's worth your time, you're going to want the biggest salary possible in order to get there. At the same time, this doesn't mean starving, but it means putting in realistic numbers so that they can say, okay, that's the reasonable amount to pay them, and we believe in you enough to do that. And come back to those four things I said right at the beginning of being clear, credible, contagious, and capitalist. If you can do those four things, you're in. So best of luck with your fundraise and I hope this was useful. Check out the other videos on this page if you want to learn more and subscribe for future videos.