April 16, 2017
by: Karthik Sundaram
Every idea is a great idea. You’ve probably spent quite a few sleepless nights crafting your pitch deck, finessed each slide, pored over the flow, drilled down to the sales process and revenue streams… yet you seem to get no traction with the venture world.
Over the last couple of years, we have been working with quite a few start-ups that have sewed up seed and Series A rounds in 12 months or less.
Some early notes in your fund-seeking efforts: You need at least three Proof of Concepts with early customers, bringing about $10,000 a month in revenue for a Seed round. You need at least five customers paying about $100,000 in monthly revenue for a Series A. Don’t waste your time schlepping your deck around with no customers, in the hope some VC will fund it.
Here are five easy-to-follow tips to help build a winning pitch deck:
Summarize the problem stack into a solution statement:
E.g. Using the cloud as secondary storage is making companies lose $1B in wasteful spend (problem stack) can be rephrased to:
We are helping X, Y, and Z (names of your early customers) save over $1M annually by leveraging our tools to operate their data on the cloud.
A classic trend statement could be:
Digital transformation is forcing enterprises to embrace the Many-to-Many transactional model, where customers are buyers-and-sellers at different points, requiring new payment security solutions. Current payment security market is $14B, but with mobile payments growing to 63% in 2016, this market is expected to expand to $23B by 2020.
Your pitch needs to talk bad-ass market sizes.
A start up we are helping says it well:
The new age of ransomware is helping fund drug, human, and weapons traffic to the tune of $132B. If we don’t tackle it now, even a venture firm’s business is open to attack.
Make them realize the pain, “What if it happens to us, me, or our firm?” Oh, that doesn’t mean all the problems out there you are solving will be directly relevant to them, but the idea is to bring the trend down to a pain level.
The same CEO goes on to explain why his team is the right fit:
Co-founder A: key contributor to the $12B chip-set security business at company X
CTO: Key architect of the mobile security at company Y
CEO: Led the sales and market share of the end-point security solution for Company Z, today at $400m, CAGR 21%
Talk numbers, facts, and intelligent marriage of data and dreams.
The second part is your approach to the problem: why your approach solves the problem, where has it been battle-tested, and what is your roadmap to build this to scale. This involves your ability to clearly show how you approached the problem, raving customer testimonials, and a clear roadmap on how you will scale with product features that will solve the $B market size challenge. Many start-ups expect to solve all problems with their current stack, but we need to be realistic here.
One smart CEO put a matrix of competition and all the problem stacks they solve, and highlighted where his product solved the whitespace in the matrix–not addressed by the current landscape as their focus are on other challenges. Another CEO described it in market spend, and showed how his license model could disrupt current models and build new, scalable revenue streams. You need to really think through this slide.
The balance slides are fairly table stakes: Product Roadmap, Sales and Pipeline, Cash burn to Profitability, Exit Strategy, and Conclusions.
What are your inputs? How have you crafted your winning pitch deck? I’d be delighted to include your feedback here.