The VC Pitch – Confusing the Destination with the Journey

Too often we are so preoccupied with the destination, we forget the journey.
Unknown

Entrepreneurs hear that VC pitches ought to be short, 10-20 slides.  What most don’t know is that there is no way they can deliver a presentation that short by just “writing” the slide deck.

You Got to be Kidding
An entrepreneur I’ve known for a long time came by the ranch over Thanksgiving break to show me the first pass of his new startup slide deck.

My eyes were glazed by slide 9. It was over 35 slides long, with each slide feeling like it had 12 lines of 10-point type. It had a problem statement going back to the invention of the telephone, an opportunity claiming to exceed the Gross National Product and it had every possible product feature with enough left over for three other startups products.

My first reaction was, “you got to be kidding.” Yet I was hearing the pitch from an experienced entrepreneur with multiple wins under his belt. He had raised money from name-brand VC’s in past startups and knew what a fundable VC slide deck looked like.  What was going on?

Then I remembered, every slide deck I ever wrote started out just like this.

The Slide Deck As A Brainstorming Tool
Most startups ideas are not built in an afternoon, typically they are the sum of seemingly disparate and discrete pieces of information, and a pattern recognition algorithm continuously running in a founders head.

What I was seeing was an entrepreneur using a slide deck as a way to collect his thoughts.  The slides were his brainstorming tool.  He was using them to think through the impact of the idea he had, and was trying on for size the potential opportunity and trying to use the slides to spec his features.

The difference between this entrepreneur and a novice was that he knew his presentation wasn’t ready to show to a VC; he was using it to share his thinking with me to get more feedback on his business model.

We talked about how much of his presentation were just hypotheses (most but not all,) what hypotheses he could quickly test outside the building (assumptions about minimum feature set, pricing and customer archetypes) and how to turn some of the hypotheses into facts.  I pointed him to my “Lessons Learned” slide decks that turn a standard VC pitch into something more informative.  He left with both of us knowing that he was months away (and lots of customer feedback) from being ready for a VC pitch.

Advice From People Who Get Bored Easy
Most of the advice founders get about Venture Capital slide decks are from the recipients of the presentations – the VC’s – letting you know how they want to see the final deck. And most of their recommendations are essentially “show us your business plan in PowerPoint.” Few VC’s have experienced the process a founder uses to get their idea into 10-slides. And none of them tell you how.

If you find yourself trying to shoehorn your 35-slide presentation into a “VC-ready” format, you don’t know enough yet. And you won’t know any more by sitting in your office surfing the web and writing more slides. Get out of the building and talk to potential users and customers. The irony is the more you know, the easier it is to make your presentation short and concise.

Lessons Learned

  • Long slide decks are indicative of you thinking out loud;
  • Get out of the building and get smarter.
  • The more you know (versus guess) the shorter the deck.
  • Most VC’s are looking for the “give us the business plan in PowerPoint”
  • Give them a “Lessons Learned” VC presentation.

Listen to the post here: Download the Podcast here

12 Responses

  1. Great post, Steve. We just pulled back from an angel raise for just this reason… our deck has too many hypotheses and not enough demonstrable, product-specific data. The only way you can convince an investor to part with hard-earned money in 10 slides and 30 minutes is to show proven traction. That means download numbers, usage data or (the best) revenue/profit. We could have raised some money on trust/reputation, and we could have flogged the deck around Boston/SF to find some angel follow-on. But we’d rather wait a couple more months until we actually have some user data. If Yesware works, our valuation will be higher and the raise will be quicker. And if it doesn’t, we shouldn’t have taken the angel money anyway.

  2. If only it was that easy. Can you imagine Twitters pitch? Revenues, profits – nah. Just lots of users for free (and then we’ll figure out the business model).

    Most VC’s see too much, noodle too much, and by the end of the week are diluted with ideas. They’d rather back the jockey even if they don’t understand the horse he’s riding.

    Ultimately it’s hard work finding a real customer problem, solving it in the simplest way and punting on the rest. PowerPoint doesn’t teach you.

    Cheers,

    Peter
    5o9 Inc.

  3. Very timely post! I’m preparing a slide deck after 8 years of thinking and talking with customers. I’ll use the lessons learned slide deck to get out of the “Thinking Out Loud” Slide Deck that I was developing to flesh out the detailed features of the services offered.

  4. Powerful premise, Steve. Having seen it happen, I can vouch for the transformation from a pile of disjointed assertions into a story that one can’t help but nod along with.

    I’ve also seen second-time entrepreneurs start out with the _last_ startup’s deck, and then try to shoehorn the new idea into the same format. Talk about disaster. The assumption was that the length and format of the old deck (you know, fitting into the VC-approved pacing) mattered more than the content.

    Heck, I’ve seen visuals recycled three or more times through multiple startups, with obvious mental contortions to get the latest idea to make sense in the context of an old visual. Bizarre, right?

    What you’re really taking on here is the notion of a pitch format as some sort of talisman to use against VCs, instead of the output from arduous exploration, head-scratching, and humility.

  5. Great point,

    What do you think of the five slide templates advocated by Tim Young and http://LeanDeck.com?

  6. This reminds me of a quote by Blaise Pascal:

    “I have made this letter longer than usual, because I lack the time to make it short.”

  7. Steve —

    did anyone report to you success or disasters with VCs while using your format? What did VC say about your approach? Did they get excited or dismissed it?

  8. I don’t use a deck much anymore except to show the business model.

    Show the software, explain the model, ask for questions.

  9. Great post. The better you know your customers and their needs, the better your deck will be.

    VentureHacks has a great template at http://venturehacks.com/articles/deck

    I’ve put together a 15 slide template specifically for medical device startups at http://wp.me/p10xgs-j

  10. A pitch is a sale orientated environment.
    In human sales relationships interaction and engagement is key – to an extent, the person becomes the vehicle for belief in the product. This quite rightly transfers to a pitch. Nobody wants to hear a pitch that feels like a lecture, the more slides you have the less personal it will feel.

    An entrepreneur must sell both the product and himself with help only from slides that prove indispensable in this communication process.

  11. Steve,

    As I read your post I cringe at what I’ve presented over the years. Great post – especially the point about using the longer deck to gather & shape your ideas/hypotheses.

    I feel you omit one important factor though. First time entrepreneurs tend to sweat the small stuff (& I’m a world champion at this) and often lack the confidence to omit detail. Second or third time around, you’ve seen a lot of this stuff before & you’re confident in your own ability to deal with it & omit from your slide deck.

    I’ve only recently discovered your writings & want to compliment you on the incisiveness of your analysis & the clarity you bring to the science of entrepreneurship.

  12. Great point, What do you think of the five slide templates advocated by Tim Young and http://LeanDeck.com?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 159,743 other followers