Guest post by Lisa Cuesta. Lisa is a Vice President at DC-based early stage venture firm NextGen Venture Partners and a member of the Vinetta Venture Challenge Committee, a group of investors representing 12 local firms that review all of Vinetta's pitch applications.
While founders may disagree about the causes for tech’s diversity problem, there are many reasons for female founders in Washington DC to be optimistic. In November, DC tech leaders announced a partnership with Mayor Muriel Bowser to make the District “the most supportive ecosystem for women entrepreneurs in the United States.” This effort formalizes the momentum that the DC tech community already has.
This week the Vinetta Project will begin accepting applications for its 3rd Annual Pitch & Panel Showcase Series. A group of 15 local investors on the Venture Challenge Committee will review all applications, and come to a decision on each company relatively quickly. This is a relatively common practice. A study by content management startup Docsend and Harvard Business School professor Tom Eisenmann showed that investors spend about 4 minutes per deck.
As you begin preparing your application, I wanted to share some thoughts on how to make your company stand out during the investor’s fourth hour of reading decks. My intent is not to replicate or repackage the many resources already available, you can find *real* pitch decks from companies and tips from investors below. Instead, I’ll share some highlights from our kickoff meeting to shed light on how investors evaluate pitch decks.
1. Sell the vision
If you haven’t figured it out by now, being a startup founder involves *a lot* of selling - selling your product, selling yourself, selling your company, selling your vision. If you’re not pitching investors, you’re pitching current employees, prospective hires, or potential customers. You’re trying to persuade these stakeholders to take a bet on you with their time, energy, and capital.
The pitch deck should capture a vision that gets investors excited about the future that your company is building, and why the company’s mission gets you out of bed in the morning. With a powerful mission statement, you can stand out and rise above the noise. Here are a few examples of tech companies’ missions:
2. No really, what problem are you solving? Who cares? And why?
Presumably you started working on your company after noticing a problem, and you developed a novel solution to address that problem. Every successful business has a target customer who needs their product or solution. Whether your target customer is a business or consumer, your product should address a need that affects their routine and that they’ll pay to use.
Get the investor excited about the solution - prove that your approach is better, cheaper, or faster for the customer than anything else out there. Remember to show don’t just tell - include screenshots to show your product’s differentiation, defensibility, and proprietary tech. Explain why now is the right time and how is your team uniquely positioned to build the company.
Show the reader that you’re familiar with the competitive landscape and the products that your solution is displacing. Lastly, prove that you can build a company around your product - and that it’s “not just a feature,” as Steve Jobs infamously told Dropbox’s Drew Houston.
3. Tell us how big the market is, but the exact number doesn’t matter that much
Including the total market size in your deck helps orient the investor and offers a sense of the scale and impact that your company could have - but it’s not the deciding factor. No investor ever assumes that your company will capture 100% market share. Instead, it sheds light on your understanding of the opportunity and industry dynamics.
In some cases, the startups are actually creating new demand (i.e. Google’s monetization of the internet through Adwords) or expanding a relatively small market (i.e. Uber revolutionizing the taxi industry). In other words, don’t stress about getting the number exactly right - provide a ballpark estimate and explain why the market opportunity will change over time.
4. How are you going to make money?
Sure, maybe Larry and Sergey hadn’t yet identified Google’s monetization strategy and Mark Zuckerberg was focused on getting more users on Facebook when they pitched investors, while Travis Kalanick is still trying to figure out how to make Uber profitable. However, these edge cases are the exception, not the rule.
Investors want to see the unit economics for your product - how much customers are willing to pay versus how much it costs you to serve them - and what you have to believe for the company to be profitable. Investors know your financial projections are going to be wrong but it’s still a worthwhile exercise to build forecasts around your assumptions about the business.
5. How far along are you?
Some will claim it’s never been easier to start a tech company. With the proliferation of developer tools and pay-as-you-go cloud computing platforms, entrepreneurs can ship product and start acquiring customers with minimal capital investment.
Your pitch deck should show your product’s validation from the market and traction to date. Depending on your business, this can be measured in revenue, orders, number of customers or signed contracts, number of users, or key partnerships. Investors will be looking for how fast your business is growing, and how you’ve learned and iterated.
If you’re looking for more inspiration, you can find additional resources from investors and entrepreneurs below!
For tips from the experts
For more inspiration