A good teaser pitch deck is like a good CV, it gets you past screening and to a meeting that will allow investors to start the process of assessing if you’re right for them. With the limited pool of investors that startups are vying for attention from, your pitch deck is one of the most critical factors to get right. There are lots of blog posts on what your pitch deck should include, but just as important is knowing the pitch killers will destroy your teaser deck and put investors off from the important next step : securing a meeting.
Pitch Killers # 1 – Not describing the problem you are solving clearly
At enfoundery, we see lots of startup decks and the ones that are the best describe in simple terms on the very first slide what problem they are solving. Even if the problem you are solving is very complex or for a specialist user segment for example mutual fund traders, you still need to explain in simple terms what the big problem is you are solving.
The other mistake we see founders make is force fitting the solution they’ve already dreamed up to a problem that their target audience “must be facing”. This is really dangerous for your startup and if you are feeling a twinge of guilt of having made the same mistake, STOP. Go back and really get under the skin of the problem your target user is facing. An example is framing your problem as follows: Users are looking for ethical art and hand crafted products made by artisans in developing countries. Sorry, but no one wakes up in the morning worrying about how they are going to source a decoration for their house from an artisan in a developing country. It is not the most burning concern or an urgent problem that needs to be solved. When you frame your problem this way, you run the risk of the investor simply stopping at that point and moving on to the next pitch deck in their inbox and leaves you having wasted one precious opportunity at being considered for investment.
This is one of the more common pitch killers amongst marketplace startups who have two audiences that they are solving the problem for. The trick is to focus clearly on who you are solving the problem for primarily and then showing how your solution connects your two audiences together. So your problem may more accurately be framed as : artisans in developing markets lack the means of reaching international discerning consumers looking for unique art and home decor. You can clearly see how this would be a priority problem for someone in a developing country whose sole livelihood depends on being able to make money from their skills. And now you have just managed to get the investor to make an emotional and rational connection to your pitch on page one. Now you have their attention, the rest of the deck will be about demonstrating how you are best placed to solve this problem.
Pitch Killers # 2 – too much detail
One of the toughest skills to master is that of brevity. I understand the fear all too well of missing out the details that you think really differentiate your startup or demonstrate to the investor that you have thoroughly researched this space or that you are an expert in your domain. However, at the first contact with your target investor, your goal is simply to excite them enough about the opportunity to warrant them making time for either a call or a first meeting. From experience of sending decks to hundreds of investors, the average amount of time spent on a teaser deck of 10 slides is just under 2 minutes. If you’re lucky you’ll see the investor spend 3- 4 minutes on your deck and maybe come back to open your deck for a second time for a couple of minutes looking at two or three slides that stuck in their memory or caught their attention.
Common mistakes I see are very wordy decks – no one has time to read small text. Your deck is not meant to be a business plan. Neither is it meant to be a glossy marketing brochure. A danger amongst fashion, beauty and travel based startups is to include lots of gorgeous imagery on otherwise pointless slides in the deck. Often, there will literally be nothing else on those slides than images. Whilst this demonstrates polish and design skills and may work really well on attracting customers to you, it doesn’t help a busy investor who is quickly trying to assess whether you’re worth speaking to. Also bear in mind a number of decks are now reviewed on a mobile phone so again, tiny text doesn’t help.
There are lots of guidelines on what to include in a startup deck, so I won’t go into that here. The key tip to remember here is keep to 10 slides, use imagery on your cover slide and perhaps as a background image on some slides that have a simple but important point on them. Condense down your content into helping the investor answer the following six key questions in as visually and verbally simple terms as possible:
- what is the burning problem?
- how big of a problem is it?
- what is the unique solution to this problem?
- who else is solving this problem and why is it not good enough?
- why this team?
- why now?
Pitch Killers # 3 – ignoring the competition
This one is a real turn off. The number of times founders suggest that they are the “first” or “only” company solving this problem for users is altogether too frequent. Global Entrepreneurship Monitor suggests that about 133 million businesses are launched each year, of which an estimated 1.5% are tech startups – about 1.78 million startups a year. It is therefore highly likely that even if you are doing something very new, there are many others who have spotted the same problem as you and have landed upon similar solutions. So at best, saying you are the “first” or “only” startup solving this problem is naïve. At worst, it shows a lack of commercial acumen or awareness. Unless you have a patent or the barriers to entry are really high, I would advise serious caution to startups claiming they have no competition.
The other really important aspect founders should consider is that even if you have a patent or a complex technical solution, your startup should be anchored around a problem you are solving. Whilst you may have a new way of solving the problem, the likelihood is that your target user has been solving that problem with a variety of other methods. The competitive set you face isn’t limited to companies offering similar solutions to the problem but also include legacy solutions. For example, the competitive set for a online table booking platform includes the telephone or customers simply walking in to a restaurant. Startup founders would do well to remember that changing customer behaviour is difficult and expensive and legacy ways of solving a problem, even though they are sub-par, will remain a barrier to overcome.
Finally, competition is actually a good thing from an investor perspective. It shows that there is already a market there.
Pitch Killers # 4 – Weak Financial Projections
Everyone accepts that financial projections of early stage startups are just that – projections. These may never bear resemblance to your reality and it is fully expected that these will be regularly updated and course corrected as your startup evolves until that magical product market fit point. However, one of the biggest mistakes founders make is to outsource their financials to a friend (who may be an accountant or even an investment banking analyst) or a freelancer.
Whilst you may not like dealing with financial projections or modelling, it is really important to get under the skin of your financials because they actually tell the story of your business. Building your projections on solid assumptions will enable you to have a sensible conversation with investors on risks and scenarios. You will also be aware of what the core drivers of your business are and what metrics you need to watch to make it a success. Simply doing a linear forecast on your revenues assuming a 20% month on month growth is not just misguided, it is dangerous and could cost you an investment.
I have seen some great startup founders that are generating revenue and have clearly proven that they know what it takes to build a business be let down by this sloppiness. So if you really feel like you can’t build your own model, I would advise you to get help from someone who has experience with startup models at the stage of your business. Do not ask an MBA student or accountant to help. They may be incredibly proficient with financial models but may not be familiar with startup models and therefore lead to either overly complicated models or not be able to tell your startup story well.
Pitch Killers # 5 – inflating the market
It is widely accepted that one of the pre-conditions for VC investments is to demonstrate that the market you are targeting is large and fast growing. Typically, the market should be over $1 billion to be seen as attractive enough for VC investment. However, the approach founders take to determine this market size must be believable – in other words don’t inflate the market simply to hit those billion dollar figures. Founders that do this risk looking unclear about the actual segment they’re targeting or naïve about their potential to actually service the whole market.
We have shared tips on how to size up the market in this post that you might find helpful. To demonstrate that you understand the market you are targeting, break down your understanding of that market into 3 sections: Your TAM, SAM and SOM.
- TAM = The Total Addressable Market is the whole of your potential target audience. If you were creating a school pick up and drop off service for children, your TAM is not all the children in the world of school age. A more sensible approach would be to target the markets where a school bus service doesn’t exist already and where students live far enough away from school to need transportation.
- SAM = The Serviceable Available Market would be a subsection that you are targeting where your proposition is the strongest. It could be the 4-5 markets where your research shows the greatest demand and willingness to pay for a solution. It could also be a narrowing of the segment of user – perhaps only 11-18 year olds where you don’t need to worry about a child: staff ratio to keep children safe.
- SOM = The Serviceable Obtainable Market is the market you can capture in the first few years of your startup. It could be broken down geographically or be based on a strategic advantage you have versus competitors in the space. For example, if you discover that schools who offer a bus service may have 5 years contracts with a particular coach provider, this market suddenly is not serviceable by you.
Ultimately your pitch deck needs to be a polished, brief description of the problem you are uniquely solving and how you will succeed. It should show evidence of detailed understanding of the market and be free of the 5 pitch killers. Your goal is to get a face to face meeting with an investor but get past the digital screening or gatekeepers.
The average investor receives over 3000 pitch decks a year and spends just a few minutes scanning each one. Getting your pitch right is critical for successful fundraising. To see how we can help with reviewing your pitch deck or practising your pitch, click here and speak to one of the team at enfoundery for personalised guidance.