We spoke last week to Jeff Ullrich of Earwolf, who sold the idea of a Podcasting Network to Scott Aukerman after pitching him with a 14-page deck.
There have been many apocryphal tales in Start-Up Land about companies raising enormous sums based solely off a presentation, or, in some cases, just their deck. (A famous story from two years ago was Color, whose story was spoofed by this slideshow.)
You most likely won't make $41 million off your presentation, but you DO need a deck which clearly lays out a few key things which ALL VCs (and potential partners) look for:
- What your product does
- What your Unique Selling Proposition (USP) is
- What the market size is (and who your customers are)
- How you plan to make money
It seems easy, but one of the hardest exercises you will go through in this process is distilling everything you think, want, and believe in your company into a measly 10 pages (and you can't use eight-point font. It's unprofessional, and confusing.)
Think about it this way: the last time you explained what a favourite television show was about to someone, how long did it take you? Usually the answer is a minute or two, and that's too long. (VCs and partners are busy people.)
What your product does: Tell the story, pare it down to the essentials
A good way to focus the "what" of your pitch is to start out broad: write down the story of what your product is and does.
Now, reduce this story down to bullet points. Then, explain it verbally to someone using these points. This way, you'll find out what others find essential to getting the concept. You might remove points for clarity, or combine points.
Your USP: If you don't sell it, no one will buy it
The next most important piece of this puzzle is your unique selling proposition. It's OK if you have competitors in your area, (Actually, this could end up helping you raise money if you spin it correctly) you just need to distill WHY you're different, and better.)
If your main USP is that you're simply cheaper than the competition, it's not a compelling story. You need to dig deeply to explain what the essence of your product is. Effective USPs explain why the current system doesn't work and why your product is better. To use an example everyone is familiar with, Twitter's USP is that it's a realtime information network which allows you to engage or follow anyone around the world.
Market size: Don't oversell it.
The time for prudence is when you're putting together metrics on the market you're dealing with. On the Dragon's Den/Shark Tank, the kiss of death for rookies pitching is inevitably when they claim their product is a million dollar idea because the cosmetics industry is worth nearly $10 billion. Your product will never capture 100 per cent of the market. What you want to do is talk about the kind of metrics competitors have in the context of the market as a whole.
If your competitors have 10-million hits on their site every month, and 5-million active users, then use this to paint the picture of the market as a whole. You can also put it in the context of who fits your target demographic, although this is a bit tricky, as you'll never grab 100 per cent of your demographic.
Also, remember to use published figures and quote the source in your deck. You do not want to lose out because of made up numbers.
The literal million dollar question: How you plan to make money?
This is the biggest hurdle for some companies, including well-known ones. Facebook did not make money for years, and neither did Twitter.
What you need to encapsulate is a business model. If you sell something like T-shirts, you are on an e-commerce model. If you enable something transactionally, you have an affiliate model. If you don't sell something directly, the waters get murkier.
But what if your model is multi-faceted, or you do something no-one has done before? You should do your best to explain the model as easily as possible. Hire a graphic designer to draw a diagram of how your model works if you have to.
There are more detailed items you will need for your deck (the average investor deck is 10 pages). There are several resources where you can find step-by-step guides for their construction.
The most important thing to do is to focus on these four fundamentals and hone them, so at any given time, anywhere, if you are asked, you can give the same basic pitch, helping anyone to understand what you do and why it matters.
Here are some pitch decks for companies you know: