Creating a pitch deck and meeting with investors are both elemental aspects of the fundraising process—but there is something critical that needs to happen before this in order to have a successful fundraise. Once you’ve decided you are ready to fundraise, the first thing to do is to put together a compelling narrative.I firmly believe that investors invest in (and employees join, and journalists write about) compelling stories. Click To Tweet
I specifically start with a narrative and not a pitch deck when getting ready to fundraise. Your pitch deck is really just a vehicle for telling your story. So first, nail your narrative and only then should you build a pitch deck.
While building a successful business is 99% of a founder’s job, perfecting and pitching the company’s narrative is a critical 1%—but this 1% can make all the difference to your success.
Crafting a compelling narrative
The best advice I ever got on narratives was from Slava Akhmechet (Stripe, RethinkDB) on a matter totally unrelated to raising money. He said that every major story in human history followed the same story arc:
- The world is a certain way
- Something changes
- The world is now different
This may seem obvious, but I love the simplicity of it. I bet you that any great story you can think of right now follows this outline and your narrative should follow the same arc.
The 3-part narrative for fundraising
The world is a certain way — Here you outline your background and the current state of the market: How you were introduced to the problem, why you are an expert, and the order of magnitude of the problem today (it should be big!).
Something changes — This is your solution to the problem. As well as why you are the right person and why now is the ideal time to solve it.
The world is now different — Now explain how your solution changed the world: think product traction (metrics / milestone-focused traction). The remaining opportunity, or, why your traction will continue an increase exponentially.
Your narrative must be concise and accessible. Anything that doesn’t powerfully support one of these three points I would leave out.
I view this narrative as a story you tell through a conversation. If you have a powerful narrative you should be able to have a conversation with someone who is a novice in your industry and guide them through it, and at the end they should think your company is amazing and probably going to be very successful. In fact, to refine my narrative I often do exactly this (it doesn’t have to be with potential investors—more on this below) and use it to iterate on the story I am telling (adding or removing specific facts, changing the order of how things are presented, etc). Getting the right narrative is the most important part of the pitch process, so I would advise you spend a lot of time perfecting it.
Framing your narrative
Many (or most) of the investors you talk to will be less knowledgeable about your industry than you are. You should not make assumptions and instead explain things simply. This does not mean dumbing things down or belittling them. Instead, you can often do this by walking them through real world examples of what would happen without your product vs. what happens with your product successfully in the world (hopefully the latter is a much better outcome).
You should pitch the biggest vision that you actually believe in. VCs are trying to find multi-billion dollar companies. You want to present what you are building as something that is going to be big. If investors don’t see that your idea can have traction and impact, they will not invest. However, it has to be a vision you actually believe: if you pitch something that you don’t believe will happen just because you think it sounds big, it will be apparent and investors won’t want to back you.
Your pitch deck format
Once you believe you have a powerful narrative, you are ready to put together an effective pitch deck. Your pitch deck should follow the major points of your narrative as we outlined above.
The order of the slides in your deck is up to you. You may want to lead with your company purpose slide, while others may want to lead with the slide that describes the problem the company solves. Alternatively, you may want to introduce the team behind the idea sooner rather than later because it better qualifies why you can solve the issue. Whatever order you choose, make sure that your deck hits on all of the major components of the 3-part narrative.
Below are the slides we see in successful pitch decks, and how they might fit into your 3-part narrative structure:
Our fundraising pitch deck template explains the purpose of every slide listed above, with data and examples from successful pitch decks.
Lastly, resist the urge to put clip art, stock photos, and other random graphics or gifs into your pitch deck. It’s not helping you convince people you are building a great company. A powerful story and solid metrics will do the trick.
The metrics to consider for your pitch deck
You must know all the metrics surrounding your business like the back of your hand. If someone asks you what your customer acquisition cost is, and you can tell them the % breakdown of which channels you are getting customers from and the cost in each channel, you will look like a top notch operator. But take note that although you want to know all your numbers, you do not want to include all of them in your presentation. This is where an appendix comes in. As you craft your narrative and practice it with others, you want to think of every possible metric you could be asked and create a slide for it. If an investor asks you about these numbers, you can then surprise and impress them by pulling up a slide.
Based on your business, the core metric areas that should be in your pitch deck are:
- Total addressable market (TAM)
- Financial forecast
- Unit economics
- Use of funds
- Cash burn and runway
The blog post Narrative by Numbers breaks down each item above and explains how they will play into building your pitch deck and preparing for VC meetings.
Practicing your pitch
The next step is to practice your pitch. Many founders I have worked with just practice by lining up one or two second-tier firms as their first meetings, but I think that is a mistake. Pitching your company is a skill, and like any skill, a lot of practice is necessary to truly become a master.
I don’t think you should only practice with potential investors. You can practice with your friends who are founders, potential angels who might want to participate in a Series A round (but are low risk because they aren’t likely to lead), or even just potential employees or partners in the industry. It doesn’t hurt to practice with friends and family completely out of the startup world, either. This will help to highlight if you are using too much jargon and ensure that your story makes sense to a wide audience.
Also, you’re never too experienced to practice. I had raised over $70M before raising money for Atrium, and I don’t believe I had my Atrium pitch nailed until around 80 presentations in. There’s no significance to the number 80, itself—this was just what it took for that specific fundraise. The point is to get as much repetition as possible.
There is a lot of skill building to do and more practice will help you with the following things:
The more you practice, the more confident you will be. The more confident you appear, the more people will believe the things you are saying. This is how human nature works. If you appear nervous, you will not seem like an expert (even if you are).
Defining your pitching style
Everyone has their own style. Some people are aggressively confident. Other people are more introspective and thoughtful. You should do what works for you. The commonality is that whatever your style is, you need to be confident about your narrative and your metrics.
Filling in the holes of your pitch
The more you practice, the more objections and questions you will uncover. You can then think of and prepare answers to these objections and questions. Eventually, you will know everything anyone will bring up before they bring it up. When you have a solid, well-reasoned answer, they will be impressed. The alternative is being blindsided by an objection you don’t have an answer to, and looking like you are unprepared.
Remember, this all starts with creating a narrative that will compel investors, individual contributors, and users to engage with your business. This narrative, or vision, for your company also needs to be genuine, something you truly believe in. Throughout the entire lifecycle of your company, you’ll often be telling this story several times every day—to friends, employees, investors, industry partners, and media—so it’s important that your narrative is also clear and consistent.
Once you have your narrative and you’ve refined your pitch, you can start setting up investor meetings and begin fundraising with confidence. Whether you’re getting ready to pitch your startup to a larger audience or gearing up to raise a specific round, the resources below will guide you through this component of building your startup.
Pitch Decks and the Pitch Itself
- Your Fundraising Pitch Deck – The Do’s and Don’ts
- Narrative by Numbers: The Metrics That Should Be in Your Pitch Deck
- How to Pitch Your Startup on Stage