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Wednesday, May 4, 2011

The Myth of the Early Stage Pitch Deck

Do you know why there is so much information about how to craft the perfect early-stage pitch deck?  Because, people believe a good deck will get them investment...the secret is, it won't.  To make matters worse, it's damn near impossible and let me tell you why.

First of all, no matter how good your slides are, you're only guessing what the person across the table wants to see.  I realize that many VCs, like Sequoia and Dave McClure (500 Startups) via How to give a VC a Hardon, tell entrepreneurs what they want to see.  However, that's just a guideline at best.  Depending on whom you actually get face time with, even within the same firm, they all have different experiences, knowledge bases, skill sets and triggers...not to mention getting VCs interested is about getting them excited, not-not boring them to tears.

Second, public speaking is hard.  Most people can't land a joke successfully when all eyes are on them.  Think about how many conferences you've spent staring at your phone or picking at your terrible meal, instead of listening to the speaker.  In the world of entrepreneurs pitching VCs, I guarantee that no VC has ever invested in an entrepreneur they've tuned out.  But, don't worry.  You don't need to spend years perfecting public speaking.  But, before I tell you my thoughts on what to do, I'm sure some of you are wondering, "How do you know if I'm a talented speaker?"  If you haven't spent years dazzling crowds, or if you don't feel guilty about all the great events you have to turn down speaking requests from, it's unlikely that you are a great public speaker.

The good news is, you don't have to be.  Check out Sergey & Larry at early Google.  The secret is to let your passion come out.  Focus on what you have going for you, which is the problem you're solving, your solutions to the problem (ie product) and the empirical evidence you've gathered that tells you it's going to be a winner.  The best pitch meetings I've ever had started with a demo (core use case, not EVERY SINGLE FEATURE) and then I shut my mouth.  The interested ones wouldn't let me through the demo without lots of questions and comments (that's a good thing).  After you get through the product / use case, then it gets down to the evidence.  This is where you should use your prepared slides.  If you get through the details and the conversation turns turns to "How much are you looking to raise?" or "What can I do to help?", that's the best possible outcome...no pitch from a deck required.

The caveat is if you aren't pitching the right person in the firm, the aforementioned doesn't apply.

Then why do so many people ask for decks?  Theoretically, a deck is faster to thumb through than a executive summary and you can direct submitters to touch on important topics.  All that means is, if you are part of the unfortunate masses that haven't invested the time into directly networking with investors or people investors respect, when you get put in the never-empty inbox, you have a better shot at getting thumbed through.  But, do you really want anyone seeing your slides un-narrated?  NO!

If you get a seat at the right table, let your passion, hard work and external validation shine through.  There is nothing worse than having your pitch stopped or watching people you've spent months trying to get to-check their email.  Realizing you blew is like a punch in the stomach.  Pitch decks are only for products that have gained traction (specifically in the minds of investors).  If the person you are pitching isn't already a fanboy, and they're usually not (odds are they haven't even looked at your product, even though you are on their calendar), you have to make them a believer.  To do that, you must make them believe, in this order:

1)  users will use it.
2)  that someone will pay for it.
3)  that they can make a big return by backing it.

Most investors invest with their gut and justify with facts.  Once you've crossed the threshold of worthy of their time (their most valuable resource), they'll be more forgiving.  However, for most of us, running them through a slide deck during your 1 bite at the apple, isn't going to do it for you.  The good news is, now you know that is.