Elizabeth Yin

Even though there are a lot of web resources on how to put together a pitch deck for seed-stage companies, most don’t address how many decks you need and for what purpose. If you are fundraising, you’ll need at least 2 decks:

1. An email deck
2. An in-person meeting deck

If you are participating in a Demo Day with an accelerator, you’ll also need a Demo Day deck.

Originally posted by theweekmagazine

Obviously all your decks will be similar, since you are pitching the same company!  All of your decks should:

• Be compelling – lead with your strongest points first! If it’s team, then lead with team.  If it’s traction, lead with traction.  If it’s a big problem, and you have an unusual solution, go with that.
• Tell a story – this is not just a series of facts.  The slides must flow together.
• Be visual  – i.e. verbalize, don’t make an investor read words.
• Be simple – an investor should understand the slide in 1-2 seconds; don’t make him/her think.
• Include your contact information so that people can contact you!

But, there are some major differences…

What is an email deck?

An email deck is what you’ll email to investors if they ask to see a deck first before setting up a meeting with you.

There should be enough information here to be compelling enough to take a meeting with you. BUT, not too much such that they can decide NOT to take a meeting with you.  Keep in mind that many investors could (will!) forward this to other people, so don’t put anything too confidential in here.

Examples of what to put in (not in this order per se):

• Problem you’re solving
• Your solution
• Traction – key performance indicators (could be MRR, growth, users – whatever makes the most sense for your business)
• Market
• Team

The purpose of the email deck is to get a meeting – that’s it.  So, you should include facts about your business that will be compelling to get you that meeting and nothing more.

The flip-side is that you shouldn’t include too much – specifically, anything that can be nitpicked.  These are some things I wouldn’t include in an email deck include:

• How many people you are hiring
• Financial projections or forecasts

These are hypothetical. The number of people you hire could change, and if an investor thinks you should hire 5 sales people instead of 4, you shouldn’t let that be what stops you from getting a meeting.  Similarly, if you are projecting too high or too low of a revenue number for next year, an investor may think that you are unrealistic or not ambitious enough, and you are not even there to defend your argument when he/she reads your deck.

Realistically, an investor will spend only 10 seconds looking at your deck, so it has to be understandable and concise.  It’s ok, if he / she only understands the gist.  The meeting will allow for detailed discussion.

Lastly, an email deck serves to provide context.  Sometimes an investor you’ve already met with may ask for an email deck so that he/she can send the opportunity to other partners / investors at his / her firm so that they can get context before meeting with you.

What is an in-person meeting deck?

An in-person meeting deck has the meat.  Lots of great people have written about what slides you should have for this deck.  You can find great resources here, here, and here (among many other places).  I don’t need to dive into this in detail.

In short, an in-person meeting deck should have ~10 high level slides with appendix slides that dive into the weeds.  In addition to the other slides from your email deck, include your business model and 1-2 key unit economics (LTV, CAC, churn, etc.).

Even for this deck, you’ll want to still keep the slides at a high level.  If an investor asks to dive into the weeds on certain areas, then you can guide him/her to the appendix slides you’ve prepared and fully cover a topic before continuing on.  Some investors prefer to dive into product questions and others really want to dive into customer acquisition channels and unit metrics.  You’ll want to have lots of appendix slides to cater to different audiences, but most of the time, you won’t dive into all of them.

If you’re meeting with an angel investor, this first meeting may be all that you need to secure funding.  But, if you are meeting with a VC, the purpose of this deck is to get the next meeting.  (Be sure you ask questions to understand how an investor decides to invest and what his/her process is.)  At a firm that moves quickly, that next meeting could be an all-partner meeting, which is typically the last meeting needed to make a decision (for seed-stage).

Go get ‘em!

I’ve ragged on investors quite a bit in my recent posts here and here.

But fundraising meetings are a two-way street.  Entrepreneurs also need to do a much better job pitching.  Specifically, I’ve noticed that many first-time entrepreneurs do not ask any questions.  This is a serious mistake.  Entrepreneurs should learn everything they can about an investor.  Taking investor dollars shouldn’t be done lightly.

You don’t want to take money from bad apples because down the road when things get tough, investors can:

• Call their convertible note
• Potentially replace you (depending on the equity and board situation)
• Threaten litigation (even if they have no case)
• And most importantly, be a big pain in the ass and call you all the time

You are looking for a relationship – not just money.

Before taking an investor meeting (or even reaching out), you should definitely do your homework and research investors.  Make sure to reach out to investors who are actually a good fit for your business (stage, sector, amount, what they look for, etc).  Most websites will spell this all out – especially newer microfunds who are trying to differentiate themselves in the market by going after a specific niche.

In addition, here’s a list of questions you should ask investors when you meet them:

• How big is your fund? (for VCs)
• Where are you in your fund?  (for VCs)
• When will you need to fundraise again? (for VCs)
• Do you lead rounds? (for VCs)
• What is your typical check size?
• Do you reserve capital for follow-on?

This gives you a sense of how much money you can raise from a given firm or individual.  This is really key because there are a lot of investors out there who have no money but are still taking meetings.  It’s OK to take a meeting with an investor who has no money to invest, but you should know that they won’t be able to come into your round until they have raised money so your meeting might not lead to anything.

Understanding how much is allocated for follow-on investments also gives you a sense of how much money is left in a fund.  If a fund is $10M and two-thirds is reserved for follow-on, then in practice, there’s $3M for first checks.  If the firm has already deployed $2M, you know that your chances of getting a first-check is slim…

In general, it’s slightly easier to raise from funds that have just raised a fund.  They have a lot of money that needs to be deployed, and so they are more eager to invest.  In contrast, when there are fewer dollars left to deploy, those last dollars will be extremely competitive.

You should find out an investors’ cadence:

• How many seed deals have you done in the last 6 months?
• How many seed deals do you anticipate doing in the next 6 months?
• How long does your process typically take?

And how decisions are made:

• What is involved in your process?
• Who is the decision maker?  (for VCs, although sometimes angels need to consult their families or friends)

By the end of the meeting, you should understand

• Everything about an investor’s decision making process
• Whether you have a champion to take this to the decision makers (whether it be partners at a firm or their family)
• What the concerns are with your business in their eyes
• What the CONCRETE next steps are

If you do not have answers to ALL of these questions, keep asking questions…

The first time I ever tried to fundraise, I was completely clueless.  My team had built a highly technical product that allowed consumers to co-browse with each other, but we had no customers or users.

A lot of investors turned me down, but I didn’t even realize it because they were not clear in their rejections.  Investors would tell me:

“Oh this is a very interesting product.  Let’s keep in touch.”

“The technology is quite interesting….thank you for showing it to us.”

As a naive founder, initially I did not push to get to a call-to-action or to learn what the next steps should be.  I had no idea how close I was to successfully raising investor dollars (read: not at all).

As I met with more investors, eventually, in my frustration of not getting anywhere, I realized that I needed to push harder to find out what investors really thought and whether they were going to invest in my company soon.

Still, investors were quite nebulous in their thoughts on my company.  I remember this one phone call very clearly:

“So, are you going to invest?” (I was not sure how to ask this in a great way, so the first time I asked it, I was pretty blunt because I just needed to know the answer.)

“Well, it’s an interesting product.  Let’s chat again in a couple of months.”

“I’m not sure I understand; is that a yes or a no?”

“It’s a no for now.”

That conversation was just the first step in my becoming a savvier fundraiser, but it took many, many more missteps and poorly-run fundraising meetings for me to eventually understand how this game is played.

Most investors are simply not upfront with their true thoughts because they are afraid to reject entrepreneurs.  They think entrepreneurs will not come back to them later when they have made more progress or have found a better business.  I find that this is particularly common behavior amongst investors who have never been founders.  So this is the type of vacuous email you typically receive as an entrepreneur:

This is a big mistake in my opinion.  Although, founders should also be less clueless on how to run investor meetings and should ask good questions (something I hope to change with this blog), if investors were more upfront with their true thoughts and opinions, founders would find that feedback valuable.

Great founders can take feedback well and can learn and adapt quickly.  The investors I have the greatest respect for are the ones who were candid with me about my company – whether they invested or not – without my having to pry their thoughts out of them.

I realize it is a tall order to ask investors to be explicit with their feedback.  It’s not a fun job to send tons of rejection emails everyday.  When I first started investing, I was unsure what to write in a rejection email, and so I asked Dave McClure for advice.  He told me to frame my emails positively – what it would take for me to invest?

This has been one of the best pieces of advice I’ve received in joining Venture Capital.  So, I now write entrepreneurs emails like this:

Although, it’s still not fun to be the bearer of bad news, it causes entrepreneurs to come back to me later when they’ve fixed some of my concerns.  This helps me see how quickly teams can learn and adapt, which is one of the best indicators of a team.

Plus, we end up having productive conversations about their progress which actually *helps* me build a relationship with entrepreneurs.

Entrepreneurs: what has been the most helpful “rejection” you’ve received?  Tweet @dunkhippo33.

When I was fundraising for my company LaunchBit, raising money frustrated me to no end.  There was all the rejections.  All the time spent in investor meetings.  All the email follow ups that went nowhere.  We ended up raising ~$1m, but it was brutal.

On the flip side, I often enjoyed selling LaunchBit as a product to customers.  Selling a product had many similarities to fundraising – again, constant rejection, lots of demo calls before getting to a “yes,” and follow up emails that went nowhere.  Even though the two sales processes were similar, somehow selling my product was a very different experience from selling my company for investment.  One was a very fulfilling learning experience, and the other was pure misery and an angering experience.

Entrepreneurs often hate fundraising, not because of the fundraising sales process itself, but because of all the underlying crap that we have to put up with alongside the actual fundraising.  Most entrepreneurs don’t complain about it publicly – I certainly didn’t.  They don’t write public blog posts about their experiences because you end up sounding like a whiner and because you’re afraid that no other investor will take your meeting.

So what is this “fundraising crap”?  It’s all the times that investors:

• clearly have no interest in your business but want to waste your time with multiple meetings and by “keeping in touch” with no call-to-action or closure.
• are trying to “pattern match” and have inherent biases based on past successes, but you don’t fit their demographic pattern because you are not a 20-year-old American White Man with a degree from Stanford in computer science who speaks accent-free English.
• reschedule your meetings multiple times (often on the day of or at the last minute) to take meetings with other entrepreneurs.
• are too chicken to invest in your company (even if they have conviction) because they do not want to be the only ones.
• have no money to invest but they don’t tell you that.
• don’t articulate what will give them conviction – or are even self-aware enough to know – so you can’t effectively sell them on your business.
• project their weird ideas on whether a company is truly a serious business or is “just a fun lifestyle business” when the founders happen to be
  • Family
  • Married or dating
  • One or more of them is pregnant or has children
• have no interest in your business but will take advantage of the situation in inappropriate ways.

Truth be told, as a founder-CEO, your job isn’t to change the fundraising process or even to worry about whether it is just or fair or right.  Your job is to cut through the crap as best as you can and raise money for your company.

And so, all of this fundraising crap continues because no one calls it like it is.

Having been there before and now investing in startups and running the 500 Startups Mountain View accelerator, it’s time to call it how it is and change investor-entrepreneur relations.  Going forward, my blog posts will be focused on how I’m trying to make the fundraising process better and more transparent for entrepreneurs and calling things as they are.  Sign up for my newsletter, and look out for my next blog posts.  Let’s change how this industry works!

Special thanks to Andrea Barrica and Chandini Ammineni for reading drafts of this post.