BeyondVC

A friend of mine is putting together his first deck for potential investors.  In typical startup fashion, they launched a product, got a number of users, and then iterated several times to improve the service.  With the product in the hands of tens of thousands of users, they started getting inbound requests from larger organizations who were willing to pay for customized and private group related services.  While Version 2.0 will be released to the greater world in the next 6-8 weeks, you may be interested in what I had to say about the pitch deck. 

IMHO, a great pitch deck is concise (15 slides) and highly focused.  And in the deck I like to see the following points covered (yes, this is my preferred order):

1. One/Two sentence pitch for company -value proposition (1 slide)
2. Brief history - founded when, capital raised to date and from whom, capital needed in new round (1 slide)
3. Who/Team - give me some context of who you are, your backgrounds, success/failures so I can get an idea of your ability to deliver and surround yourself with experienced talent, also include any board members or advisory board members that may be relevant (1 slide)
4. What's the problem? - too often I see pitches where the entrepreneurs dive right into the product and I scratch my head thinking why in the world we need another lifestreaming service or social network or ad network (1 - 2 slides)
5. How do you UNIQUELY solve the problem? - solving the problem just like everyone else is not exciting.  You need to show how you solve the problem UNIQUELY and ultimately deliver a 5-10x improvement for the customer in terms of ease of use/functionality and cost.  What this boils down to is your simple product pitch. (1-2 slides)
6. Product/Tech - make sure to tell me about your secret sauce or core tech that enables you to deliver a unique service - screen shots, overview, etc - could be good time to go into demo in a live meeting (1-2 slides)
7. Customer traction - is product in hands of customers?  if so, how long in market and share some data on users or beta customers or customers (1-2 slides).
8. Market size/Competitive Overview - how big is the market and how do you come up with that number - how are you positioned in the market - show graphically maybe by offering or value proposition (this is where you get your typical top right hand corner Gartner like quadrant).  A sin is to tell me you have no competition (1 - 2 slides)
9. GoToMarket Strategy - how will you grow quickly and in a capital efficient manner?  How will you sell your product - online, direct, or indirect sales?  any potential partners signed or game changing partners that will help you deliver?  (1 slide)
10. Business/Revenue model - show me that the economics of your business work - note that single digit gross margins will get you thrown out the door pretty quickly (1 slide)
11. Financials - yes I know for early stage customers it is at best a guesstimate but give me an idea of how this will grow, what the revenue numbers look like over the next 3 years to give me an idea of how the business scales, and ultimately it helps me understand the true cash needs for the business to get to breakeven (1 slide)
12. The financing round - lay out the dollars you are asking for, how it will be used, and how long the cash will last (1 slide)
13. Milestones-what milestones have you hit so far and what do you plan on realizing during the next year with the new cash (1 slide)

Ok, pretty basic and that's it.  For those of you have triskaidekaphobia or fear of the number 13, it's ok as it is a lucky number in our house since my wife was born on the 13th.  Anyway, if you cover all of these points the deck should be about 15 pages in length and provide a great overview for potential investors.  One other point that I want to highlight is that how you position your business is key.  Take a look at this post from April 2004 titled What Aisle, What Shelf. You need to make sure that your audience gets where you fit in the ecosystem quickly and how you are different from what else is out there.

UPDATED: One item I forgot to mention: in this world of constant digital bombardment, you must figure out how your product or service becomes a "must-have" versus a "nice-to-have" solution in a customer's daily life.  If you are a "must have" with minimal substitute products then people will clearly pay for what you have.  If you are a "nice to have" in a world of many substitute products even though you may get some usage you will never be able to monetize that base. 

The alarm bells are ringing in Silicon Valley and start-up land today with Sequoia Capital and Ron Conway telling companies to prepare for the economic meltdown and to raise cash by cutting their burn.  This is not new news as being in New York we started to feel the real economic impact in mid-September as [...]