advice from Due Diligence of 50+ Pitch Decks
Is Your Pitch Deck Worth the $$$ You're Raising: Advice for Aligning Product, Technology, and AI in Your Pitch Deck Story
Post was originally published in July 2022, and updated in October + December 2022, March-May, September - November 2023
I help VC firms evaluate alignment between how SaaS (software-a-a-service) or HaaS (hardware-as-a-service) start-ups solve their customers’ pain points with their products, align incentives on product and pricing, and how they use technology and (where applicable) AI to do so.
I review about 200+ decks/year; investors see 1000+ (!). What stands out are those that are great and those that aren't. To get your pitch decks to stand out (for good!), here's what I look for as I review each pitch deck.
Working Backwards from End Goals of Pitch Deck
First, we need to remember that funds exist because LPs are diversifying their portfolios by investing in start-ups and expect to get higher ROI/returns than the market. Funds will invest in founders that seem to have de-risked the idea in one way or another, often by finding a really narrow niche/focus area with many underserved customers -- or by getting SBIR (or similar) funding to begin proving out the idea. The more your pitch deck story talks about the work you've done to already de-risk the investment (from expertise to MVP to traction/similar), the more you'll stand out from the crowd.
Next, we need to understand the goal of a pitch deck. It won't get you a check, but it may get you a meeting if you can demonstrate why we need this now -- and that this is a (relatively) low-risk investment.
Bonus: As a non-investor, especially when reviewing a D2C brand, by the time I'm done reviewing your pitch deck, I'd love to have you leave me wondering (and answering) one thing -- "where can I buy this now?!?"
Due diligence is one such meeting, where the end goal may be either to get you to the next meeting, get you to an intro, get you to the next due diligence meeting, etc. Before I start, I find out what the (high-level) end goal is of due diligence, and work backward from there.
One mistake I see many founders make is assuming that a pitch will get you that check, when in reality, it may get you to an introduction or the next meeting. To help you prepare for the 8 fundraising steps (or stages), please see this blog post for advice.
Is there -- only) 1 -- storyline to the story you're trying to tell, from who your target customers are, to the go-to-market-strategy, to product focus?
Kerry Bennett outlines what the 7 parts of the storyline should look like; 90% of pitch decks I see miss the mark.
Major kudos if your story also highlights why you're at the top of your category -- and why the fund should invest in you over everyone else. "Everyone else" is 1000-8000+ pitches that funds see annually (!).
Remember: We're not experts in your industry! Start at a 10K-foot view of what's going on and what the challenges are.
If you're close to profitability -- which is so rare -- consider leading with that!
Does every slide build on the other -- and show (1) the value that only you can bring to each of the points you make, and (2) (as, fellow Techstars mentor, Hrishikesh Sathawane advises) talk about company growth or how you've reduced risk for the company?
It may help to think of it this way: can your competition have the same slide in their deck? If not, why not? This answer is what you should consider covering with the slide instead!
Bonus: this way, every slide directly/indirectly touches on how you've de-risked the potential investment for the VC firm.
Note: if anyone else can have the same slide in their deck, you're not there yet.
Here's a deep-dive done by Hustle Fund of how the Daily Blends start-up addressed this in their pitch
Have you established a baseline knowledge for your audience about the specific target customers you're solving the problem for?
Note: your audience will most likely be a combination of people with no experience in your subject matter, some experience, or a different experience. Your (understandably) difficult role when telling the story is to get everyone on the same page quickly.
Assume we're all 8-year-olds with no knowledge of what's happening in your industry.
Why are you raising money? How will the raise help you reach the end goal of a scalable product?
Cat Middleton in an interview for the "Daily Bolster" podcast puts it another way: "Do you have a clear vision of the future you're building towards?"
What are the steps this raise will help you achieve, to get you closer to the end goal? Connect the dots for me.
Does the amount of the raise accurately reflect what you’re trying to accomplish, to get you to the end goal – or next milestone/raise/exit?
Does your audience have enough context to really understand the customer's pain point? Educate us!
Some of us have no first-hand experience in the space, some may have had a different experience, and others may only be somewhat aware of the challenges in the space. (Easier said than done) Help establish a baseline of understanding of how specifically things are for Customer A. Have us feel their pain!
Alternatively, Jason Yeh astutely points out that if we didn't understand that a customer would buy a pen because it would look good in their pocket -- pitching them on ink quality won't resonate.
Is it really a pain point you're solving? Or are you providing a vitamin?
Do the product and pricing align incentives between the start-up and its customers? Who, specifically, are these B2B/B2C customers?
Does it tie into the current customer habit/workflow? Or (not recommended) will customers be expected to overhaul how they currently do things to solve their problem(s)?
Can you walk me through (at a very high level), how the product ties into the current customer's habits and solves their pain point (end-to-end)?
How does the customer onboard?
Is the scope manageable, focusing on one product/feature at a time?
Do I have enough information to agree – or disagree – with you? Or will I ask you for more information to make a more informed decision?
Who are your competitors (on a national and global scale) -- and how are you different?
For example: if you're a smoothie-making start-up, I'd argue that fresh/frozen fruit from your grocery store is also an alternative to your product. What sets you apart?
Even if you think you have no direct competitors, what is the status quo of how your customers are solving this pain point now? This workflow (even if it takes 3 vendors to do so) is your competition. How can you make it more efficient?
Technology and Infrastructure
Is the product scalable, such that 2 and 20 fee structure for VC compensation and ROI on investment makes sense for it?
If technology is core to the business, is there a technical (co)founder/employee (even if they're part-time)?
If you’re showing me an architecture diagram of your future tech stack (it happens!) – are these the right tools for the job?
If there’s existing software/hardware infrastructure that you call out, do I have enough information to agree – or disagree – with you? Or will I be asking you for more information to make a more informed decision?
Is it clear how data will be accessed or created?
Is the analytics/AI appropriate for the stage of the product – and feasible, or is the claim to develop state-of-the-art that doesn’t exist yet with the next raise?
Please see my (opinionated) blog posts on the Biggest AI/ML mistakes made by startups and What should (not) be your AI roadmap? (or) Why You Don't Need AI in your SaaS MVP for more details.
How will AI be used to help the company scale? Does it pass the "The AI Startup Litmus Test"?
Will this AI offering be an added feature you charge for, separately? or is it part of the core product bundle?
If you are integrating with ChatGPT, how are you using it to create additional value for your customers? How are you mitigating the risk of hallucinations that may have an adverse and material effect on your customers?
Please see Dear Advisor: What metrics should I include in my pitch deck? for advice on how to talk about traction -- and what to discuss instead, if you don't have it yet.
Consider asking your advisor(s) to pitch your product to you, so that you can study how they set the scene around what motivated them to join your start-up, what's the pain they see in the market and the customers, and how the product solves this for them.
Bonus points if your advisor is also an angel/VC. Getting an investor's point-of-view is even more important, as that's your target audience for the pitch deck.
Connect the dots for me on "why you, why now", so that by the end of the pitch deck, you've built credibility and I have no doubt you can execute on what you promised. And the audience is left feeling -- I need to be a part of this, now!
If there are any laws/regulations that have made "why now" possible, explain them to us, assuming we don't know anything about this.
Consider attending Demo Days and Pitchfests to see how well (or not-so-well) others in your industry -- and a different industry -- are doing this in a way that quickly resonates and builds rapport.
Are there any objections you keep hearing (what seems like) repeatedly? Call them out and address how you're already solving them (if not in the main part of the deck, then in the Appendix). This will go a long way to continue to build credibility and rapport.
If your answers to the questions raised here are unclear, I advise that founders address these points before recommending them to the next step.
Don't include full sentences in the slide deck.
Is the deck in layman's terms? Or do we need a background in your field to understand the pitch?
I hope you're not requiring an NDA for people to access the pitch deck.
To avoid more pitch deck mistakes that others make, consider reading my other blog post on the topic.
Now you know what you need to improve; good luck!
You May Also Like
Dear Advisor: How do I Prepare for AI Technical Due Diligence?
Dear Advisor: What metrics should I include in my pitch deck?
Working Backwards (the Amazon Method), by Product Plan
Examples of successful pitch decks:
Due diligence advice from others:
(Highly recommend) Alexander Morsink's workshop on "Due Diligence for Angel Investors in 2023", hosted by Founder Institute, because it's applicable not just to angel investors
GoingVC's "Venture Capital Due Diligence: A Quick Introductory Guide", with a link to their 59-page handbook for more in-depth advice with a subscription to their newsletter (no affiliation)
Technical Evaluation of a Startup, by Ian Langworth
Questions VCs ask founders, by Signature Block