TL:DR: Early stage founders tend to use the same playlist before approaching angels for investment. However, it’s not enough to simply tick boxes. Focus your effort on the sections that investors are really interested in.
We have been helping early stage technology founders for over 5 years now. During this time things have changed. It used to be possible for founders to focus their pitch on an idea and gain investment by simply creating a good deck. As we then went through the app phase, pitch decks became productised and focused on approximately 10 key elements (The Dave McClure Deck is a good example). However, this can often lead to disappointment as founders feel they have ticked all the boxes and still fail to interest anyone.
Early stage founders are normally advised to create pitch decks covering the following sections;
Problem, Solution, Market, Competition, Team, Business model, Financials, Roadmap and The ask.
Founders very often put far too much emphasis on ‘the solution’. Investors are much more interested in other sections of the deck;
Investors want to know that they are investing in a strong founder and a team that can execute against the plan. They look for founders with relevant experience and an open-mindedness to new ideas. Investors will obsess about the team and look for gaps. As startups focus on deeper technologies such as AI or machine learning, investors will expect to see specialists in the team. We would advise founders to obsess on this element of the pitch. If they don’t have every skill covered they can compensate by having strong advisors to fill the gaps. Don’t bluff about having skills that you don’t possess. It will come back to bite you.
Investors want to know that you really understand the problem that you are solving. Too many founders believe that they have identified a large problem that users will pay to solve. They jump to building an MVP, only to find that the problem is insignificant or users already have better ways to solve it. It is worth spending time understanding the problem in depth before building any tech. This can be done at minimal expense using open questioning and other techniques (see The Lean Startup).
Market opportunity and timing
A product can easily be introduced to the market either too early or too late. If there is well established competition you are probably too late. The speed of innovation is accelerating and if are competing against similar propositions with VC backing you may have missed the boat. You can look at deficiencies of existing products and as long as you can get a 10x improvement it could be worth continuing. It is also possible to be too early. Google Glass is an example of this. It can be risky for investors to invest in pure research from universities where there is no clear roadmap for commercialisation. Finally, investors are looking to invest in startups that address very large and growing markets or in new markets that can be massive.
When preparing a pitch deck focus on these 3 areas and make sure you can provide all the answers to any questions that investors may throw at you. Remember, it’s not enough to simply have good words on a deck. Although the deck is a marketing document, the information needs to reflect the true state of the startup and demonstrate your awareness of the domain that you are involved in.
Blog by Paul Dowling — Co-Founder of Dreamstake the world’s first tech accelerator platform focusing entirely on taking startups from inception to Series A. Dreamstake identifies promising startups from universities and other accelerators and provides them with access to the resources they need to achieve later stage success. This is achieved through a large programme run out of Google Campus in London and our own network of experts and investors. We run corporate accelerators on behalf of clients and have recently supported Just Eat with a Foodtech accelerator.