When looking to secure funding for your business, there is no greater asset than a winning pitch deck (and maybe a winning smile!). Pitch decks are your one chance to make a great first impression on potential investors and to position your business favorably at the same time. With funding on the line, entrepreneurs typically spend hours upon hours preparing and planning their pitch decks before that ever-important meeting. However, even a knockout pitch deck can be held back by a few commonly made mistakes.
We’ve talked a lot about what you should be doing before, during, and after a pitch, but it’s equally important to know what not to do. To that end, we’ve compiled the top five most common mistakes to avoid when preparing your pitch deck –
1. Too Long/Too Many Details
It can be exciting to finally be making the case for your business, however, it’s extremely important to respect the time of the investors and not oversaturate them with information. For many entrepreneurs, this business is their baby. And like a proud mom or dad, they may want to overshare every detail of its existence. But investors have both limited time and bandwidth. So, if it isn’t pertinent to the primary message you’re delivering, you’d be well advised to omit it. A great pitch deck will have investors excited and wanting to learn more by the end, not overwhelmed by extraneous information.
2. Lack of Clarity
The message you are communicating with investors should ring loud and clear. Remember that the investor may know nothing about your business and/or industry, so your pitch deck needs to have clear and concise points regarding their merits. Entrepreneurs should avoid using too many buzzwords or jargon, which only tend to muddle the overall message of the pitch.
3. Ignoring Weaknesses
The very foundation of investing is about evaluating risk and reward. A pitch deck that does not acknowledge the weaknesses of the plan robs the investor of the opportunity to make a proper evaluation. Your pitch should help assess the risk for them and make the case for your business despite any weaknesses. Ignoring them will only make the investor think you haven’t fully analyzed your position or have something to hide.
4. Not Revising Enough
Never present your first draft to investors. Actually, never present your second or third draft either. Your pitch deck can only be perfected over time with thorough revisions to pick it apart and put it back together again. Revision is a crucial part of creating a winning pitch deck formula and eliminating mistakes.
5. Generic/Outdated Formatting
Many entrepreneurs make the mistake of focusing too heavily on what they want to say in their pitch deck rather than how they should say it. Make no mistake, the “what” is incredibly important, but the overall appearance and formatting will be one of the first visual components investors see—making it the “first impression” to your first impression.
An outdated or generic format or appearance will automatically make your pitch deck seem outdated too. Ensure that the formatting aligns with your product, the industry you’re in, and the consumer you’re serving. If you’re edgy, then the formatting should be edgy. If you’re conservative, then it should be more conservative. You want to create cohesion between the formatting and the content of the deck overall. In this particular respect, no detail is too small.
There’s no denying just how important it is to make a great first impression to potential investors. And avoiding these mistakes will help you do just that. In such a competitive and high-risk financial world, don’t you want to give yourself the best chance to walk out with funds?
Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Think back to one of your most memorable experiences. At its foundation was likely a great story. It may have been your own or it could have been someone else’s, but a connection was made. You probably remember how you felt, where you were, maybe even a scent or what you were wearing. That’s what stories do – they connect people in a way that facts and figures never can. Whether you’re in a classroom, boardroom, or a room full of investors, your story (and how you tell it) is what will make people remember you.
Remember – investors invest in people, not in businesses. So, what do you offer that would make others take their money and risk it on you? What attributes do you possess that will help ensure they will benefit financially from doing so? Ultimately, why should they take a chance on you? Often, all of those answers come down to the connections you establish. And those connections come from the story you tell.
What About the Numbers?
Personal anecdotes, combined with a unifying passion, is what will make your business stand out in a pitch. This is not to minimize the importance of the numbers, data, and metrics. To the contrary, a great story without that critical data will lead you only to neverland. No matter how compelling a story, it cannot be a substitute for basic business essentials – a strong business plan, financials, and a proven track record. But to set that data apart from all the others, you need a compelling story to take the investors on your business’s own unique journey with you. It comes down to providing that information in a more memorable context to help you stand out among the rest.
Top 5 Storytelling Tips
Keep it Real. Authenticity is key in storytelling. An authentic story is what will set you apart from someone who is making a marketing, sales, or investor pitch for a specific business or solution. Through your story, and the way in which you tell it, investors can truly see the authentic you. And authenticity builds trust – a key component for any relationship.
Connect with Emotion. According to Inc.com, 90% of decisions are made based on emotion. Then, people use logic to go back and justify the decision they’ve already made. Use a story that includes the positive emotions your product, services, or solutions can generate.
Remember the Story Behind Your Why. Allow the investors to feel that same insight or pain that you felt when you developed your product or solution. You can only share your why effectively through storytelling. They will not only remember your message, but understand why it is so important.
Connect to a Higher Purpose. Your personal why or story likely has a far larger impact (or you wouldn’t have been able to make a business out of it). Your story becomes that much more powerful when you remind others of your personal commitment to a certain cause or providing your solutions on a larger scale to help others.
Share Another Story. Maybe the story isn’t yours. Maybe it’s from one of your clients or customers. How has your product or service improved their lives or businesses in some significant way? What have they shared with you? Focus on one particular person’s story. To be relatable, you want to be specific, and put the investors in the shoes of that person, not everyone overall.
Storytelling is not about performing as a comedian or an actor in a theatrical production. It means personalizing how you communicate your business. Storytelling builds relationships, which are at the foundation of all businesses – customers, clients, partnerships, and investors.
You want them invested more than financially … you want them invested emotionally. To capture their undivided attention during your pitch, tell them your story passionately and authentically. By creating connections, you will infuse passion and trust, leading to your own happy ending – the investment your business needs.
Barker Associates thrives in helping companies develop the right stories for their pitches. If you need assistance with yours, or have any other questions, we can help. Please click here to schedule a 30-minute consultation at a rate of $100.
How do you know where you’re going without a navigation tool – GPS, a smartphone, or even the “ancient” map? For angel investors, that navigation tool is an investment thesis. When done correctly, it will not only guide you along your chosen investment course, it will help you identify the roadblocks and detours to avoid.
An investment thesis is one of the most useful tools in the angel investor industry, summarizing your reasons and conditions for investing in certain types of companies. If you do not have an investment thesis or some type of investment strategy from the beginning, you may fall in love with a charismatic founder and invest in a deal you have no business investing in. This scenario happens all the time and it shouldn’t because it leads quickly to frustration and likely, the loss of the investment down the road. There is a myth that an investment thesis is only for venture capitalists—those who have a fiduciary duty to invest money in a certain way. While it’s true it is an important component to them, it is equally, if not more, valuable to all investors, especially those who are just starting out on investment roads less traveled.
Essentially, if you invest in start-ups, founders will inevitably pitch you for money (it’s the name of the game, after all). Without an investment thesis, you may find it difficult to concentrate only on the start-ups that match your investment objectives because simply, you may not know those objectives. On the other hand, a strong thesis will guide you into sourcing the right deals, with your criteria, conditions, and requirements clearly set in advance.
The Benefits of an Investment Thesis
All angels should have clear, documented investment theses due to the numerous benefits they provide. And like any good roadmap, your thesis not only benefits you, it benefits others as well. Behind the driver’s seat, it keeps you disciplined on your selections and focused on where you want to go with your investments. With a deep understanding of the types of industries and businesses you want to invest in, the risks you’re willing to take (and those you’re not), and the parameters you want to see in companies, you are much better equipped to find the right fit for your money.
An investment thesis also benefits the start-ups and entrepreneurs looking for funding. It allows them to understand what you’re looking for and what you’re not, and if you’re the right fit for them. If not, they can move on to someone who is, saving time, energy, and money in the process. This can only happen when expectations are delineated clearly from the beginning.
Finally, an investment thesis facilitates communication and dealings with other investors. Angel investors refer deals to each other frequently. What may not work for one in one instance may be perfect for another at that particular time. And no one wants to refer a deal that the person is not interested in. Not only does it waste everyone’s time, but it makes that person look as if they are ill-advised.
Tips for Creating a Strong Investment Thesis
Let me reiterate – an investment thesis is crucial for your success as an angel investor. A strong one will help develop a stong portfolio, while a weak one may indicate lower overall performance. Here are a few tips to help you create a strong investment thesis:
Do not rush it. It should take thought, research, and time.
Have a clear, simple purpose, conditions, and expectations.
Choose an industry you either have experience in or in which you are passionate about.
Determine how that industry’s impact influences your decision.
Conduct market research with both primary and secondary sources.
Analyze long-term trends and short-term events that could affect the industry.
Set specific criteria for an investment. Be clear as to what you will invest in and what you will not.
Remember diversification. While you should focus on a particular industry or sector, you can diversify other factors, such as geography, business model, technology, or customer segment to create a more balanced portfolio. This should also be calibrated with your personal net worth.
Once your investment thesis is created, you will have a detailed roadmap of where you are going on your investment journey. It helps serve as a reminder of why you do what you do and what your own investment parameters and boundaries are. And it guides you toward finding the investments that fit those objectives.
Remember, all early-stage investments are risky and can fail even with the best idea, product, and management. By investing only in companies that fall within your thesis, you are not only minimizing your risk and exposure, you will also have an increased ability to help more companies grow through your specific offerings. And ultimately, a better fit in the beginning will likely lead to a better return in the end.
Barker Associates has extensive experience working with angel investors on their investment theses. If you would like to discuss angel investing, either as an investor or as a company that requires funding, or if you have other specific areas of concern, please click here to schedule a 30-minute consultation at a rate of $100.
Lately, we’ve been talking a lot about pitching investors. We talked about the importance of your story coming through loud and clear and why you need two pitch decks. And with all this “talk,” it now comes down to your actual words.
You have a limited time to tell your story and make the best impression. Knowing what will resonate with potential investors, and perhaps, more importantly, what will not resonate with them, can make all the difference in whether you receive funding. Even if your pitch deck is perfect, it can easily be derailed by poor word choice. How you choose your words says a lot about you, your views on your business, and how you would fare as a potential partner.
Overall, your pitch will tell your story, including information about the problem (briefly), target market, revenue or business model, early successes and milestones, customer acquisition, team, financials, competition (briefly), funding needs, and exit strategy. As you’re talking about each, there are words and phrases you should avoid, as what the investor hears when you say them will be entirely different than what you intend. Take the following chart as an example of some of those situations.
No one can do it alone. This person will burn out.
No competition
No market or you have not done your research
“No brainer”
Arrogance
Guarantee
Amateur – there are no guarantees in investing.
Any word or phrase you cannot explain well
Unprepared
A Quick Note on Buzzwords
People tend to use them because they think it will make them sound like they know what they’re talking about. But those people aren’t fooling anyone, particularly sophisticated investors. A “buzzword” is defined by Merriam Webster as “an important-sounding usually technical word or phrase often of little meaning used chiefly to impress laymen.” By the definition alone, you should see why you should exclude them completely. You want to impress the investors (who are not laymen) the right way – with legitimate numbers and proven strategy, not by trying to sound impressive.
Powerful Words/Phrases that Strengthen Your Story
Instead of the above words and phrases, focus on the following powerful ones that show you mean business:
Customer Acquisition Cost (CAC) – explain how much your customer acquisition strategy costs and how it can be reduced over time.
Lifetime Value – explain how your customers will eventually cover the cost of operations.
Churn – explain how efficient you are about retaining your existing customers (eventually generate enough value to pay back their acquisition cost and help you generate a profit).
Burn Rate – explain how much cash you have remaining to operate and how efficiently you are operating your business.
Cost of Goods Sold (COGS) – explain the sum of all costs that go into offering your product.
Gross Margin – explain how well your business is performing.
EBITDA – understand what this means and have projections to back it up.
Use of Proceeds – explain how the investor’s money will be spent and make sure it is not to increase the existing C Suite or Founder’s salary.
These are the terms investors want to hear. Not only do they demonstrate that you know your business inside and out, but they also give more credibility to your numbers. A win-win for investors!
Other Pitching Tips
Now that you understand the words and phrases to avoid and those to focus on, other pitch tips include:
Stay professional
Be on time and respectful of your time limit. Show that you value the investors’ time.
Be confident, but not arrogant.
Focus on the solution, not the problem.
Don’t attack the competition. Instead, focus on your strengths.
Think and talk long-term. Investors are not interested in quick wins. They’re looking for companies that are going to make an impact on their industry.
Communicate your “why” passionately and infectiously.
Understand that there is a difference between creating a great pitch deck and creating a great pitch.
Going into any pitch is a nerve-wracking experience. Even with practice, you may struggle to find the right words, which is why focusing on them from the start is so important. There are many available pitching tips out there, but word choice alone can make or break the deal. At the very minimum, they can give some extra positivity, and who doesn’t need that on pitch day?
Barker Associates has extensive experience with assisting companies in preparing their pitches, including the keywords they want to use (and to avoid). Schedule a free 30-minute consultation with this link to my calendar to talk about how we can work toward getting you the investment money you need.
As someone who regularly helps others prepare to pitch to investors, I see one situation far too often. This may all sound a little too familiar to you as well. You are an entrepreneur who has done everything right. You developed a product or service and turned it into a successful business, that business began generating revenue, and now you are ready and willing to scale, but need investment money to do so. Then, you seem only to hear a resounding NO from the investors you approach.
Why? More often than not, it’s because the investors have no indication of what you are actually offering them. And understanding what you offer comes down to two simple words, with not so simple connotations … “pitch deck.” Yet, if I can share one piece of advice with you, as I do in my book, Pitching to Win: Strategies for Success, it’s that one pitch deck is never enough. If you are serious about scaling your business by pitching to investors, then you must have two pitch decks – one to send to investors and one to use in your presentation (or pitch).
Let me explain. Some investors will not agree to meet with you until they have first reviewed your pitch deck. As such, they may ask you to email it to them before scheduling an actual pitch. And just as much as an email is not the same as standing in front of someone delivering a presentation, your pitch decks likewise cannot be the same.
Understanding how they are similar, and how they are different, is key to getting that next phone call, presentation, or meeting. To that end, I have put together the Top Five Tips for ensuring you have two pitch decks that will get you the right attention when you need it.
Pitch Deck Creation: Top Five Tips
1. Be Proactive
Research the investors who are already investing in similar products or services. If they have similar interests, they are the ones most likely to invest in you. Try to determine what types of questions they asked before and incorporate the answers into your pitch decks from the start.
2. Create Pitch Deck #1
This is also called the “Handout Pitch Deck.” It is the one that you will email to investors when asked for a copy. The key to this pitch deck – it must stand alone.It cannot rely on your verbal explanation of the content because, quite simply, you will not be there to explain it.
The Handout Pitch Deck must quickly communicate with words (but not too many), numbers, and graphics your “Why me?” to potential investors.
3. Create Pitch Deck #2
Use Pitch Deck #1 as a foundation to create Pitch Deck #2. Pitch Deck #2 is the “Presentation Pitch Deck.” This version is based on you delivering your pitch, aided by high-level slides with few words and many images. It does not, and should not, stand on its own. Pitch Deck #2 will have very few words and numbers, if any. Instead, it will function much like a television or movie screen, as your priority is having the audience focus on you and your messaging, rather than reading slides. Remember, at the end of the day, this pitch deck is a sales presentation.
4. Ensure that Both Decks are Concise, Professional, and have Visual Appeal
Pitching is never the time to get into the intricate details of your past experiences or even your product or service. Get to the business of what investors want to know:
(a) what your business is all about and
(b) most importantly, how it is going to make enough money to return
multiples of the amount of money you are asking them to invest.
5. Update Both Pitch Decks Regularly
Consider this scenario: a potential investor asks you to send your pitch deck via email or present it to a group of investors. You respond that you will get it to them in a couple of weeks. Chances are that when you finally prepare your pitch deck, the investor will have already moved on to other projects and entrepreneurs who are ready to take their money.
You want to be able to distribute Pitch Deck #1 or present Pitch Deck #2 at a moment’s notice. Just as every professional has an up-to-date resume to present at any time, a growing entrepreneurial company should have both pitch decks ready to email or present at any time.
The creation and management of your pitch decks are critical parts of the capital raising process. Remembering that the difference between the two decks comes down to your voice is of the utmost importance. Pitch Deck #1 must stand on its own, capturing your voice, without the benefit of you speaking, while Pitch Deck #2 exists to bolster your voice as you present. Barker Associates has extensive experience with assisting companies in preparing their pitch decks. Schedule a free 30-minute consultation with this link to my calendar to talk about how we can work toward getting you the investment money you need.
Pitch and Storytelling According to “Schitt’s Creek”
A Successful Pitch is the Result of a Good Story
Recently, I have been watching the Schitt’s Creek series on Netflix … for the second time, and enjoying it even more this time around. When I watched it the first time, I found myself getting irritated. But several Schitt’s Creek fans I knew encouraged me to stick it out, and I am so glad I did. What I learned watching the entire series twice is that each character surprises you from many different dimensions throughout the six seasons, representing numerous similarities to the world of pitching investors.
The story centers around an ultra-wealthy family that loses everything. The first episode shows the authorities taking all of their possessions, forcing the family to move out of their large estate. They soon learn that they can retain a small town they purchased as a joke years earlier. So, they get on a bus with their suitcases and head to their new life. They are immediately immersed into a stark contrast from the luxurious lifestyle to which they had been accustomed. Yet, despite the lack of luxury, their experiences in this small town teach them many lessons they never would have learned before about life and business, including how to pitch to investors. You can see why my interest was piqued! In fact, I was so interested in the story that I watched an interview with the two creators.
One of the creators insisted on developing the backstory of each character for hours prior to starting the script, while the other got increasingly frustrated with the time and energy “wasted” on backstories when they had an entire script to write. However, he soon realized that the investment of time in creating those backstories was one of the primary reasons for the success of the series.
The parallelism to pitching to investors was uncanny. An essential element of a successful pitch to investors is having a compelling backstory. It is far beyond the “script,” or in this case, pitch deck. Working on the story behind the company so that it is authentic and backed by sustainable facts is the key to reaching investors. And connecting with them authentically through your story, coupled with ensuring you are the right fit for their investment criteria, will ultimately secure the investment! Success!
I recently became an investor in the Seattle Angel Group and immensely enjoy the education the group provides for both investors and companies preparing for pitch competitions. Bob Crimmins, a repeat successful entrepreneur, was one of those educators, and he was fascinating. He called successful stories “Cogent Stories,” as they are believable and can help an investor understand how they are going to invest their dollars now and receive a significant return three to five years later. As I watched Schitt’s Creek, I thought a lot about Bob and the impact of “Cogent Stories.” Apparently, they work for more than investor pitches. They are also what is behind a hugely successful series.
Now, back to our regularly scheduled programming! (Spoiler alert here – if you have not watched the entire series you may not want to read further, but schedule a chat with me (link to my calendar) to discuss your backstory and pitch deck.).
In the show, Johnny Rose (the family patriarch), Stevie (the hotel clerk), and Roland (the mayor of Schitt’s Creek) are business partners and pitch investors, achieving success at the end of the series. There are many circumstances that bring these individuals together, and their collective growth leads to the overall success of the pitch.
Johnny Rose had been a successful businessman and made a lot of money with his business “Rose Video.” The events that led to the loss of his fortune were based only on his business partner’s actions. The business itself was successful. While Johnny’s story is fictional, similar stories happen every single day in the “real world.” What happened to Johnny could happen to anyone if they are not paying attention to governance, controls, and financials. Yet, the loss of Johnny’s fortune was itself a growth experience.
Stevie was working the front desk at the hotel in Schitt’s Creek, feeling like she was a failure. In an effort to “get her life together,” she decides to branch out and interview for a professional position with an airline. After she secures the position, she learns it is not for her after all. This experience actually creates a huge appreciation for who she is, her talents, and her previous role. Similarly, for the C-Suite to be successful, confidence and self-identification for the position must exude when the investors begin their due diligence.
Roland is the mayor of Schitt’s Creek, which is a position filled with pride, in part, because it was bestowed upon him through birth rite. Roland struggled with who he was, and there were many times that his self-discovery process irritated Johnny and Stevie. But despite all of those irritations, he showed he was trustworthy and loyal to them in many ways as their relationship grew.
Through trial and error, often hysterical ups and downs, these three professionals began to trust each other. They respected the talent and contribution they each brought to the team. Johnny knew that Roland would always have his back, and vice versa. One of my favorite episodes is when Johnny and his wife, Moira, are celebrating their wedding anniversary, and they run into some of their old “rich” friends, along with their new friend, Roland. The encounter is a life lesson in itself. Johnny and Moira attempt to fit in like they used to, but soon get irritated and offended when their old friends begin to talk negatively about Schitt’s Creek. Johnny, standing up for Roland, who is even more offended, mentioned that while their so-called friends never reached out once after they lost everything, Roland and Schitt’s Creek welcomed them with open arms.
This episode reminded me of the loyalty, communication, and respect needed among team members working toward pitching to investors. Working as a team to strategize and execute a fast-paced growth company takes perseverance, intellect, the ability to deal with ambiguity, and many other attributes that can only be achieved when there is open communication among team members who trust each other. At the end of the day, it must roll up into an authentic story about who these people are because that’s what investors are investing in … the people behind the company.
When you are preparing to pitch to investors, the best thing you can do is work on your “Cogent Story.” Take the time to create all aspects of your strategy prior to the pitch, similar to how the creators worked tirelessly on creating the backstories of their characters on Schitt’s Creek. Your story will be more authentic, your confidence will increase, your team will be stronger, and your chances of success will increase exponentially. Barker Associates has extensive experience with assisting companies in developing their backstories and preparing pitch decks. Schedule a free 30-minute consultation with this link to my calendar to talk about how we can work toward getting you the investment money you need.
