Passion, love, and the “Ugly slide”: How to pitch a VC in 2019
BLOG: I hate pitch decks! Ok — There, I said it. As a VC you see a LOT of pitch decks. Even though some of them stand out, their repetitiveness will tire you out eventually. To make a lasting impression, arming yourself with the “Pitch deck for Dummies” and some incredible design skills just doesn’t cut it.
To really get our attention you need to address these five things that really matter to us:
1. Tell us who you are, what brought you here, and why you and your co-founders are the best suited to solve the problem you are passionate about. Although we may fall in love with an idea we invest in founders. We know first-hand that the journey is long and filled with obstacles, challenges and setbacks. We are your wingmen and we’re in this together. Therefore, it’s fundamental that we get to know each other well before any investment decisions can be made. Start by telling us who you are, why you care and why you are the chosen one to be addressing the problem you want to solve. We want to see your passion, not just the numbers.
PRO TIP: Show us your passion.
2. Next, let us understand the problem you’re solving. You need to establish an understanding of the problem that goes beyond the surface. Keep asking yourself why this is a problem until you’ve drilled down to its essential elements. Make us cry, laugh or go “Oh sh*t”, and you know you’re on to something. Obviously less drama may suffice, but you have to make sure that we understand the problem and its magnitude, that we can relate to it, and agree that it needs to be solved. If we cannot relate to it or see it as a big problem, it could be that we simply don’t get it. But it’s on you to make sure that we do!
PRO TIP: Make us care.
3. Woo us with what you’re building. We want you to demonstrate that what you’re building is unique, scalable and defensible. We’d love to experience your product, take it for a spin and see firsthand how intuitively and simply it solves the problem you’ve identified. An MVP is perfectly fine for this purpose. Less really is more at this stage as long as you can show how you’re solving the problem. If you have to “build the perfect airplane” before having anything to show us — well, that’s one hell of a mountain to climb.
PRO TIP: Show, don’t tell.
4. It’s all about love — product love. It may still be early days and you may have little data to prove traction but anything suggesting that you’re on track to find product-market fit is key. Forget about vanity metrics. We really don’t care about how many downloads or page views you might have, or that Techcrunch has written about you. We want to see early data showing that your users, no matter how many they are, actually use and love your product.
We focus on usage frequency and time, as well as whether users are likely/willing to recommend your product to their friends and family. We’ll ask you about cohorts, churn, DAU/MAU, LTV/CAC. Do yourself a favor and clearly define the KPIs that describe your business and show how you measure these. Being data-driven from the get-go is essential. You don’t want to be the pilot that flies without instruments.
PRO TIP: Prove that your users love your product.
5. Show us your “ugly slide”. Do tell us what keeps you up at night, what the key challenges and risks you face as a founder, why your startup may fail, grow slowly or be unprofitable for a long time. Be honest and open. The more you share, the more you will get back from us, and the higher the likelihood that we’ll want to continue the conversation. We’re not just another investor team, we want to be your partners. We are driven by great teams and want to give you the highest chance of success by supporting you in areas where you would benefit from additional experience or expertise.
PRO TIP: Always include a slide with what keeps you up at night.
If you come to us without an “ugly slide”, we will assume one of two things. Either you’re not telling the truth, or you’re ignorant and don’t understand your business. The ugly slide is your “get out of jail free” card and we won’t hold what’s on it against you. On the contrary, it builds trust and shows that you know your business and the dynamics of the market you are entering — as well as your own limitations.
A scenario where information that should have been disclosed in your ugly slide surfaces after our investment will definitely harm the trust between us.
With the “ugly slide”, we want to get a better understanding of how we can help you. We want to ensure that you get a high chance of success and get a competitive advantage by gaining access to our strong group of experienced byFounders Collective and our accumulated knowledge and network.
Some founders still seem to think that getting funding is like getting a loan from the bank, but honestly, if the only thing you are coming for is funding then this isn’t the right place. You can get capital almost anywhere but at byFounders, we focus on how we together can be successful.
If you are in doubt about what we are looking for when investing, take a look here and see how you stack up.
This blogpost is also published on Medium.com.