Pitching to a Venture Capitalist and raising capital is not an easy task, so entrepreneurs might not know exactly what to prepare. For example, what topics do you absolutely need to cover in your pitch deck? How should your email outreach be formatted?
David Teten, a Mentor for both the New York and Singapore Founder Institute Chapters, is uniquely positioned to provide tactical advice on this subject, having been a longtime tech entrepreneur, investor, and analyst. Currently, David is a Partner with ff Venture Capital, which has made 245 investments in 76 companies since 2008.
In his blog post "Please Don’t Pitch A Venture Capitalist Without This Checklist", which originally appeared on David Teten's blog, he outlines several criteria that he looks for in both an email pitch and pitch deck from entrepreneurs, and provides some advanced tips for founders seeking venture investment. An excerpt has been republished below and reformatted for clarity with permission.
"Raising capital is about quality of outreach, not quantity."
First, before approaching any investor, review their website to understand their areas of interest. Most VCs (including ffVC) only accept business pitches via referral.
Then, I suggest you send a 7-10 page presentation deck (or link to a deck) with a one-page introductory "cover note" email.
What to Include in Your Cover Note
The cover note should include:
- Name
- Website
- Location
- Revenues (if any)
- Detailed financing history (if any)
- Precise terms on which you are seeking to raise capital.
If you are testing the market to see what terms you can get, just say, “We are targeting to raise $X at pre-money valuation of $Y.” Investors value getting a sense of your expectations.
What to Include in Your Pitch Deck
With regards to your 7-10 page presentation, here’s a checklist of things we look for:
- Overview: One or two sentences about what you do, for who, so they can do what. Location. You may find it helpful to use the Business Model Canvas or BizIgnite summary form.
- Team: We want to know what qualifies you to execute your idea successfully and better than the five other companies in your space: work history, network, and skills are all key. Your history is important: did you work together in a prior company or did you meet last week at a hackathon? At an early stage, the key driver of our investment is the people, particularly how hungry and coachable you are.
- Demo: We almost always require a demo, or at least a mockup.
- Market: What is the problem, why does it exist, and how big is the opportunity?
- Solution: Your value proposition: how you solve this problem faster, cheaper, smarter.
- Business Model: How do you make money? Who pays, how much, from where?
- Customer/User: Who they are and how many? How will you reach/acquire them?
- Competition: Know every competitor and what are the current solutions to this problem, and why they aren’t addressing your market adequately. List the major competitors, understand their processes and what your competitive advantage is.
- Financial Overview: What are the expected revenues, expenses, and EBITDA three years out? How long will this round’s cash last you? We typically fund companies sufficiently so that they can run 18 months until the next funding, if needed.
- Funding: How much are you raising and how are you going to use the money? To grow a team, to support overhead, to expand? How much have you raised thus far and from whom?
- Milestones: What is your vision for the future, measured in milestones for the next 3 years? Note that in our board meetings, we will evaluate your progress against these milestones.
- Legal status: Where are you incorporated? Are you planning to relocate some or all of your team?
For more details on the information to provide for a Series A pitch, I recommend reading “6 things to pre-empt 90% of Due Diligence."
Additional Pitch Deck Tips
Here are some additional tips for your pitch deck:
- Emphasize Traction: We only know one thing for sure about your presentation: most of it will be proven wrong. However, we want to know that you are expert in your market and that you have thought about the key issues inherent to your business. As much as possible, emphasize the traction you have already achieved and the metrics you are using to measure that traction.
- Title your deck in this format: [Company Name] [yyyymmdd], e.g., “Klout 20150524”. This allows investors to differentiate your file from all of the other files they receive, and also easily track the evolution of your pitch as it changes. Naming your file “Pitch.ppt” does not make you look thoughtful, considerate, or organized.
- Be sure to prepare a pitch deck: Some founders have commented to me that they haven’t written down all this information in deck form, and would rather just meet and talk through the issues. My response: any competent investor will ask you these questions. You can give the information verbally and the investor will try her best to transcribe it. Or you can write it down and control the narrative. I think it’s more efficient, scaleable, and better sales technique to write this down. Then you can focus the meeting on discussion, not data transmission.
For more insight from David, check out his website, follow him on Twitter @Dteten, or review his series of posts on communications:
- How to Write a Memo That People Will Actually Read
- How to Present So People Will Hear
- How To Add Powerful (and Legal) Images To Your Presentations
- A Checklist for Writing Code
