Prepare 4 VC- Elements of a Pitch Deck

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Yeah. Yeah, thanks for joining. Yeah, thanks everyone for joining the call today. Yeah, this is— I'm Jason Kraus, the founder of Prepare for VC, which is a startup consulting firm that basically helps companies go through the fundraising process. I'm part of this new Found Something group that Roger created as under the My Co-Founder brand. And basically it's a group of entrepreneurs that have all come together and there's different mentors that basically are teaching different topics each week and, you know, helping. helping startups go from the beginning of their launch of their company throughout the whole process and getting them ready to scale. So in this session I wanted to dive into what it really takes to build a pitch deck, what investors are looking for, and how you can sort of pinpoint the key aspects in your presentation as you go through and build these on whether it's a fundraising round or startup competition you're doing. And really, you know, a lot of it comes down to basically, you know, being able to present what you're doing and why you're different than the competition, why this is an exciting opportunity. In a really short period of time. As most investors, whether they're venture capital investors or angel groups, they're receiving upwards of 50 presentations a month. And to really stand out from the crowd, you have to put something together that excites them in a 3 to 5 minute window that they go through and review. And yeah, just going to take you through some of the highlights of what investors are looking for and how you can build this around your own company as you tell your story. So I mean, to start off, you need to identify a problem that your company is solving that exists in the marketplace. So it's usually a key pain point you're solving, which can be anything from— within my own company, it's that 42% of startups fail due to the lack of a market need. And my focus within that is helping prevent startups failing due to a lack of funding and running out of cash. Just taking some of these, basically, you know, every sort of the problem is used at the beginning of the deck to sort of answer that why, like why this is important, why should somebody even listen to a presentation about the topic you are covering, and what are you really going out and solving that can't be or doesn't exist in any of the competition out there. So like, for example, some of the problems I'm solving when I help work with startups and go through this process of building out a pitch deck is there's some key aspects that a lot of companies are missing. Either they go in, they have too much information, all the slides are text, and It really just overwhelms anyone that's looking at their deck, and it doesn't really focus in on the key points and tell their story. Sometimes it's the opposite side, there's not enough info. You can, as a founder in the company, sometimes you feel like everybody else knows what you're doing as well. You might think some of the key— basically, yeah, like if you have— you might think one of the key features is self-explanatory to everyone else that is really novel and makes— is the main message of your business that you need to get out there. being able to present every aspect that is important and leave out some of the extraneous details. You also need to know your competition. A lot of companies will say they're the only real competitor in the space, but everything is competition, even if it's, you know, using— even if you're competing with using a pen and paper filing system versus Versus Dropbox or another competitor. You're competing with an older way of doing things or you're competing with existing technologies and platforms out there. Valuation. We work with a lot of companies around this that want to give themselves a $10 million valuation because that's how much equity they want to give up versus having a real clear depiction of this is— companies at our stage typically sell for a certain multiple of revenue or value users at this amount or just base it off of the technology and expertise on their team that they bring. to the table. So having a clear understanding of the value of your business really helps going through negotiations and being prepared for investment discussions. And also, not keeping the traction up to date is something that can really hinder a lot of startups. Basically, yeah. I've talked with, uh, or worked with some companies that, um, you know, as they're going, they, they go from, um, 100 users to over 1,000 on their platform and, um, forget to update their deck as they continue to reach out to investors. And there's a lot of investors that have, you know, sort of milestones in mind of when they start taking getting interested and making sure that whether it's a partnership, number of users, basically anything that sort of shows traction and continued growth of the company gets updated and recorded to investors is key to stay on top of. So all of these decks should be sort of a living document. breathing document, whether it's a business plan, a pitch deck, or financial projections that should be updated and revised as the company grows and moves forward. Different companies are, you know, are a better fit for different types of funding depending on their stage and And the, you know, industry that they're involved in can be anything from angel investments, which are usually individual investors. Also, sometimes they're part of groups that come together and review deals together and make— basically pick and choose which deals they want to go into. Those are typically The earliest stage of, you know, come in anywhere from the seed stage to— could be a little later, like Series A round as well. VCs are institutional investors that have funds together or funds they manage on behalf of other people, whereas the angels are investing their own dollars into the startup. Sometimes they pick an area, like one area of expertise from previous businesses or just that they've followed and become an expert in. And other times they'll spread the risk across whatever opportunity comes their way. So Then there's also crowdfunding. Started in the rewards and donation spaces with sites like Kickstarter, GoFundMe, and Indiegogo. And over the last few years, there's been the securities crowdfunding has taken off too with sites like WeFunder, NetCapital, SeedInvest that allow both More general, um, basically general solicitation and advertising, uh, for registered companies on one of these platforms, um, to accredited investors, as well as some platforms that allow you to, uh, raise from unaccredited investors and basically gives a chance for your, um, if it's a consumer-facing company, for your customers to invest, become an equity owner in the company, as well as just open it up for larger investments from the community. Some blockchain companies are going through token sales. For that, it's key to make sure you— or at least in the US— to follow Make sure you register as a security. Follow follow the securities laws as some of them or the SEC has come after some of the ones earlier ones that didn't really apply to the regulations there. But it's a great avenue to for all blockchain companies to be able to raise funding around either new cryptocurrencies or just blockchain platforms that are emerging and are going to be sort of, yeah, want to, you know, a new avenue to tokenize, either tokenize securities, make your own currency, or just build a platform on top of this technology. You know, science-based or healthcare, like healthcare companies, those federal grants, great avenue. You know, secure as much of them as you can get, as these tend to be non-dilutive funding. So that means they're not taking— it's pure giveaways. You know, you have to apply, go through an application process, but usually it's funding that comes from the government or non-governmental institutions where they basically give you capital to fund a mission that they have. And it's not— doesn't take equity away from the company, the founder, or the investors. So investors Angels, VCs, other investors love to see that you've secured grants. If you come in and have $3 million in grant funding, that just adds that much value on top of what you've already built and the technology and company you put together. There's other loans and types of credit coming from the Small Business Association or banks and alternative financing. That depending on the industry can be a good fit for a startup as well. So what we do, like our solution is we really sit down with all the startups that come in, go through the strategy of figuring out where the best opportunity for these companies to raise capital is, whether they're at this— at a milestone where it makes sense to fundraise now or whether we can help them get to— maybe they need to— or they'd be in a better position if they do a prototype. And we can set them up with Either someone from Roger's group, someone from our own group, and basically get them to a place where they are ready to go out and raise capital. From there, we do a full-scale business plan with content and design, create a pitch deck that showcases their business and the key aspects that separate them from every other pitch an investor is going to receive. We give them a one-page executive summary and help them apply to these angel groups, VCs, or get onto a crowdfunding platform that makes sense for them so that they can go get funded and get back to what they really— basically their mission and what they want to do in moving their startup forward. And then the team, yeah, the team is really important, especially in the early stage. A lot of pre-seed to seed funding comes based on the belief in the team, because any company is going to have competition along the way. What an investor is really betting on is that the team you put together in place will be able to execute on the idea and grow the company faster than anybody else that's trying to do the same thing. So like, yeah, this just showcases some of the team and expert consultants. They're all— we've put together all either VC investors, experienced entrepreneurs or MBAs that come together and work with me on helping out the startups we work with. Another key aspect of the deck is the market sizing. So here it's important to showcase more of the key elements that show how big of an opportunity this is. for both your company and for the investors that are backing you. So you want to put in, you know, you don't want to just say like we are targeting anybody that uses an iPhone or an Android. You want to be more specific but big enough to capture the attention of investors. Basically like In our case where we're connecting or basically surveying the 550,000 new business owners and entrepreneurs each year or that launch a new business each month, connecting them with over 750,000 investors that have made friends and family or angel investments. So, and, you know, other, other companies, you might do like the size of a specific industry and break it down into the types of users that, like, maybe within, within a virtual reality industry, you want to target users that are Also in the gaming industry and showcase what your market size and potential opportunity is there. And also within the rest of the deck you're showing why you can expand this market even further and grow the opportunity larger than what's taken place to date. You want to showcase your competitive landscape and differentiate yourself from the competition. So a lot of times, you know, this can be 2 ways. One aspect, you can sort of compare yourself to existing companies. Like a social media company, you could compare yourself to Facebook, Twitter, Instagram, and show what features, what community aspects you have that differentiate yourself from the competition. But also, like I mentioned, you know, sometimes your competition isn't necessarily a company. It's using— like, for instance, you know, I'm competing with advisors that take equity in the startups they work with and, you know, go on a one-by-one basis versus ours is more of a consulting process and a group of experienced professionals that come in and work on anything from a one-off project to longer-term consulting projects. So yeah, it's key to show both the competition with other companies as well as with an alternative way of doing things. And how you differentiate yourselves from them. Traction can come in terms of companies you've worked with, revenue, users, you know, any aspect that's really— you want to use to showcase basically how far you've come and give an idea of where you can take this from here. And along that line, you want to give a roadmap to the investors of what you've built to date, what you're looking to do, sort of like the next— yeah, usually here you can say we're raising $200,000 now. You want to put down milestones of what that $200,000 will help you achieve. And where the next fundraise will come in, and what that can take you along the way. The benefit of doing several raises is that you can basically, if you can break it down into key milestones, you can say, you know, at each, or you can raise enough now, not have to give up, the full equity amount in the company you would if you did a much larger raise, and just come back at that second point once you've hit milestone 1, have more of the boxes checked off on the traction, and be able to say maybe we were a $2 million company in the first round. Now that we've hit milestone 1, when we do our second raise, we're a $4 million company. And basically break it down into actionable growth items you can show to investors and increase the value of your company, decrease the amount you have to give up in each round. And the last part I like to include in every deck is financials. Sometimes it's It can be based on, you know, if it's a revenue-generating company already, it's based on previous results and projecting from there. Other times it's based on a user or customer-based method. If we get to 200,000 users, what does that mean in terms of revenue? What does that mean in terms of cost behind it? Being able to showcase that. Also building in some comparables from other companies in the space that you can use to showcase that, you know, maybe not like on the marketing spend, how much if you invest $100,000 into marketing, how many downloads will that turn into and sort of price out give a pricing and revenue model based off of the competition in the space. And you really want to showcase how much, how much invested investment you need, where it will get you in terms of the roadmap you've, you showed, you showed to the investors on the previous slide, and what you're offering on these deal terms. So. Sometimes, you know, at an early stage it might be convertible note or a SAFE into— then from there, typically a preferred equity round and valuing the company based off of the financials you're showing, the growth trajectory. You know, at an early stage, usually looking for— investors are looking for Basically a company that can exit 10 to 20 times the value that they're investing in. As the company gets later stage, there's less risk. The valuation multiple is going to decrease from there because you've already de-risked it, shown you have stable revenues, and you're already worth a lot more than than you are at this stage. And you want to show them, you want to really paint a clear picture of that you're building something strong where there's this problem needed in the market, you have the solution, you have the team behind it that's better than the competition, you've shown there's There's something really there that people want to see— customers, partners, other investors that have come in and basically that with their capital it'll accelerate the growth even further and take it to that next level. So yeah, this is— those are the main parts. we focus on as we're building our investment decks. And, you know, happy to answer any questions, open it up for discussion, and looking forward to working with all of you.

All right, cool, Jason. That was an awesome intro to what a lot of these people can look at, and I wish some of them were in here. I mean, Doug's kind of more on our side of it, and Dennis is Is as well. So we're not going to get any of the— well, anyways, but I know one of the questions that a lot of them, a lot of people have been asking are like, they'll say stuff like, I've been reaching out to people on LinkedIn and investors on LinkedIn and none of them will respond to me. And why won't they respond to me? And how can I get them to invest in my company?

Yeah. So I mean, the easiest— well, I mean, there's 2 types of the warmer introductions that helps you get in front of investors. One is if you're connected with somebody that they're already connected with, they're more likely to take an introduction. Even come from a founder. Like, if you know, um, if you know one of their portfolio companies and, um, basically get introduced by a founder they've already invested in, or, you know, somebody, um, an investor they've gone into a deal with in the past that can send, send an introduction along, um, that helps a lot in terms of You know, making it, making that warm introduction. Another like warmer lead is if you can go and say, you know, you're not just a random person I'm reaching out to on LinkedIn. It's, I want to connect with you because I saw on Crunchbase or AngelList that you've invested in, you know, another biotech startup in the diabetes space or whatever. Whatever your company is, showing you've done some research around them before reaching out sort of adds another layer to that outreach and helps you get a response quicker than a cold email or LinkedIn outreach.

I think that's right, trying to do your backend research to figure out who you can talk to. I think that takes a lot of time and a lot of Founders that come in really early, they just don't— a lot of people just don't know really where to look. So I'm glad you mentioned AngelList. That's one place you can go, or Crunchbase, to kind of find out what these people are investing in. And you're really just kind of digging through. Actually, Doug, are you still there? Doug?

Yeah, I'm here.

Oh, awesome. I know that you've worked a little more on the later end stage of some of these raises, but then, you know, we obviously haven't had too much discussion, but do you have anything to note on, like, for really, really early stage companies and reaching out to investors? It's hard to put you on the spot, by the way.

Yeah, I mean, I guess for really early stage, Where you're looking for, you know, for an investor to give you their money. Yeah, I mean, the decks— this deck hits the point. I mean, what problem are you trying to solve? You know, I mean, you gotta have a convincing pitch on that. You know, if there is a problem that needs to be solved, you know, then the only next piece is just convincing the VCs that you've got a plan to go solve it.

Yeah, and I mean— oh, sorry, it was someone. Yeah, someone was going to ask another or say something there.

No, I think it was background noise. Fire away.

Oh, okay. Yeah, so I was just going to say, you know, another key, and again, it's kind of You know, somewhat more challenging to find. I mean, obviously, you know, it's hard enough to find an investor, but also like the right investor that can come in and sort of help at an early stage as well, make some introductions to either potential clients, partners, or other investors in the space. But if you, you know, the best Or most likely investor to come in at an early stage is somebody that's experienced this problem themselves and really understands, understands the industry and market, market problem you're solving and sort of sees why the solution you put together is better than anything else out there. Yeah, so sometimes it's, you know, ideally it's somebody, an angel or early-stage invest— early-stage fund that'll come in with sort of more of the background knowledge and you really emphasize all the key points they're looking for. Other times it's just somebody that, you know, maybe they'll know They'll get convinced by the story you tell. Like I mentioned, a lot of times they're investing in just the team. They see what you've done in this startup in the past, that you have some experts either on your team or board of advisors, and might not 100% know like the ins and outs of the technology you built, but, um, just betting on the horse and that you guys are the right people to execute on this.

You also mentioned the crowdfunding platforms like SeedInvest. Now a lot of those require, you know, $2,500 to put all your materials on it, and then there's also like a monthly fee. Um, would you I'm just kind of curious, like, when's the right time to invest that amount of money into one of these crowdfunding pages? Um, I mean, would you want to do it right off the bat? Would you want to wait until a little while? Would you want to wait? Do you have an investor? Would you want to wait until— I mean, I guess, what would you— from scratch, I'm starting from scratch, when would you say is the kind of generally the biggest hit point when I should start investing cash into one of those? crowdfunding startup platforms?

Right. Yeah, so there's a bunch of different models they use. Some do have more— or yeah, some have fees right away and monthly. Other ones are more brokerage sites and basically take care of a lot of it upfront and just charge a success fee on the backend. But as far as when to crowdfund, on that side it helps— or the larger email list or social media following you have, the easier it is to raise. Like if you can show— basically if you can, on a lot of these sites, if you can go out Once you're on the crowdfunding site, push it out to all of your own channels, raise some capital there, and then have the sites incentivized. They can show this is the hottest deal of the week. It's raised whatever, $20,000 in the first 2 days it launched or whatever the numbers are. They generally push push ones more often to their emails and newsletters for the full platform as a whole that have shown some level of success reaching out to their own network. But yeah, I mean, it's great. It's not a fit for every company. I mean, There's a— or well, the larger ones that are doing regular angel rounds or VC rounds can be a fit, just expanding the reach and the pool of investors you're going after. But the smaller crowdfunding rounds, those are— Or the like— More retail crowdfunding. It's great for consumer-facing products. It's great for impact opportunities that sort of also get impact investors as well as financial-looking investors to both go after— basically has multiple opportunities. And You know, also, I mean, yeah, a reason it's good on the consumer side is when you have some capital, yeah, say you've raised a small angel or friends and family round, decide to go out and do this crowdfunding, you're basically doing marketing. Like, the money you're spending is going towards marketing to your end customers as well as people that are going to come back and invest in your business. So You sort of get that 2-in-1 approach if it's a consumer-facing business.

So one last thing, and then I'll stop talking so much, because that— but you mentioned, just because you brought up impact investors, and I'm not— it's kind of a newer concept, and I was just wondering if you could make the distinction between your impact investor and your traditional, you know, ROI investor.

Right. Yeah, so impact investors generally have a mission they're involved with and sort of a reason behind their funding as well. So some, like for instance, there's funds or investors that want to do sustainable investments, investments in green energy, other ones that You know, can be— might have a tie to like a particular— like diabetes or cancer treatments and, you know, make that the focus of their investments and portfolio. You know, still, they still— it's not a donation. They're still investing in companies that, you know, have a potential for return and financial success for them, but one of their main aspects of what they're looking for involves some sort of impact on the community or the world or a particular issue that they're really passionate about.

All right, awesome. So those are the questions I have. Doug or Dennis, you guys want to jump in and ask anything? Remember, a lot of this is going to be for the new entrepreneurs that come through. So if you have any issues that didn't get hit on, I'd love for you guys to bring them up if you want.

All right. Yeah. So I'll be open. Yeah. If you have questions or comments, like you can go through the— yeah, either on our Trello board we have on the Found Something group, or you guys can email me directly. Happy to answer any questions and help out and get to know you guys better as you grow your companies.

Okay, awesome. So we're going to put a link We recorded this. We'll put a link for this on that Trello card, and then I'll let everybody know to go watch it. Like I said, there's a ton of people who are looking forward to it. So that was awesome. All right, cool. Thanks, Jason.

Yeah, thanks. Thanks for joining.

Yeah, man. All right.