Honing your startup pitch and building brand recognition, a beginning
By Robin Rowe
BEVERLY HILLS, CA (Venture Hollywood) 2018/8/16, updated 2019/2/12 – Startup founders often ask me, is it really free and how do I apply to present at your monthly pitchfest? Yes, it’s free. Here’s the “secret” procedure…
Contact me, Robin Rowe, on LinkedIn. After we connect, I’ll ask you to email me a PDF copy of your pitch deck. Or, if you know my email address at Venture Hollywood (it’s easy to guess), you may reach out directly.
If your deck says “confidential” anywhere, expect it to be automatically rejected. Pitch event is open to the public. Do not share with us anything that is confidential.
Send a pitch deck as PDF or the link to your pitch video. If you are not in Los Angeles and want to pitch remotely, it must be a pitch video.
Pitch Deck Standard Format
Don’t overthink or overproduce your deck. Keep it simple. Resist the impulse to put too much text on your slides. Use concise bullet points. A picture tells a thousand words. The slides emphasize what you are saying, are not there to read from.
Based on feedback from investors, I ask that you arrange your slides in the order that investors prefer. Organize your slide deck in this format…
- Title slide: your company name, logo and a 3 to 4-word description describing what your company does in simple terms that an investor unfamiliar with your industry will understand. Clever tag line is optional.
- Team: your team members photos, names and titles, or alternately, an About <Your Name> slide if you prefer the focus is just you. Investors say that the Team slide is often 90% of their decision. That’s why I ask you to place it first and last, not only at the end as is more typical.
- Problem: a clear description of the burning issue you intend to solve
- Solution: a clear description of the means by which you will solve the problem
- Technology/MVP: A simple diagram of the technology you are using. It might show a user, a mobile phone, a cloud with various services in boxes. Name drop any significant brands powering your solution, e.g., AWS.
- Market Research: How many people have you asked to give feedback on your product? Who are they? What do they say? Are they ready to buy? What issues do they express with existing products?
- Business Model: Your business model in a nutshell. Not a 6-year spreadsheet or a hockey stick profitability graphic. A simple description in a few bullets of what your prices are, cost of customer acquisition, average revenue per customer, projected profits. In general, putting costs on this slide is too much detail. Focus on revenue and profits. Assume your audience understands that revenue minus profits equals costs.
- Traction (or Validation): Ideally this will be users and revenue. Any progress can count… Built team, did a market survey, started development, completed MVP, got recognition or a prize, testimonials, corporate partners, meetings with potential customers, pre-sales, pilot or beta or clinical trial, created website, got publicity.
- More slides as you wish, but you probably won’t have time to brief them within a 5-minute pitch. If you have additional supporting slides, maybe put those after your “last” slide, ready to call up in support of anticipated questions during your 5-minute Q&A.
- Team/Contact: the last slide. Your team slide again, but with your name and contact details that you are comfortable making public.
Email me a PDF of your slides or better yet send me the URL if you have it online. As a PDF your file should be less than 5mb and not require Dropbox. Do not email me your PowerPoint PPTX file. You’ll bring that on a flash drive to the event.
It’s normal that presenters are refining their slides up to the day of the presentation, that the presentation deck is a little different from the PDF that was sent to me.
At the event, your PPTX (or PDF if you prefer) will be copied from your flash drive onto the presentation computer. All the pitch decks are copied onto one computer, so we won’t fumble with swapping out computers between pitches.
If you decide to put your pitch deck online as a PDF and give me that link, I can put that on the web page so it can reach investors beyond those who attend in person.
Avoid These in Your Deck
- Do not put secrets in your deck. Avoid revealing your secret sauce recipe. Coca-Cola and KFC are examples of companies that say they have a secret sauce, but don’t tell us the recipe.
- Do not put a Disclaimer slide in your deck. There is no safe harbor disclaimer you can make. If you are a U.S. citizen you can’t disclaim yourself from the SEC, FINRA, CFIUS or other regulators no matter where you do business. Consult a securities attorney, as regulations keep evolving.
- Do not put your deal terms (the ask) in your deck. While broad solicitation is allowed under SEC 506(c), if you are funding under SEC Reg CF, “An issuer may not advertise the terms of a Regulation Crowdfunding offering…”
It’s best to avoid putting deal terms in a deck anyway. Expect deal terms to vary in every city. We should be asking for a lot more when pitching in San Francisco compared to Los Angeles, because Silicon Valley expects bigger. However, we don’t want to be locked into the top market, that we can’t make deals elsewhere. Make the best deal that each investor is able to offer that we can accept.
Your choice whether you verbally state your deal terms in the room. Consult with a securities attorney to decide your best policy on when and where is ok. ABC Shark Tank can discuss the shark’s deal terms in public because the offer is only to the accredited investors in the room, not to the public.
Public Link to Your Pitch Deck
More investors than those who are attending the event may be interested in you. Investors who are unable to attend reach out to me to ask that I introduce them to specific founders or send them a copy of a startup’s deck.
Rather than me becoming your middleman, I suggest that founders put their PDF pitch deck online at their website and send me that URL. I can link to that directly on our web page. Of course, if you’d rather not put your deck out in public, that’s fine too. Just trying to help. Link format to be something like:
Don’t put version numbers in your deck’s file name unless you intend it to never change.
The PDF you send me is just a backup. Don’t forget to bring your Powerpoint file on a flash drive to give to me the night of the event to copy onto the venue’s presentation PC.
Question from a presenter: I’m sending you two pitch decks, one in your format and another in a format that we think tells a better story, may we use the latter?
Please try again and send me one deck. Using the format that appeals to investors helps you. Give your audience what they want.
Our presentation format evolves based on feedback from investors. If as a founder you have a fantastic idea to improve our format, I’ll listen. However, I’m going to give more weight to what investors say they want to know.
If you want more pizzazz or flexibility than a deck, you have the option of producing and showing a video or having a live demo. Let me know if that’s part of your plan.
Question: How much detail to put in our deck?
A reasonable number of slides in a deck for a 5-minute pitch is 10. That’s only gives us 30 seconds to see each slide. And if the number of words on any slide exceeds 30 or 40, that may be too much text. When projected, such wordy slides will be unreadable due to font size, and the audience will rapidly lose interest.
Question: How much detail on the Technology slide?
Present enough depth to assure investors you understand the building blocks of your own technology. Not so much that you will cringe when your competitors see it. When an investor is interested, expect your presentation will get passed to your competitors as part of the investor process of vetting you. Your competitors are assumed to be the most capable to vet you. The most likely outcome of a great pitch is that your idea or deck will land on the desk of the CTO of your biggest competitor.
Best situation, your competitor will see your deck and want to be your customer, to partner, or to buy your company. Avoid badmouthing or antagonizing your competitors. An investor’s decision to fund you may hang on what competitors think of you. You may want to partner with them someday.
Question: Is this really free? How? Why don’t you charge something?
Yes, no charge to the audience or presenters. The event is made possible by the generosity of volunteers, including myself, and sponsors. I just want to have fun at events. Trying to collect a few bucks at the door during an event doesn’t interest me.
Question: How do you decide which startups may pitch?
Looking at professionalism in the pitch deck and in the behavior of the founders. In general, not trying to evaluate the viability of any business. That’s for the audience to comment during the Q&A.
We’re open to being the first venue a startup or founder has ever pitched. However, each startup only gets to pitch at our event once, no repeaters unless for a different startup. There are other pitch events in L.A., such as Pitch Globally, that I’ve been on the panel several times. Ideally, your finding your own opportunities in 1:1 investor pitches and using public pitches mainly to practice and create word of mouth.
Question: Will there be investors in the room when I pitch?
Yes, probably, at least there have been in the past. However, they may be deep in conversation with someone else or have already left when you are doing your pitch. Even if an investor sees your pitch and is paying attention, a public pitchfest is not the best place try to close a deal. Get a private meeting.
There is a 10-minute break between when the panel speaks and the founders present. Use that moment as an opportunity to make a connection with any investors on the panel who could reasonably be interested. Introduce yourself. Ask if you may give a 1:1 pitch at their office. If he or she declines, ask for a tidbit of advice, such as, who do you think we should try to pitch it to? If you get a card, don’t email a deck to an investor before he or she says it’s ok. That’s too forward. Query first.
Before the panel Q&A, I ask the room for a show of hands of who is a student, who is a founder, and who is an investor (and willing to admit it). Typically, a couple investors in the audience will raise their hands.
In general, the sales process for any product is 3-touch. That is, a potential buyer needs to touch your product three times before becoming committed to buy. It takes time, whether it’s selling a sweater at a retail shop at the mall, or selling equity in a company to investors. Don’t be the pushy sales rep who expects to make a sale on the first go. Don’t over-sell. Explain why to buy.
Question: Is it too soon for my startup to pitch?
To present at the pitchfest you need a pitch deck, video or a demo. Most pitches are only decks.
Startup investing is whimsical, may happen at any point including when a product is merely an idea on a napkin. Some founders prefer to wait until they have more traction or a released product or sales. Often, the real motivation for such a conservative strategy is not prudence. It’s fear of public speaking, that the presentation will bomb. Everybody blows a presentation sometime. Can’t be avoided. Nobody’s perfect.
Making 50 investor presentations before finding an investor to take the plunge is typical. It can be a long road, so start now. By the time your pitch is honed, your company will be further along anyway. Who knows? You might get lucky, find an enthusiastic investor on your first pitch. Securing an investor early can be a tremendous advantage, growing a company sooner and getting to market faster.
Bjarne Stroustrup, the inventor of the C++ programming language, says the most important thing for success in a technology project is to be clear about what we are trying to build. Even when finding no investors, the added clarity founders gain from preparing and presenting a pitch is worthwhile.
Question: How large will the audience be?
Sixty or more is typical.
Question: Will we sign an NDA?
No. And it wouldn’t help if we did, as nobody at the pitchfest event has signed an NDA. The event is open to the public. A whole roomful of people are going to hear your pitch, any of whom could be a current or future competitor.
Question: But, what if competitors steal some of our product’s features?
As CEO, it’s not appropriate to ask investors that question. Investors ask you that question. How will your competitors not be able to easily replicate your product? Devising a defensible market strategy is your job. Here’s how…
How to Protect Startup Pitch Deck Secrets
While hearing you have patents is a satisfying answer to many investors, it is costly. In the U.S., typically $20k each and $1M+ to take anyone to court. You will need a major corporate partner to help with litigation costs if you get into a patent fight. You may have to sell your company at a distressed price to support lengthy litigation. The litigation process can be so consuming that by the time you achieve a court victory you will have missed your market.
- Trade Secret
Omit revealing the secret sauce in the deck. Say what, and not how.
- Open Source
The opposite strategy of trade secret. Put your source code out on GitHub and share it with everyone. Expect to explain how you will make money when the software is free.
- Market Barrier
You have unique traction, an exclusive platform to reach buyers, big dog partners, celebrity endorsements, sales dominance, or some other special market position or unfair advantage that competitors can’t replicate easily.
- Don’t Care
You know your competitors to be slow or even paralyzed, perhaps because you used to work there, that they can’t out-perform you.
Question: How Likely Are We to Close a Deal in the Room?
Except for pitch competitions like Shark Tank or Dragon’s Den, or in a private meeting with accredited investors, don’t expect any investor will make an offer in the room. It’s too soon. Don’t try to close a deal at a public pitchfest. Single out a likely investor to ask for a private meeting, follow up.
Question: When do venture capitalists fund companies for good rather that for money?
There are impact investors who are trying to save the planet.
Investors may buy anything for any number of business or personal reasons. A more significant question may be, for how much? What is our company worth?
Six popular ways to calculate the valuation of a business:
- A profitable idea: 2.5% of gross sales as a future royalty or perhaps sooner as a buy-out.
- Fans: Each user is worth $5.
- Revenue: Company is worth 8x annual revenue.
- Market cap: Company stock or crypto market value.
- Comparables: Company is worth the same as a comparable company of known value, based on market cap or M&A sale.
- Incubator: For the cash-poor startup, preferably with a couple thousand in monthly revenue, an offer might be $150k for 20% equity from a Los Angeles incubator. Y Combinator incubator deal terms are some of the best in the industry at $120k for 7%.
Pick one metric, not add above together. The above are just a negotiation starting point, to be argued up by the founder and down by the investor. Don’t forget to divide by the % equity we are willing to sell. This number is what one can reasonably expect from an investor. Do we even want it?
If our company’s valuation is so low we would turn down any reasonable offer, it may not make sense to seek professional investors. To get better terms than a VC can offer, raise friends and family funds, crowdfund or win grants. Exception to the rule, any investor who seeks us out may be able to pay way above market rate for special reasons of their own.
Question: What city is the best place to raise money?
For high tech, Silicon Valley has the most money, can handle big deals. Los Angeles is an emerging venture capital market.
If you’re a film or TV producer, not Hollywood. What new producers aren’t told is Hollywood is where money gets spent. It gets raised somewhere else. A reason so many Hollywood films take ten years or longer to get made is that raising capital takes so long.
If you do manage to get entertainment investors in Hollywood, they will be looking for traction, that your platform already has fans or subscribers. If you’re a screenwriter, 2.5% of the film’s production budget is a reasonable offer for a screenplay.
Hope this helps!