Heres' the 5 most common mistake founders made when building a pitch deck.

Creating a pitch deck is one of the most crucial tasks for any startup founder aiming to raise funding. Yet, many founders stumble over some fundamental aspects, diminishing their chances of securing investment. My pitch deck review tool tracks the mistakes founders are making - let's take a look at that massive data set, and look at the common pitfalls and how to avoid them.

1. No Operating Plan

Stat: Only 7% of startups include a good operating plan.

Why It's Important: A clear financial plan is essential for showing investors how you intend to allocate resources and achieve your business objectives. It demonstrates that you have a well-thought-out strategy for scaling your business and managing finances effectively.

The Fix: Include a detailed operating plan that outlines your projected revenues, expenses, and key financial milestones. This should be realistic and backed by data, showing that you understand your market and have a plan to navigate it successfully.

2. Poor Use of Funds

Stat: Only 4% of startups get the Use of Funds slide right.

Why It's Important: Investors need to see specific, measurable, achievable, relevant, and time-bound (SMART) goals for how their money will be used. This clarity helps them understand the potential return on their investment and the milestones you plan to achieve with the funding.

The Fix: Detail how you will use the funds with precision. Break down the budget into categories like product development, marketing, hiring, and operational expenses. Specify the outcomes you expect from these investments, such as user acquisition targets or revenue milestones. Never use percentages. Here's how to get it right.

3. Lacking Unit Economics

Stat: Only 6% of startups get the Unit Economics part of the story right.

Why It's Important: Understanding and communicating your unit economics is critical for demonstrating how your business model scales. Investors want to see that as your company grows, your financial metrics improve, indicating a viable and profitable business in the long run.

The Fix: Clearly explain your unit economics, including customer acquisition cost (CAC), lifetime value (LTV), and gross margins. Show how these metrics will evolve as you scale and what steps you will take to improve them over time.

4. What Traction?

Stat: Only 16% of startups get the Traction slide right.

Why It's Important: Traction is a key indicator of your startup’s potential. Revenue, especially recurring revenue, is the most compelling evidence of traction. If you don't have revenue yet, highlight other achievements that de-risk your venture, such as user growth, partnerships, or product development milestones.

The Fix: Show your revenue numbers and growth trends. If you’re pre-revenue, provide metrics that demonstrate progress, like user engagement, downloads, or partnerships. Explain how these achievements validate your business model and reduce investor risk.

5. Shoddy Team story

Stat: Only 19% of startups get the Team slide right.

Why It's Important: At the early stages, investors are betting on the team as much as the idea. A strong team with relevant experience and complementary skills can navigate challenges and pivot if necessary, which is crucial for startup success.

The Fix: Highlight the strengths of your team members, including their backgrounds, expertise, and previous successes. Explain why your team is uniquely positioned to execute your business plan and achieve your vision.

Ready to Raise in 14 days

Getting these slides right can significantly enhance your chances of securing funding - and if you're struggling, you're in luck. I've developed a course: Ready to Raise in 14 days, that walks you through every step along the way. Remember, your pitch deck is not just a presentation; it's your ticket to gaining the support you need to turn your vision into reality. I'm here to help.

Pitch Deck Teardown: Too many slides

Cloudsmith, a Northern Ireland-based startup which helps companies to manage their digital supply chains, let me take a look at its Series A deck for this week’s Pitch Deck Teardown on TechCrunch. The deck was used in September 2021 to help it raise $15 million, but while it might be a little older than others I’ve looked at, there’s lots to learn from it. My biggest take away from the deck is that less can certainly be more, and that sometimes, having too many slides and too much information ties you up in knots.?Read the full teardown on TechCrunch

This week’s Pitch Guide deep dive

When you’re building a startup, one of the sweeteners that you can offer your employees to help bring in the best talent and build commitment to the company are stock options. In my deep dive this week, I explain why any stock options should come with a vesting period of at least four years. That might feel excessive, but there are reasons.

3 top fundraising tips

1. The importance of storytelling in a deck: When you’re focused on your pitch deck as a business proposition, with business models and pricing details, revenue graphs, and market size slides, it can be difficult to recognise the story in it. But every deck is a story, and tells a story. To get investors on your side, you need to weave that narrative thread and learn how to tell it.
2. How much should I focus on the design of my deck?: There’s a balancing act when it comes to pitch deck design. It definitely does not have to be on a par with the ceiling the Sistine Chapel (or in fact its floor–everyone forgets to look down in there, and it’s gorgeous), but you don’t want to be handing over the equivalent of some beer-stained napkins that aren’t even stapled together, either.?
3. Nix that exit strategy: There’s one slide that nobody should be including in their deck. They shouldn’t even hint toward it. That’s an exit strategy. Don’t be tempted, not in the slightest. Always omit ideas around an exit.

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Monday 3 June 2024

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