Four Critical Tips for Fundraising Season

It’s post-Labor Day, which means that thousands of entrepreneurs are gearing up their pitch decks and VCs are ending their three month sabbatical. This fall could be one of the most active seasons we have seen in years, with over $9.9 billion invested across 880 deals in Q1 2014 alone.

As an entrepreneur, there are the standard slides that tell the founding story and market opportunity – but how do you take your deck from informative to persuasive? Here are my top tips for early and late stage entrepreneurs that will separate your pitch from pack.

1. Pre-Pitch: Prep for the worst case, not the best case

It’s surprising how many entrepreneurs don’t spend as much time on role-playing their pitch as they do in putting the deck together. The deck is meant to be a guide book – the majority of your pitch will almost inevitably be question and answers.

Prepare for the worst by going through your deck slide-by-slide and recording responses to potential objections that your competitors or enemies could throw at you. Then do the same at the end of the presentation. There will always be questions, but you can identify the gaps and fix those gaps prior to your pitch.

2. Don’t just focus on market potential – speak to the issues

Many people spend 45 seconds talking about the issues in the market they are entering and 3 minutes talking about the market potential. There is an assumption that investors are all-knowing and only care about the potential market, so the bigger the number the more likely they are to invest.

Avoid this common mistake made by first spending a short amount of time discussing the relevant issues facing the space using reputable, outside sources. Once you’ve discussed the issues, highlight the real opportunity by reviewing the implications of those issues on the industry both today and over the next 5 years. Then lay out key capabilities needed to compete and the potential competitive landscape to show your unique position.

Using this framework will help to better position the market potential because your audience will be educated on the “why” of your market and not just the demographics and back of napkin economics.

3. Failure happens, just make sure it is on the path to replicability

Until you are late into your rounds, D and up, no one expects you to have the core business 100% figured. People know that mistakes will be made – and sadly, there is no fool-proof plan for building a company. The key is to make sure that you have laid out the plan and process to everyone well in advance.

A critical component of ensuring you are close to the right path is to look at how replicable your business and sales processes would be if the founders and key first few hires were removed from the process. Explain how your current process works today and how you plan to scale over the coming years. What is missing, what is in progress, what have you fixed over the last six months?

The people side of investing isn’t just where you went to school or if you spent two years at FB/Google. It’s also about your thought process and how you think about failure. Can you diagnose the needs, show a track record of being proactive, and put together a plan to move from point a to point b in a repeatable manner?

4. Don’t ask for an arbitrary dollar figure – be specific about how the funding facilitates your plan.

This one seems fairly straightforward, but I’m still shocked when I talk to early and later stage founders who are raising a 10 million dollar series B, but have only one slide dedicated to why they need 10 million dollars.

A key piece to every deck is the set up for the financial ask. Highlight key milestones in a 18-36 month plan, and the needs of the business to get there. Show that you understand the ways this may change and the key factors that will influence your plan. Think about a math equation. You want to show 2+2=4. Not x + x =4

Conclusion

A pitch deck must have many other core components but these four sections can help to separate your pitch from the rest. The key to all four points is to ensure you establish your problems in a way that shows your potential, the business needs, and positions your plan in the best light.

This is the biggest sales pitch that many founders will ever have so make sure to treat it that way. It’s not all about the facts, a little sales strategy in your deck can take your presentation to a different level.