22 subtleties that can turn a losing pitch deck into a winner

Introduction.

When a startup company tries to raise capital from a venture capital fund, an angel investor or a group of angel investors, it prepares a “pitch deck” that explains to prospective investors exactly how the company plans to make money and how investors will receive a return on their investment. The purpose of a pitch deck is to capture the attention of investors and possibly obtain either a first meeting or a follow-up meeting to explore the company’s plans in more detail. A pitch deck does not have to provide exhaustive information about the startup; the details will unfold during a due-diligence process if investors are interested. But it must answer the most critical questions that affect an investor’s decision to invest, or not.

Building an effective pitch deck is not a process of “checking boxes” or “filling in blanks.” Make no mistake: Building a good pitch deck is an exercise in “effective writing.” It requires both writing and communication skills and a lot of creativity.  

I have seen well over 10,000 business plans or pitch decks, and it strikes me that in some respects they all look alike. Most have a similar outline and address the same checklist of issues. But some get funded and some don’t. What’s the difference? In my experience, the differences between winning and losing pitch decks are subtle and not at all obvious to most people. Many pitch decks are prepared by professionals, yet they still fail to communicate in a manner that will attract funding to the startup.

This article describes 23 of the subtle differences that can turn a losing pitch deck into a clear winner.

The List.

Here is a list of “subtleties” that can make a big difference is the reception of a pitch deck.

1. Lack of context

1. Use of undefined jargon
2. Logical flow
3. Product not described in detail early in presentation
4. Graphics that confuse more than they elucidate
5. Incomplete description of accomplishments of team members
6. No quantification of the significance of the technology/product
7. Complicated technology not explained in simple terms
8. Superficial treatment of industry competition
9. Too much use of text
10. Cryptic bullets that require extensive explanation
11. Superficial treatment of business model
12. Lumping funds or strategies into generic “buckets”
13. Using an overly-complicated “inductive logic” approach
14. Underlying technology not described in simple language
15. Slides require too much explanation
16. Future capital needs not addressed in enough detail
17. Inadequate treatment of major milestones
18. Superficial treatment of exit plan
19. Font style, colors and contrast
20. No clear delineation of revenue and profit sources
21. Explanation of generic strategies like “market expansion,” “research and development,” “expand supply chain.”

How to Use Each “Subtlety” to Your Advantage.

Let’s take a look at each of these “subtleties” in more detail and see if we can discover how to turn a “losing” pitch deck into a “winner.”

•  Lack of or insufficient context.  

Critique. Inventors, in their eagerness to talk about their creations, often jump right into the technology, without providing enough context for the audience to understand the message. “We have a better way of finding customers for your business.”

Suggestion. Start by describing the “big picture.” What universe are you operating in? What problem are you addressing? Who should care about your invention? How is the problem being solved today? Then begin to describe your product and its advantages.

• Undefined Jargon.

Critique. Use of technology jargon words. Every jargon word is wasted because it may mean absolutely nothing to the audience.  Even long technical words can disrupt you message because the listener may not know exactly what the word means in your context.

Suggestion. Either avoid the use of jargon and technical language, or define carefully all the terms you use. Try to describe your invention and opportunity in simple language that any lay person can understand.

•  No Logical Flow.

Critique. Poor pitch decks often make statements that the audience cannot understand because the concepts have not been previously defined or explained. This leaves the audience in a state of confusion.

Suggestion. Your audience builds its understanding of your business one step at a time. Imagine that you are building a brick wall—one brick at a time starting at the ground level and gradually building toward the top row of bricks. You don’t start a brick wall from the top, so don’t say anything in your pitch deck unless you have provided enough background for your audience to understand it. Build the logical foundation.

1.  Product not described in detail early in presentation

Critique. I would estimate that about half the time when I listen to a pitch, the presenter gets to slide 6 or 7 and I still have no idea what the product is or what the company does. If this happens, you have completely lost your audience, because they have no context for the rest of your presentation.

Suggestion. Make sure that by the time you get to Slide 3 you have explained very clearly what your product does, why it is important, and what the company is about.

1.  Graphics that confuse the audience

Critique. A poorly selected graphic can confuse the audience, use up valuable slide real-estate, and require valuable time for the presenter to explain its relevance. Don’t use graphics just to make your presentation pretty.  

Suggestion. Only use a graphic if it is self-explanatory and truly clarifies the message you are sending. A bar chart for revenue and profit, for example, might be easier on the audience’s eyes than a table of numbers. But if the graphic is not crystal clear, toss it and use a few short bullets to make your point. Sometimes, “A word is worth a thousand pictures.”

1. Incomplete Description of team members’ accomplishments

Critique. Showing pictures of team members along with their prior positions does not give investors the information they want. The question investors want answered is, “Why is this the right group of people to build this company?”

Suggestion. Portrait photos are helpful if they don’t use up much space. Explain in some detail the experience and accomplishments of each team member, even if you need more than one slide.

1.  No quantification of the features and benefits of the product

Critique. Every startup says is product is “better” or “the best” or “the only,” but few provide enough data, research or background information to justify the claim. The important question is, “How much ‘better’ does a product have to be to cause someone to buy it?”

Suggestion. Any “claim” that a pitch deck makes should be backed up by research, data and quantified measurements. Investors need to know, “How much better is it and why?” Customers don’t buy products just because they are “better.” They have to be measurably better and investors need to see that proof.

• Superficial description of complicated technology

Critique. Inventors, scientists, and engineers often describe technology in its own language which can be loaded with long and complicated words that the audience is unlikely to understand. Technical words and jargon often lose the audience completely, because they don’t understand what’s being said.

Suggestion. Find a way to describe technology in language that a layman can understand. Pretend you are writing for Reader’s Digest or your grandmother. Don’t worry that you may be “rounding off the truth” a bit. Telling the 100% accurate truth does no good if no one understands it. 

•  Superficial treatment of competition

Critique. A preponderance of pitch decks contains a “product comparison matrix” that shows “our” features vs. the competition. This may help the audience understand the product, but it does not answer the question, “Who are the present and future competitors and what are the dynamics of competition within this industry?”

Suggestion. Michael Porter’s book “Competitive Strategy” is a “bible” for analyzing the competitive situation within a specific industry. The number and power of a company’s competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company’s profitability. Use this model to analyze your competition.

•  Overuse of full sentences and paragraphs

Critique. If you have complete sentences or paragraphs of text in your pitch deck, you are making the audience read too much, and it won’t hear what you are saying. Interludes of “reading” are very disruptive to the flow of your presentation.  

Suggestion. Your audience can easily grasp a small handful of bullet points as you talk to a slide. A slide with four or five 6-8-word bullets can be quickly grasped by the audience and it can reinforce your message.

•   Over-cryptic bullets

Critique. On the other hand, it is possible to be too cryptic with your bullets. One- or two-word bullets that require extensive explanation don’t really help your cause, either. You have missed an opportunity to reinforce an important part of your message.

Suggestion. Try to use short bulletized text (4-10 words) that complements your presentation. The right words can reinforce your verbal message and they can be grasped by the audience without distraction or interruption.

•   Superficial treatment of business model

Critique. Many pitch decks either do not address the “business model” or they equate it with a revenue forecast. Either approach is unacceptable and warns investors that the startup is not profit-centric.

Suggestion. The “business model” description tells investors how they will make a return on their investment. It needs to explain the company’s present and future capital requirements and the timing and sources of revenues, profits and cash flows.

•  Lumping funds or strategies into generic “buckets”

Critique. It is tempting to combine funds or strategies into broad categories such as “market expansion” or “research and development.” These categories may mean different things to different people, and the details can be important.

Suggestion. Spell out your use of funds and strategies. Be as specific as possible without flooding your deck with details. Your mission is to convince investors that you have thought through all the issues thoroughly.

•  Using an “inductive” approach that never tells the audience exactly what your company does.

Critique. If your audience arrives at Slide 5 or 6 without a clear picture of what your product is, how it works, and how your company will make money, you have lost the battle.

Suggestion. Make sure that your first 2 or 3 slides tell the audience very clearly what your company does. Do it with words that anyone can understand, and provide whatever context and definitions are required to make it easy to understand.

• Underlying technology not defined or explained.

Critique. Many inventors—possibly in an effort to avoid a highly technical explanation—do not explain the underlying technology that makes an invention possible. This can be a large “gap” in a pitch deck.

Suggestion. Investors do not need to know all of the inner workings of your technology, but they want to have some understanding of “How does it work?” They may dig into the details in subsequent meetings, but they want the “existence proof” that the science and technology are sound and that the product is likely to work as advertised.

• Slides require too much explanation

Critique. If you’re having to spend more than about 1 or 2 minutes explaining a slide, something’s wrong. Either it contains too little information, or it contains complicated text and/or graphics that require explanation.

Suggestion. Try to stay with 5 or 6 simple text bullets per slide and/or simple graphics that are relatively self-explanatory. You won’t always be there to explain the slides, so they need to be somewhat stand-alone. You may use your pitch deck to open doors, and investors may use it to tell their partners about you.

•  Future capital needs not addressed in sufficient detail

Critique. Future capital requirements are either not addressed or they are lumped into one number without any discussion of timing or milestones.

Suggestion. An investor’s return is affected by subsequent dilutive equity financings, so they are an important part of his calculus. It is important to describe a timeline of significant milestones the company must achieve and the cost for each. This way, investors can see the company’s capital needs as well as the major accomplishments and increases in value.

•  Inadequate treatment of milestones

Critique. The pitch deck does not show a timeline of the significant milestones the company has already achieved or must achieve in order to reduce risk, increase value, and raise additional capital.

Suggestion. A startup’s fundraising strategy must be driven by the accomplishment of significant milestones. Seed investors expect certain progress to be made such as completion of the product or a first customer sale. The fundraising strategy is based on the increased value of achieving major milestones combined with the cost of achieving them.

• Superficial treatment of exit plan

Critique. Many pitch decks say, “We will go public in 3-5 years,” or “Google just acquired Company X in our space for $2 Billion.” Neither will satisfy investor’s need to understand how management is thinking about an exit.

Suggestion. The most significant aspect of an “exit plan” is that the company does, in fact, plan to “exit” at some point in time, so that investors can make a return on their investment. But the IPO market is way too variable for anyone to predict that it will be available as an exit. Any IPO plans must be qualified by, “If the IPO market is available.” It is a good idea to list potential acquirors, but to peg an exit valuation to a single high-value example is not realistic; better to have a list of deals so investors can see an average.

•  Font style, colors and contrast

Critique. Some pitch decks try to appear “cute” or “pretty” by using unusual fonts or font colors such as white-on-black or low-contrast pastel colors. These pitches often have complicated “backgrounds” that make slides mor difficult to read. As someone who likes to print pitch decks for comparison, future review, and annotation, I often refuse to review decks that use white-on-black because the black background uses up too much printer toner.

Suggestion. Keep it classic and simple. Use of colors and design to dress up a pitch deck is fine, but stay with dark colors on light backgrounds; avoid using distracting overlays; and focus on telling your story in the most effective way possible; you don’t get “points” for “pretty.”

• No clear breakdown of revenue and profit sources.

Critique. Some startups have more than one source of revenues and/or profits, but they lump all together. This makes it impossible for investors to understand the company’s business model.

Suggestion. Show clearly (a graph might help here) how the company’s revenues and profits breakdown in Year 1 and how the percentage breakdown changes in Year 2, Year 3, and so on (if it does).

• Use of generic terms like “market expansion,” “research and development,” or “expand supply chain.”

Critique. Phrases like this mean different things to different people and their meaning can be vague.  

Suggestion. Provide details to show exactly what tasks will be involved. Be specific. Otherwise, you are just begging the audience to ask the question.

Conclusion.

Creating a good pitch deck requires good writing and communication skills. It’s much more than providing a glowing description of a technology. In order to decide whether to invest, or not, investors need answers to important questions. Ultimately, they need to understand how the company will generate the revenue and profits required to give the investor an attractive “return on investment.” But to answer these questions, you must provide credible and understandable information about your technology, the need for the product, the number of customers, their willingness to buy, and details about price and cost.  

So, don’t think you can create an effective pitch dick by just “filling in” an outline. Your deck has to be logical, understandable, quantified, well-researched, and compelling. You will probably need multiple editing and “wordsmithing” sessions to create a deck that is effective and helps you get to next steps with an investor.