Many new ventures require large amounts of capital in order to reach profitability (but not all). Over the last ten years I’ve raised approximately $230M in venture capital for my own companies and helped many other founding teams (most recently Pancetera) with pitches which have resulted in their successful raises. Over the years I’ve evolved the template I use for seed round venture capital pitches and I thought it might be interesting for me to share this with the reader.
There have of course been many articles written on raising venture capital and how to write a plan or pitch but few of these (actually none as far as I’m aware) have an actual example of a successful presentation included as an illustrative example. There are many possible reasons for this. Maybe the pitch contains company confidential information or possibly the ultimate company product or financials deviated by quite a long margin from the original vision.
I’d like to walk you through the original Data Robotics (originally called Storage OS) seed round venture pitch and explain the thinking behind the slides. Fortunately this pitch doesn’t contain any information that isn’t in the public domain and the company is reasonably well know so it makes a good illustrative example. This pitch was also successful (I’ve been lucky enough to have had a 100% success rate so far) and valued Data Robotics at an approximate initial valuation of $12M with nothing more in assets than this pitch and our initial patent.
The sections of my current seed template are as follows -
- The Team
- The Opportunity
- The Solution
- How Does It Work?
- Paths To Market
- Business Model
In the coming weeks I’ll walk through the slides in the various sections dealing with one or two sections per post but in the meantime here is a very short summary what what each section should and shouldn’t contain.
This section establishes the credibility of the founders who will be giving the presentation and introduces team members not present to show the overall strength of the founding team. Keep the names discussed to just the core founding team members.
This section of the presentation shows an attractive and hopefully growing market, then outlines some kind of pain the customers in that market have (or possibly some completely missed opportunity) which would allow market share to be captured.
This section of the pitch outlines a solution (not technology) that resolves the pain experienced by the customer. I like a story based walkthrough of a real world situation if possible showing what the customer experiences contrasted against what they have to do currently.
How Does It Work?
This section shows the technology underlying the solution and shows why it’s involved, defensible and has long term value. This description should be kept short and high level for your initial pitch meeting as you’ll be quizzed later by more technical folks and you can whiteboard with them on the details. It’s extremely unlikely that the venture folks you’re pitching will be subject matter experts on the details of the technology.
Paths To Market
One of the most important parts of the presentation, this section shows how you expect to reach, educate the customer and ultimately fulfill the resulting demand. Alternative sales strategies might be a channel based model or direct sales force. Marketing strategies might include online, viral or traditional (or more likely in the modern world some blended strategy). The mood on the best go to market models tends to change fairly rapidly here in Silicon Valley so it’s also a reasonable fundraising strategy to outline several options, discuss your preferred model but keep the matter open for resolution in the future.
This section shows a very simple layout of the company fundamentals to demonstrate how the company can provide a great return within a sustainable business model. A five year income statement example and cash flow should be enough. Sometimes I’ve just used graphs (with numbered tables held as reserve slides) as these are easy to quickly digest. Currently it’s possible to get a new media or social media company founded with little to no idea of where or when income will materialize but I’m a traditionalist and shy away from this kind of venture.
No more than three or four one sentence bullets outlining why the target market is great, what the current problem is, how the new venture solves it and how much can be made doing that.
Here are a couple of final points to consider -
- Focus your presentation on telling a story. This will resonate with your audience much more than any technology or business details.
- Don’t allow yourself to get sidetracked. Several times a member of the audience has asked me to just tell the story without a structured presentation or has dived straight into detailed questions. Once the narrative flow is lost it’s very difficult to get your audience to the right conclusion so instead insist that the presentation will cover their questions later and get right back on track. You will of course need to be open to discussion and longer questions following the conclusion of the pitch.
- I often hear talk about the number of slides being important. That’s not key but the pace and duration certainly is. Try to keep the length of the presentation to 30 minutes or so as a maximum. Venture folks see a lot of pitches and it’s tricky to hold their attention for much longer than this. Much better to use any extra time for discussion.