Startup Scripts #2 - Early-stage pitch decks
How you craft the pitch deck that grabs early-stage investors' attention, common mistakes founders make when crafting their deck, and how to avoid them.
Hey, folks! Felix here, with the second edition of Startup Scripts. Today, I'm diving deep into the world of pitch decks, particularly those in the early stages, just like the ones we get at Antler every week. Since we opened the applications for the first cohort this year in September 2023, I've read through and reviewed more than 100+ pitch decks, some good, some bad, and some "Hell No!" varieties.
My goal today is to navigate you through crafting a pitch deck that avoids common pitfalls, connects seamlessly with investors, and genuinely stands out. We'll explore everything from mastering your pitch, articulating a clear problem statement, presenting a compelling solution, building a dream team, and demystifying the numbers. Ready to get started?
Pitching = Selling
First up, understanding the essence of pitching—it's selling. Imagine convincing your friends to cancel their plans for an adventure to a hidden beach gem you've discovered. It's about making them feel the sand between their toes and the sun on their skin with your words alone. That's the vividness and appeal you want to bring to your pitch deck. Convincing your crew about a beach day is like convincing VCs to invest in your vision, requiring you to weave a narrative that's as compelling as the future you envision.
But first, let's examine where things often go wrong for founders.
Where Many Stumble
In reviewing countless pitch decks, three common pitfalls stand out to me:
Making It Too Complicated: Keep it simple, folks. If the reader needs a manual to understand you, you're doing it wrong.
Vague Problems: If I can't feel the problem in my bones, then we've got a problem.
Solution Disconnect: Your solution should click with the problem like a key in a lock. Anything less, and we're lost in translation.
Just as clarity and connection are crucial in guiding friends to a beach, they are paramount in guiding investors through your pitch. With these pitfalls in mind, how can we ensure your pitch deck avoids them and stands out?
Building a Deck That Stands Out
Nail That Problem Statement
Your problem statement is the moment of truth. It should be as eye-opening as a strong espresso, capturing the essence of the issue you're addressing with stark simplicity and immediate relevance. For example, consider a startup that's tackling food waste in urban areas. A compelling problem statement might be, "In city X, over 30% of all food prepared daily goes to waste due to inefficiencies in food distribution and consumption patterns, contributing to both economic loss and environmental damage."
With the problem laid bare, how do we bridge to the solution in a way that feels natural and inevitable?
Your Solution Is the Hero
This is where your solution takes center stage, illustrating exactly how you intend to address the problem with clarity and impact. Your solution should be presented in a manner that makes it feel within reach, tangible, and urgently needed.
Some suggestions:
If your idea focuses on the software: Build a prototype on Figma that you can showcase.
If your idea focuses on a hardware solution: Use pictures or simple diagrams that explain how it works.
Equally important is positioning your solution in the competitive landscape. It's crucial to articulate not just how your solution works but how it stands out. Highlight what makes your approach unique, be it through technology, business model, or market positioning. Remember, asserting you have no competitors is a red flag—it suggests a lack of market understanding or, worse, a market that doesn't exist. Instead, focus on your strengths and how they enable you to address the market need more effectively than others.
Avengers assemble
To solve the most significant problems, you need a great team, like the Avengers. Especially at an early stage, VCs tend to focus more on the team since usually there are no numbers to analyze the company. It is more a people's game than a numbers game at that stage.
So when a VC is satisfied with your problem statement and your solution, the following questions usually are: Okay, who am I investing in? Who is leading this mission? Can they get it done? Are they the ones to build this?
Usually, more than a pitch deck is necessary to convince them that you are the right team. But a good team impression on your pitch deck is definitely a good start.
So how are you going to do that? - Not by listing everything you did since you left high school. I suggest only mentioning relevant experiences that underline your capabilities to solve the problem at hand.
Let's look at an example. Read through these two descriptions of the same founder. Which one is more convincing to build a startup to revolutionize the urban mobility space by introducing an innovative, eco-friendly bike-sharing platform?
I would imagine we can all agree on the one on the right. But why? Because It's all about framing the relevant experience in a way that showcases specific skills and builds trust with the investor.
Let's Talk About Numbers
Even though early-stage pitch decks focus more on the problem, solution, and team, you must include some numbers, mainly the market size. Why is this important? Much like convincing your friends the beach day will be worth their while, showing the vast potential of your market convinces investors your startup is worth the investment. To do so, you should present them with three market metrics:
TAM (Total Addressable Market): The total market demand for a product or service. It's the maximum revenue your startup could achieve if it achieved 100% market share in its specific area. TAM helps to understand the full potential of the market at its broadest.
SAM (Serviceable Available Market): The segment of the TAM targeted by your products and services within your geographical reach. SAM is the portion of the market you can actually capture, considering the current constraints such as distribution.
SOM (Serviceable Obtainable Market): The portion of SAM that you can capture or serve in the short to medium term. It's your realistic market share considering competition, product reach, market penetration strategies, and other limiting factors.
Let's Wrap This Up
In closing, remember that your pitch deck is more than a set of slides; it's the narrative of your startup journey. To ensure it resonates:
Keep your message simple and straightforward.
Make the problem and your solution crystal clear.
Highlight your team's unique strengths and commitment.
Ground your vision in tangible numbers that speak to the market's potential.
Your pitch deck is your invitation to investors to join an exciting journey. Make sure it's an invitation too compelling to ignore.
If you want to look at a great example on how to do it, take a look at Dropbox’s original pre-seed deck.
That's it for today. I'd love to hear your thoughts or see the pitch decks you're working on. Feel free to share in the comments below or reach out on my social channels.
Until next time 🤙