My goal is to help entrepreneurs launch and scale their companies rapidly. This often requires raising money to accelerate growth. But the fundraising process can be confusing, and it’s hard to get a straight answer—or even an actual “no”—from investors.
Your pitch deck is key, as are your financial projections.
There are lots of pitch deck templates online, but nothing that tells you how to improve your specific slides.
What founders need is a pitch deck analyzer.
So I created one and you can grab it here for free.
You can use this Pitch Deck Analyzer to quickly identify where your strengths are, so you can:
Highlight your startup’s best attributes in your pitch.
Fill in any missing info that you already have.
Identify opportunities to improve your business over the next few months.
As entrepreneurs we want to find the path to success while avoiding as many of the pitfalls as possible. One of the founders I worked with said it best:
“Starting my own business is like being lost in the ocean in the middle of the night. I have no idea which way to swim to get to shore.”
Our startup Pitch Decks are reflections of where we are in our journey. This article lays out the roadmap we're looking for.
What Investors Want
Professional investors may look at over one thousand startups per year—and invest in only three. That's more difficult than getting into Harvard! How do you make sure you stand out?
The secret is to spend less time talking about the problem and your solution, even though that's pretty much all we want to talk about as entrepreneurs!
The secret is to show investors what they're looking for. Here's a quick pie chart of what investors care about. Please notice how small the "Business Plan" slice is.
Here's what investors want you to talk about:
Investors love momentum. How much are you hustling to move things forward *without* their money? This is the easiest way to stand out. There's always something cool you can do using the resources you have. In fact, running a business is a continuous cycle of doing what you can to
Investors love great teams. Who are you and why will you succeed? Don't worry if you don't have a resume yet—simply do what the founders of Buffer did and show how much you've already accomplished for your startup.
Investors love traction. Have you already built something? Do you already have people using it? Are you already making money? Yes you can sell the dream—but it often helps when you can prove you're turning the dream into reality. One founder I know built a beta version of a referral platform, went door-to-door to sign up users, and drove the first $20k of referrals himself. That's a founder that investors want to back! (plus this checks the "Team" box too).
Investors love customer acquisition. Do you know how you will acquire customers? Do you know how much it will cost? Have you run tests? Have you done any customer validation.
This last point deserves some explanation. As founders we think we need to build the thing first and then bring the customers in. Modern startup theory says different: businesses are actually "behavior change machines" so we need to start validating the behavior change before we build anything. Otherwise we are likely to build the wrong thing (ie- we *think* we know what customers want, but then they behave differently than we imagined). Think of how much easier it is to change the blueprints of a house vs. actually trying to modify the house once it's built.
My favorite book on how to do this is The Right It by Alberto Savoia, who used to work at Google. It's a short read and provides a simple framework for early customer validation. My favorite quote from the book is, "People's opinions are worth zero points." It's only people's behavior that counts.
The Fundraising Process
You can expect to have several conversations with someone before they write you a check. People invest in patterns, and your first meeting is simply one dot. Your next few meetings create your pattern—so your job is to actively manage this process.
Always show up talking about new things you’ve accomplished without the investor’s money. This creates FOMO while also highlighting your hustle.
We recommend always running the “No money plan” while you’re out raising money. We’ve seen successful entrepreneurs sit down ahead of time and create a calendar of good news that they’ll talk about during the raise.
Read my article: Investors Love Momentum for my 6 best tips.
The Pillars of Startup Success
The short story is that founders who pitch well are able to raise money—so how do you create a great pitch?
First, let's look at data from CB Insights on why startups fail and map it to six main areas of focus to help startups not only succeed—but grow exponentially.
The six pillars of startup success are:
Vision — Solves for “Lack Business Model” and “Get Outcompeted”
Product — Solves for “No Product / Market Fit”
Execution — Solves for “Not the Right Team”
Growth — Solves for “Poor Growth Strategy”
Investment — Solves for “Run Out of Cash” and “Pricing/Cost Issues”
Technology — Solves for “Poor Product”
Now we have a roadmap that we can apply to our Pitch Deck.
What Investors Say
The thing about investors is that they often won’t say “no” if they’re not interested. Instead, they’ll say things like “Please keep us updated on your progress,” and “Let’s re-connect in six months.”
Those are actually examples of investors saying no, but it doesn’t feel that way. That’s because investors don’t want to shut a door on something that may eventually turn out to be awesome. So from the investor perspective it’s better to be vague.
This makes it hard for us to get detailed feedback about their pitches from investors.
My Pitch Deck Analyzer will help. It highlights areas where a company is strong, uncovers things that founders may have accidentally forgotten to include, and tells entrepreneurs where they need to focus on making changes to the actual business.
The Pitch Deck Analyzer
So now that we know what investors look for—along with what makes startups successful—we can use the Pitch Deck Analyzer to see both strengths and areas for improvement. Once we know our strengths, we can re-organize our pitch decks to focus on them while minimizing the opportunities for improvement.
Here are the results when we ran a test on Front’s pitch deck for their Series A raise:
The goal is to give the entrepreneur a map of what their pitch deck is telling investors, not to be confused with the actual strengths and weaknesses of the company. In fact, our summary often reminds entrepreneurs that they simply forgot to include great information that they already have.
The goal isn’t to get 100% in each category, but rather to understand where the strengths and opportunities for improvement are. So the results are typically:
See which strengths to focus on
Uncover existing information that should be included
Determine where to focus on improving the business over time
Uncover exactly the feedback that investors aren't giving us
A More Detailed Pitch Deck Roadmap
Here are the attributes included in the Pitch Deck Analyzer, along with a brief description of each:
Vision
Story — Does this company have a compelling massive transformative purpose that will attract the best talent, customers, and investors?
Problem — Is this company tackling a proven problem, meaning competitors with real revenue already exist and/or the founders have done extensive customer validation? Counterintuitively, companies that tackle proven problems tend to be the most successful.
Competition — Does the investor get a clear understanding of this company’s position vs. its competitors? The answer is often no, which is a red flag. The most promising startups have competitors and can clearly articulate how they differ.
Product
Solution — Is this solution at least 10x better than existing solutions? Ben Horowitz famously states that your solution has to be so much better that people are willing to go through the pain of changing their behavior (remember that we're building "behavior change machines" here). It’s tough to win with only a marginal improvement unless you’re already an established player. The point of an MVP (minimum viable product) is to deliver one thing that customers value so much that they’re willing to put up with a crappy experience, which you can improve over time.
Business Model — Does this company have a proven method to make money at scale? We see a lot of pitch decks where the idea is to build a big audience and figure the revenue out later, but this usually doesn’t work. Even Facebook knew how they were going to make money, and it’s still incredibly expensive to build a free audience large enough to generate meaningful advertising revenue.
Execution
Team —Is this a rock star team with founder / market fit, diverse skills, and preferably at least one person with a previous exit. This is often the #1 thing investors look at, especially in early-stage companies. Vinod Khosla recommends using equity to attract and retain “magnets.”
Advisors — Does this company have world-class advisors with relevant experience? Reach out to leaders in your field until you find some who will help you. This has the benefit of forcing you to practice your pitch and keep improving your value proposition along the way.
Advantage — Is this company creating strong barriers to entry in terms of unique selling proposition, unfair advantage, IP, etc? Or can it be easily copied and outcompeted? Nir Eyal points out, “There are only five ways to defend your market from competitors: economies of scale, network effects, regulatory protection, brand, and habit." (did I mention behavior change machines?)
Growth
Market Size — Is the potential market large and growing? Is it clear who the early adopters will be? Smart investors look for rising tides that will lift all boats—which reduces the execution risk of any specific investment. The message is that anyone will be able to make money....but we're not just anyone...which brings us to:
Customer Acquisition — Does this company know how to acquire customers at scale? Smart entrepreneurs have already done marketing tests and figured out channels that do and don’t work, along with CAC (cost to acquire each customer), churn (what percentage of customers leave each month), and LTV (average lifetime value of each customer). Think about Uber going after the entire taxi / black car market by first targeting young techies in San Francisco and New York City. I would avoid saying vague things like, "We'll run ads once you give us the money." It's best to run an inexpensive experiment or two to find some evidence to put into your pitch deck.
Traction —Has this company found product / market fit, with evidence in the form of strong KPI growth (engagement, revenue, etc.)? Marc Andreessen famously states that a startup’s only job is to find product / market fit, and that you’ll know it once it happens because it feels completely different. Successful businesses create a working business model—not simply a great product—and traction is the proof that you’re succeeding.
Exponentiality — Does this company have a solid MTP (massive transformative purpose), the potential for engaged community, access to shared resources, and/or is it creating and utilizing big data? I'm a big fan of exponentiality because it allows smaller teams to have an out-sized effect on the world. I recommend reading the Exponential Organizations book by Salim Ismail.
Buzz —Are there lots of happy customers and/or articles in the press? Customer testimonials are your friend here. The most effective form of marketing is word-of-mouth, and investors often want to talk to actual customers as part of the due diligence process.
Technology
This section is optional if your startup isn't a tech company.
Development Team — Is there a strong development team, preferably with at least the head of product in-house? A tech startup’s access to great product managers and developers, along with its process for running sprints, determines its success over time.
Existing Tech — Has the company already released awesome technology that peopler are using? Assessing this area usually requires due diligence rather than simply looking at a slide in a pitch deck.
Performance at Scale — This product is designed to handle large amounts of data and customers. Remember Twitter's "Whale Fail" message when the platform used to crash all the time? In a perfect world, the tech team has already deployed this product and tested with a big number of users.
Investment
Current Investors — Are world-class investors with relevant experience already involved? In their pitch deck, a startup called Front lists Stewart Butterfield, the CEO of Slack, as an investor in the current round. Investors love social proof! Think of how getting into Y Combinator or Techstars can set a startup up for future success.
Financial Projections — Is there a clear, achievable path for the planned use of funds to generate at least 3x the valuation for the next round? It’s harder to find investors when you’re saying, “Give us the money and we’ll figure it out.” It’s easier to raise money when you’ve already built the rocket ship and you’re just asking for fuel. Investors don't expect you to be able to predict the future, but they do want to see that you've put some thought into your financials—and that you understand and can adjust the assumptions (which is why having someone else build a fancy spreadsheet for you usually doesn't work). This is, of course, my favorite subject. Read my deep dive on The Best Financial Projections Slide for Startup Pitch Decks. And purchase my startup financial projections template at RocketProForma.com if you're looking to quickly create startup financial projections that you can update yourself.
Growth Potential — Does this company have the potential for an IPO or other large exit by being acquired? Professional investors are looking for big wins, because they know that most of their portfolio will turn out to be losers. Friends and family, on the other hand, may be more willing to invest in you personally regardless of how big the opportunity is.
Burn Rate & Runway — How much money does the company burn through each month (total revenue minus total expenses), and how many months before they run out of cash? Investors want to know that their money is being spent wisely on things that will maximize success.
The Ask — Is the company making an appealing offer, with attractive terms and valuation? Startup investing is a market like any other, which means investors are usually looking for reasonably-priced deals. In the same way that you can’t completely make up a price when selling your home, you’ll want to be in the same neighborhood as other comparable startups in your area. Ask your lawyer to provide some insight, since she sees deals all the time. Check out my template for the best Ask Slide for Startup Pitch Decks.
Is It Cool? And Is It Proven?
We use a scoring scale of zero (least) to three (most) for each attribute. This intentionally doesn’t allow a neutral score — because zero and one skew toward “least” while two and three skew toward “most.”
We then score each attribute on a combination of “Is it cool?” and “Is it proven?”
Is it cool? How awesome is what we're talking about, especially compared to the 999 other pitch decks each investor will look at this year? Does it get your heart beating faster just hearing the plan?
Is it proven? Do we have data proving our claims are real? This is where the rubber meets the road. Your business plan is actually a set of hypotheses—and your job is to validate them or pivot when needed.
You can definitely raise money on a big vision—but fundraising often gets easier as you start turning the dream into a reality. The best pitch decks combine both.
Here’s the drill-down for Front’s pitch deck:
Again, the goal isn’t to get 100% in each category. In fact, Front used this pitch deck to successfully raise their $10 million Series A round without mentioning a single world-class advisor. But they were strong in most of the categories, and had data to back up their claims.
Strengthening Your Pitch Deck
The Pitch Deck Analyzer gives you a quick snapshot of areas where you’re strong, as well as areas that could use improvement. I build Pitch Decks all the time, and I arrange the strengths as "tent poles" to support the less awesome parts of the story.
Sometimes “improving a pitch deck” means re-working a slide or two. You simply forgot to tell part of your story, or to mention some data you already have. That’s easily fixed in a few minutes.
People connect with stories, so you definitely want to spend some time giving your Pitch Deck a story arc that gets your audience excited about what you’re doing. You win when you make them feel emotions, especially passion.
Other times “improving a pitch deck” means actually working on parts of the business. You have homework to do. It may take weeks or months to design effective experiments and collect the data you need. You may need to find and work out an equity deal with a co-founder. You may need to acquire your first paying customer and build a pipeline of ten more qualified leads. You may need to run several two-week marketing sprints to figure out which are your most effective customer acquisition channels. You may need to figure out your own CAC (cost to acquire each customer).
Show Don’t Tell
The main thing is “show don’t tell” wherever possible.
Lots of entrepreneurs say they’re going to change the world (just as soon as they get the money).
Very few entrepreneurs show they’re already successfully changing the world.
Investors love this second group precisely because they’re so rare. Remember that angels and VCs may look at a thousand pitches each year and invest in three.
Losing Weight
One thing we didn’t include in this model is weighting the different categories according to their importance. For example, most investors consider the team to be more important than the solution and the business model. A good team can pivot and still succeed even when things don't go as planned.
Vinod Khosla says that he will almost certainly invest in a startup if he’s impressed enough by two of the founders that he can picture himself investing in their next companies, regardless of what the current business is.
“People invest in teams, not ideas”
Let's recap how most investors make their decisions:
If you think of it from the investor’s perspective:
Investors want to bet on people who are likely to win even if the business model changes.
Investors want proof that this plan is going to work (vs. the 999 other pitch deck’s they’ll look at this year).
Investors want proof that you know how to acquire customers—and that there's a large universe of potential users out there.
Investors want to see that other investors they respect have already done the due diligence and put money in.
That being said, you still have to get the Pitch Deck right in order to generate traction, retain a rock star team, and attract the right investors.
Your three best friends when raising money are scarcity, social proof, and momentum—which can best be summarized as FOMO:
Scarcity—This investment is a great opportunity and the window is closing quickly. Finding a lead investor and setting a time limit on your current round both accomplish this: “We’re raising $500k in the next 30 days and we already have $300k committed.”
Social Proof—Your rock star team, your world-class advisors, and the investors already on board combine to make people feel comfortable giving you money. Front’s Series A pitch deck lists Stewart Butterfield from Slack in their current round. Doesn’t that make you want to invest?
Momentum—What are you accomplishing right now, without raising the money? You’ll have multiple conversations with investors before they put money in, so make sure that you always have something new to report. Always be running the "no money plan,” meaning that you keep hustling no matter what. It’s much easier to raise money when you don’t actually need it. And all of that momentum creates FOMO and helps you land investors.
Next Steps
The founders I work with find the Pitch Deck Analyzer helpful because it provides guidance:
“Really appreciate the feedback, this is very detailed and specific, it’s like a pitch deck ‘health check’.”
You can grab the Pitch Deck Roadmap here.
(You'll be prompted to make a copy that you can edit)
Want a deeper dive on specific Pitch Deck slides? Read these two articles:
And please let me know how it goes. I want to hear your feedback so that I can make this even better.
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Mike Lingle is obsessed with helping founders grow their businesses. He's a serial entrepreneur, mentor, and executive in residence at Babson College and Founder Institute. Check out Rocket Pro Forma if you want to quickly create your financial projections.