North Forge Meetups Message Board › 3 Ways to Improve Your Venture Capital Pitch Deck
An article from Sunil Rajaraman is the founder and CEO of Scripted.com
As an early-stage startup, you should keep your venture capital pitch materials up to date, whether you are seeking venture capital funding now or in the future. When meeting with investors, there are certain questions that are almost always asked.
In my observations, and experience raising a million-dollar seed round in 2012, I learned that investors usually end up focusing on three very specific areas of your business. So, to maximize your chances of securing venture capital, here are three questions your VC pitch deck should answer:
Is your customer base growing?
If it does not look like your customer base is growing, you are dead in the water. That may be an obvious point, but I cannot tell you how hard it is to communicate customer traction to prospective investors. Investors, like you, have limited time. You need to graphically depict that you are growing in as few words as possible, using a solid visual representation.
Do customers like your product or service?
I’m speaking for both B2C and B2B businesses here – you need to be able to demonstrate that your product is getting “stickier” somehow, and the usage patterns of your customers are becoming more favorable. In our case, we choose to depict traction in terms of number of customer purchases from us each month – fortunately, that is trending upward for us.The reason you need to demonstrate that your product is sticky is simple: acquiring new customers is much more expensive than getting existing customers to pay for your product again. Not only that, but happy customers are also your best salespeople. If you are able to successfully demonstrate that your existing customer base is happy, that in and of itself is a low-cost sales channel. I cannot tell you how often we get asked this question.
Can your product or service scale?
Remember that venture capitalists are not interested in ordinary returns. This is why they are in venture capital and not the S&P 500. If you are not able to demonstrate a clear path to $100M within five years, your company is not a good candidate for venture capital.
We constantly get asked about scalability, and truthfully, there is no great answer for any company – all you can do is take your best shot. For instance, I own a marketplace for businesses to hire freelance writers. We figured out that the bottleneck for our customers was this: it was difficult for them to create content topics fast enough.
So, we introduced a product (i.e., topic pitching) that allows our writers to pitch businesses on the fly. The product had a nearly 52 percent conversion rate to paid business. Our writers are essentially doing demand generation for us. That is what we want to communicate to potential investors, should they come knocking at the right time.
Similarly, your business most likely has a “magic” lever that will allow you to reach that 100M in revenue point — I realize this is a big maybe. Once you figure out what the lever is, you need to figure out a way to communicate it. Meanwhile, it never hurts to keep your VC pitch materials up to date, should the right investor come along.