VC for Entrepreneurs

Documents for your VC Deal

This article is a tiny summary of the stuff you should be able to produce if you want to get in touch with VC investors. I try to keep it short, but give you an idea.

Decks

Beforehand: Decks are visual aids for a story that can be used to structure and control a presentation. They can not be used to structure an open discussion or replace a deep understanding of the business that has to be at hand whenever questions and drilldowns in one area occur during a meeting or call.

  • Marketing Deck

Before you start thinking out anything to anyone, be sure you have a proper design for your powerpoints. Have a logo, have a color, have a font, have a format (16:9 or normal presentation, always more wide than high.)

Be sure to use consistent formatting in the presentation: No jumping titles, a clear title and footer section where you do not have anything else. The entire deck should use a pattern of blocks that connect the overall design. Typically, it allows you for two vs three column layout both horizontal and vertical. The typical thing is to either do 3 columns, two half columners or one 2-column left and one 1 column right. Don’t mix and randomly jump. Good.

  • The teaser

The teaser is the typical “pitchdeck” people tell you to produce. It is around 10-12 slides long and somehow goes into detail on founder team, technology, product/market and a financial case. Typically this uses pictures of the founders and the names you can Google. And drop logos of associated brands if there is a relevant association. Do not put a logo into your “partner network” if you had coffee together.

  • The Management Presentation / Pitchdeck

This is the story you tell in a 30-45 minutes and it can run to up to 60 slides. Key here is to go as much in detail as is needed to drive the technology and its strength and the business case to the mind of the investor.

A general problem of such decks is that some unseasoned entrepreneurs try to educate the investors on the markets they operate in. If the investor does not know the market and does not have a business case and you do not already have revenues, chances are your market requires some education. But in most cases, investors very well know the market and any explanation of how a drone works or a sensor attached to a aaS backend is making you look weak.

  • Specialized Decks

Similar to the management presentation that provides a birdseye view on the business case, typical scenarios in a call or meeting focus on specialized topics. This is why the general presentation is usually forked into a technical, a financial and sales oriented and a decision organ persentation. Founders typically ask for a heads up and provide presentations in advance for the discussion. Deep technical discussions that might reveal IP are either put forward during on sites or when founders visit the investors later on, but are typically not sent around.

Excels

Lists and Models also belong to the roadshow material that founders have to provide to investors. 

  • Financial model

While it could be surprising that nobody expects a start-up to provide comparables or modelling of different cases in the early stage, it is however required to have a fairly sound model on financials that shows a few key things:

– The story in the forecasted model fits the story in the market sizing done in the

pitch deck.

– There is a defendable case on how costs (HR, IT, Sales, Marketing) grow along

the growth path. This is critical, because everyone expects the business model

to scale, which means everyone expects a lever in margins. The business has to

become profitable.

РThe historicals tell a clear picture on what the investor needs to know. If it is a marketing driven business, does every dollar on marketing create 1+x dollar on revenue? Does an increase in IT costs and headcount lead to lower operating margins? Etc. The overall question here is if the company undestood the key screws of its revenues and if the screws scale.

  • Sales Pipeline (B2E), Sales Insights (B2B) or Analytics (B2C)

The financial model mostly assumes the behaviour of revenues to be somehow on par with the overall story of the company. It is assumed “correct” for the sake being to analyze the scale of the business under rising revenues.

Moving to this part, the financial mechanics stop to count and the entire presentation focuses on past successes, expectable future success and the screws that drive revenues. In a B2E setting, you want a long list of prospects with probabilities of closing, timelines of closing, if the baskets sold to companies are growing in units and price, etc.

In a B2C setting, you want to see how organic growth and marketing drives the business towards a stable customer base that is willing to pay for the product.

  • Contact lists

Given the case sounds good and the team is interesting, early stage research typically includes lots of calls. So be sure to have a number of contacts ready from companies you partner to or sell to. And the story you tell should be an insightful response to the answers that your clients and partners are telling. You should be ahead of your partners.

What you need and should never have ready is an NDA.

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