Startup diary: Making investors turn page can lead to a success story
Are we ready to finally put together our deck?
The answer is still no, because there's never going to be one deck - each investor has different priorities and you need to adapt your presentation to address these. You do need to be very careful not to end up pitching multiple different companies if you do this.
You can only work fully on one business idea at a time (unless you're Elon Musk, CEO of Tesla and SpaceX, and I hear it's a bit hard even for him sometimes).
How do keep your business model clear in your own head? As it happens, there's another thing you need for potential investors that can help you do just that - the company one-pager. This is a one-page document that outlines the basic model of your business, and the investment proposition. This should and must be the same for all investors. It is a relatively dry statement of the bare facts, and because it is so short, investors can always find their own angles very quickly, so there's no need to rewrite it for each investor. Often you'll find that the one-pager is the material that gets shared initially between investors, and only if key requirements are met (such as being in the right industry for an investor), do you even get invited to send or present a pitch deck.
At this point you'll have your business model spreadsheets (always a work in progress as you get new data in the door every day, week and month), you'll have some of the core slides, and some idea of the other slides, but it's still all Lego pieces on the floor and you haven't built your rocket ship just yet.
I find that it's easier to solve problems by attacking them from multiple angles - digging a tunnel from both ends gets you there faster. So I recommend switching gears at this point and charging ahead on the one-pager. That will give you a really solid basis to build a smoking' pitch deck, and you won't even need one of Elon's flamethrowers.
One question that you might have at this point is: how exactly should I modify my deck for different investors if the business plan is the same anyway?
You have to start with the investment strategy of the investor. At seed stage, there's not much to go on, so investors use proxy data to make a decision. Some really care about the team, and have the belief that a great team will pull through and pivot into a successful model if necessary. For those investors, just move up an expanded team slide (slides) to an earlier position in your deck.
Some investors have a thesis-some set of beliefs about the current way world is going. If your startup is focused on crypto-currencies, artificial intelligence or virtual reality, you're in luck. Many investors at the moment believe, as an investment thesis, that these technologies will be transformative. Some investors are more subtle, preferring to base their approach on more fundamental attributes, such as seeking out startups that make use of network effects (see nfx.com, for example). For these investors, go deep on your core technology.
Others believe that the market is the most important thing. I love the way that the venture capitalist Andy Rachleff (formerly of Benchmark Capital) expresses this: "When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens." For investors of this type, you'll want to focus on your route-to-market and your competitive differentiators, bringing those slides forward, and expanding them.
Let's go back to the one-pager.
How do you write one? This document is boring and meant to be so. It's best done as a list of key points about your business. Let's go through them one by one.
Elevator pitch: you've done this part of your homework already if you've been a diligent reader of this diary. Here's voxgig's, as a reminder: We're a Software-as-a-Service event management platform that reduces the manual labour cost of running conferences by providing modern collaboration tools for organisers, speakers, sponsors and attendees.
Background: when were you founded, what are the key results so far? Have you launched anything? For us: founded September 2017. Started newsletter as first activity, now at 4,000 subscribers and growing at 500 a month. Launched MVP March 2018. Running three private trials with targeted clients. Public launch in January 2019.
Team: describe your founding team. You need to show how you complement each other. Hopefully at seed stage you have at least one technical founder, and a domain expert who understands your industry.
It helps to have some previous business experience, especially in sales. That said, the true colours of a founder don't show until they are actually building and running a business, so if you don't have 'proper' experience, just think of it as yet another startup challenge to overcome.
Product: describe the problem you are addressing and how your product solves this problem. Should be easy!
Market: describe your target market, and make sure to communicate that it is big enough to be interesting - you can use all that market analysis work from the early articles in this pitch deck series here.
The raise: how much money do you need, and how much have you already raised (or have commitments on)? When I started writing this column last year I promised to be as open as I could be, so that you could learn from my decisions, good and bad, and their outcomes.
I would love to be as open and transparent as Buffer (a social media promotion tool) - they release everything, including salaries and sales numbers. It's really quite inspiring.
As an Irish company director, I don't feel I can go this far. A director has to put the best interests of the company first, and we do have a different business culture here. But I think I can tell you what our fundraising looks like - this information will end up on crunchbase.com anyway. For this seed round, voxgig is raising €900,000, we have €600,000 committed, and we're closing the round towards the end of the first quarter of 2019.
Financial information: remember that this is a one-pager, so you'll have to condense your financials to the core numbers. If you can, include a small table of projected cash flows just showing top-line revenue and expenditure for the next three years.
Other numbers that you will need to include are your monthly burn (how much money you spend each month), and numbers of employees and contractors. Don't overshare - investors should have met you and heard your pitch and be engaging fully before you start telling them exactly how much money is in the bank and what you spend on pencils and staplers.
Company details: These are the essential details about your startup. Start with your company's name and registered business address, website and social media links and your company registration number.
You'll also need to include the details of a principal contact, most likely yourself. Include your own social media links so that potential investors can quickly check you out as a leader.
You'll also need to include your professional legal and business advisors - your solicitor and accountant at a minimum, plus any formal advisors that have signed agreements with the company. If this is not the first round of funding, include the names of previous investors.
One final point, you should absolutely know everything on your one-pager document off by heart - you need to be living and breathing the basic ideas and numbers of your company.
(Newsletter update: 4,127 subscribers, and an open rate of 14pc. We're very pleased with this, as we are doing really well on the newsletter at the moment. It's funny how a delivery glitch - see the diary entry from a few weeks back - has turned into something very positive. This is a direct outcome of our culture of blame-free incident analysis.
Whenever something goes wrong, we start with the assumption that the process failed in some way, not that our people messed up. There are very few people who choose to work for a startup just so that they can screw up. In the case of our newsletter glitch, we had not put in place a well-defined escalation path for issues.
Frontline staff knew there was a problem, but did not have a mechanism for creating a red flag. I do feel an article about incident management coming on soon.
Richard Rodger is the founder of Voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford