You already know a pitch deck is important to securing funding for your startup, but how do you avoid the common mistakes that can keep you from getting funded?
When I started helping startups with their pitch decks, it used to take rounds of iteration and feedback to avoid these mistakes. Since then, not only have I figured out the most common mistakes entrepreneurs make when creating a pitch deck, but I've also figured out how to hook and capture the attention of potential investors by avoiding them.
Here are the 5 pitch deck mistakes to avoid when you're seeking funding for your startup:
1) Not telling a good story
Telling a good story is a vital skill for every entrepreneur. It's the most effective way to clearly convey your vision with passion and enthusiasm. Whether we like it or not, we are all somewhat emotional creatures, investors included. Engaging your audience with a good story they can relate to captures their attention and opens them up to wanting to learn more. A use case is a great way to structure a story and allows the investor to visualize how your customers could actually use and benefit from your solution.
2) Adding too much information
Investors are busy people; the average general partner at a VC firm sees 5,000 pitches a year. Adding a ton of information to a pitch deck is time consuming to read and takes away from the message you're trying to get across.
"Like many things in life, less is more in fundraising slides. You can explain your business in mind numbing detail or you can inspire an investor." - Fred Wilson, Union Square Ventures (http://avc.com/2010/06/six-slides/)
Keep each slide simple and focused on conveying one message only. Write in headlines, not paragraphs and convey more detailed information verbally during your presentation. Where possible, translate text into compelling visual graphics and easily understandable symbols since they have a much greater impact on your audience. Guy Kawasaki's 10/20/30 rule is a good limiting rule to work with: If you can't fit the content on the slide with 30-point font size, give it the chop.
3) Listing features and not benefits
Another common mistake entrepreneurs make when creating their pitch is to list a ton of features and technical terms. Investors are smart, but they might not understand all the technical complexities and jargon. Clearly conveying the core benefits you provide to your customer is essential, so investors can see the inherent value your startup is creating (your value proposition). Once you begin selling your product/service, conveying these benefits to customers is crucial to making sales (customers really just care about what's in for them, not some whizz-bang feature that sounds cool). If you can't tie the features you are providing to tangible benefits for your customer, then perhaps you have a solution in search of a problem, which leads to my next point.
4) Trying to solve too many problems
Effectively articulating the problem you are aiming to solve is key to setting up the rest of the pitch. As American inventor Charles Kettering once said, "A problem well stated is a problem half-solved." A problem, which is painful and which the investor can easily understand and relate to, is intriguing, leaving investors wanting to know more. A "cool" solution in search of a problem is a big red flag for investors
"Pitch the problem first, connect with your audience emotionally around the problem, and then, and ONLY then, offer your solution as the remedy to that problem." – Dave McClure, 500 Startups (http://500hats.typepad.com/500blogs/2009/08/your-solution-is-not-my-problem.html)
It's tempting to list multiple problems because you're trying to prove that you will be big. Niche down and start with a specific problem, and then present your vision for growth later. Otherwise, it can be interpreted as the team lacking focus and not understanding that they need to solve one problem really well to succeed.
5) Claiming you don't have any competitors
The old adage "there is nothing new under the sun" generally holds true here.
In most cases there will be some sort of competitor currently competing to solve the problem you are going after, either directly or indirectly. Claiming to investors that you have no competitors shows a lack of research and depth of knowledge regarding your specific market. If there aren't any competitors currently pursuing the same opportunity, perhaps no one else feels it's a valuable one.
Conclusion
There you have it! If you can successfully avoid these 5 pitch deck mistakes, you will increase the power of your pitch and your likelihood of getting funded.
At first, you may have difficulty applying everything mentioned above, but after further iterations, you should be able to create a pitch deck that has a much better chance of hooking and capturing the attention of potential investors.
Do you know of any other mistakes entrepreneurs make that keep them from getting funded?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
