Featured Article

Data tells us that investors love a good story

And other secrets to a winning pitch deck, from DocSend

Comment

Image Credits: Vertigo3d (opens in a new window) / Getty Images under a Vertigo3d (opens in a new window) license.

Russ Heddleston

Contributor

Russ Heddleston is co-founder and former CEO of DocSend at Dropbox.

More posts from Russ Heddleston

Hundreds of billions of dollars in venture capital went into tech startups last year, topping off huge growth this decade. Here at DocSend, we’re seeing the downstream effects in our data: investors who receive DocSend links are reviewing more pitch decks than ever, as more people build companies and try to get a slice of the funding opportunities.

So it stands to reason that making your pitch deck stand out is critical to raising a round. But how do you do that in such a competitive landscape?

After analyzing both successful and failed fundraising pitch decks, we’ve learned that storytelling matters and this hasn’t changed over the last few years. This makes intuitive sense — who doesn’t love a good story?

But does telling a story help founders raise capital successfully? And more importantly, do you fail to fundraise if you don’t tell a story? In this post, I’m going to share some hard evidence.

It follows up on my post over on TechCrunch, looking at three big mistakes we see in failed pitch decks.

Before we start diving into the data, here’s why we know: our document sharing and tracking platform is used every day by thousands of startups to share their decks securely with investors, with visits to pitch decks shared via DocSend having grown 4x from 2017 to 2018. Controlling for DocSend’s growth, we estimate that investors are viewing 35% more decks in 2018 than they did in 2017.

In total, over 100,000 users have shared over 2.2 million links through DocSend since we launched in 2014, and these documents have received over 220 million views; while we’ve grown quickly among sales, business development and customer success teams, startup pitch decks have continued to be a popular use-case. We’ve also been analyzing the pitch data in a collaboration with Harvard Business School since 2015, so we’re experienced at analyzing and interpreting this data. (You can read more about our startup opt-in process and other aspects of our methodology here.) The data included in the research below came from companies that explicitly opted in to participate by responding to an automated email sent to them. We are incredibly appreciative to these founders for making this research possible.

First impressions stick

The old adage “you only get one chance to make a first impression” is true when it comes to pitch decks, and in fact that was the case for our company’s own fundraising process. When I pitched DocSend for our seed round, I knew what we were up against — why will this be a big business? And, why won’t Google build this? Our product was still in private beta, and we had no revenue. However, we had an MVP and those who were using our product, including our potential investors, found the product to be very useful.

So instead of a hockey stick user growth graph (since we were still in closed beta), we used excerpts from customer interviews where users were telling us what they liked and why they liked it. We built a narrative around what was working in our favor: our team, feedback from our beta users, and a demonstrable MVP. It worked, and we raised $1.7m in seed funding.

In 2015 we did a study on more than 200 pitch decks to understand how startups went about raising a Seed or A round. Since then, over 9,000 customer companies have shared over 2.2 million DocSend links.

Across the board, we’ve learned that an opening that clearly speaks to the company’s purpose is the most successful way to begin a pitch. Conversely, the common denominator of unsuccessful fundraising pitch decks is leading with the product rather than contextualizing why the company exists.

In successful pitch decks, investors spent 22 seconds, on average, on company purpose slide while they spent an average of 61 seconds on the opening product page of a failed pitch deck: that’s 20% of their total time spent viewing a pitch deck.

This is likely because they didn’t fully understand the story behind what the product does and why this product matters in the first place.

Sequence matters

Our research indicated that when it comes to a fundraising pitch deck, the slide sequence matters. There is, in fact, a right way to “tell the story” that is more likely to yield a successful outcome. Sequoia Capital’s pitch deck template most closely matches the sequence found in a majority of successful fundraising pitch decks in our study.

In fact, even though successful pitch decks were a bit longer, an average of 20 pages versus 17 pages for failed decks, they still kept the investors engaged in the story.

Notice that company purpose leads the deck and that product is nowhere near the beginning of the story.

Sequoia Capital pitch deck recommendations from its article, “Writing a Business Plan”

A clear beginning, middle, and end

A lot can be learned from one of the best storytellers of our time, Pixar studios. Their rules of storytelling tell us that every story has a structure: a clear beginning, middle, and end. The clear beginning is the “what if?” part of your presentation. In Pixar’s case, what if a rat wanted to cook haute cuisine? What if our toys could come alive?

For a startup, it’s the core purpose and why this problem merits solving. The middle part of the story is where the stakes are raised for the main characters. The rat is now in the kitchen helping a chef who cannot cook, and a newer, more fancy, toy arrives — upsetting the natural order of things. For your pitch deck, this is the “why should I care?” part addressed by the why now and why you.

While pitching DocSend, we leaned into the obviousness of the problems we wanted to solve. What if your most important documents didn’t get into the wrong hands? What if you understood what others thought of your documents? Won’t business move forward a lot faster? Won’t people be willing to share more? This helped us address the “why should I care?” question right off the bat.

Explicitly or implicitly, an investor is asking “Why should I care?” and once this question enters their head, they can only focus on trying to get the answer to this one question. So it doesn’t matter if you wax poetically about your technology stack or your MVP, it will not register.

Moreover, in failed fundraising pitch decks investors spend 56% of their time on the product, financials, and the team while in successful pitch decks they spend only 26% of their time on these slides.

Once the company purpose and market has been validated, it becomes more self-evident that this is a good business to invest it and why this team is the best positioned to execute on this idea. In successful pitch decks, there is no one section or slide where investors spend significantly more time than others. In other words, a good story flows easily; and investors understand the narrative arc and say, “Ok, tell me more.”

Make it personal

Investors are not just investing in a company or an idea, they are investing in a team that will lead this company to success. Personal anecdotes and experience go a long way in helping investors understand why you and the team are the right people for this task. When we raised our Seed Round for DocSend, we leaned on the fact that our founding team had been coworkers, classmates, and friends for over 11 years.

My co-founders Dave and Tony were freshman year roommates and did all their Stanford CS projects together. Dave and I had also been roommates, and all three of us had worked together in the engineering team of a company called Greystripe. So no potential investors questioned our commitment to working together to build DocSend.

Perhaps you’ve raised money before and had a successful exit. Talk about what worked and what didn’t. Maybe you worked at an enterprise where the problem your startup is solving was felt acutely, and you have

Our data shows that raising a seed round takes 24% longer than raising an A round and most startups will need to pitch 20-30 investors to close a round.

Practice your pitch and make each subsequent pitch more personal and relevant to the investor you are pitching.

This is the start of a series of articles about fundraising. I’ll be sharing more about the difference between Seed, Series A, and Series B rounds as well as how fundraising challenges change as your company grows. In the next post, I will be writing about why some pitch decks raise way more money than others. In the meantime, have questions about the best way to raise money? Check out our blog or reach out to us on Twitter at: @rheddleston or @docsend.

This article has been updated to include additional information on DocSend’s survey methodology.

More TechCrunch

Tags

Ahead of the AI safety summit kicking off in Seoul, South Korea later this week, its co-host the United Kingdom is expanding its own efforts in the field. The AI…

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

9 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities