Russ Heddleston
With the high possibility of an extremely active fundraising marketplace for the rest of the year, founders need to know how to take advantage of it. As you can see from the DocSend Pitch Deck Interest Metrics, spikes in the marketplace previously have resulted in some pretty specific behaviors by VCs.
Here are some tips on how to use the increasing levels of VC interest to your advantage.
VCs are spending less time on your deck, so get to the point
We’re seeing record low time spent per pitch deck. We know from previous research that VCs spend on average 3.5 minutes per pitch deck. But over the last quarter that time has dipped below three minutes. That can actually be a good and a bad thing. It implies that VCs are streamlining their process of looking at decks, which means they most likely know what they want. The downside of this is if you break a few cardinal rules right now your deck could end up in the reject pile.
From our research, VCs expect a deck to be around 20 pages. They expect a straightforward narrative that starts with your problem, leading to the solution, and then your product and business model. Our data found that VCs respond best to 35-50 words per slide (too few words per slide is also an issue; you want to offer enough context for your deck to make sense without you presenting it). The only place you can increase your word count is on your Team page. Our data shows the average number of words on a successful Team slide is 80. This gives you room to highlight the founding team’s relevant experience and show how you’re uniquely suited to build your business.
You have to include a “why now” slide and it should mention COVID-19
We already know that investors respond well to a Why Now slide. Our research shows that 54% of successful pitch decks included a Why Now slide, where only 38% of failed decks included it. That slide now has to work twice as hard. We’re hearing from investors that they expect to see information in your pitch deck about how your business has been affected by COVID-19 and how you plan to manage that impact moving forward. Even if the pandemic has had no material effect on your business, the investor will still have the question. Get out in front of it with a well-formed response near the beginning of your deck.
Founders should also remember that they’re competing for capital against all other startups out there; not just companies in their vertical. VCs need to invest capital and they’ll pick the most attractive opportunities. It’s all relative, and many companies are doing much worse right now, so the aggregate bar is slightly lowered. Founders should make sure to put their best foot forward and contextualize how they’re doing and the opportunity in the current environment.
Update your run rate to show any costs you’ve cut (and consider maintaining those cost-saving measures)
Most founders have gone through the exercise to cut costs over the last quarter. As it’s unclear when things will return to pre-pandemic conditions, you should probably get comfortable with those new budgets. VCs have also adjusted expectations from a growth at all costs mentality to an expectation of sustainable growth. But that’s not all. VCs have reported that they want to see clear information on your Financial slide to show not only how you’re going to maintain over the next 12-18 months, but how you’re going to grow. You’re going to be hard-pressed to find a VC that’s willing to give you a capital infusion just to keep you afloat.
As we move deeper into the year the Pitch Deck Interest Metrics can help guide you on how to put together your pitch deck. The more decks VCs are viewing increases your level of competition, so your deck should clearly show your differentiation and highlight why your product and team deserve an investment. As the time-spent metric drops, you know that your deck needs to rely on images and words to tell a story quickly, and your narrative needs to flow to allow a VC to understand enough about your business to book a meeting.
Founders are in a great position to fundraise right now. VCs are ready to deploy capital and are actively searching for businesses to invest in. Time to make the most of it.
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