How to Write a Round-Closing Pitch Deck: Advice from Someone Who’s Been There
So, who am I? I’m Daniel Kador. You can call me Dan. Right now I’m a co-founder over at Keen. Before that, I was lead engineer/architect at Salesforce for about five and a half years. Then before that I was in school where I studied computer science at the University of Illinois Urbana-Champaign.
Okay. So, why am I up here? We’ve done a few rounds of fundraising so far. We started the company by doing Techstars. So we did Techstars at the beginning of 2012. At the end of that, we raised our Angel round. After that we raised our Seed round in 2013, and then we did our A round in 2014. I participated in writing and delivering most of these pitches. So that’s why I’m here.
So let’s start with this. Let me talk a little bit about brains. It’s important context, because if you want to write a convincing pitch, you have to understand your audience. No matter how special VCs might think they are, they’re still a subset of humanity.
“If you want to write a convincing pitch, you have to understand your audience.”
So the brain is broken up into two hemispheres, the left and the right. As a quick caveat for all of you neuroscientists out there, this is a little simplistic. This is based on old information. The brain is much more complex than this, but let’s use this as a metaphor.
So the left brain is logical. It focuses on facts. It’s the hemisphere of science. It prefers non-fiction. The right brain is emotional. It focuses on creativity, and it focuses on belief. It’s the hemisphere of art, and it most definitely prefers storytelling. So why does this matter?
VCs are left-brained by default. Remember that. Most of them achieved their success by analyzing, pattern-matching and applying some sort of rigor to their careers. But, the truth is that investing in a startup is a pretty bad idea if you try to apply the scientific method. Investors have tons of different tools they use when making decisions, things like founding team quality, market size, track record, etc. But, none of these actually predict success.
“VCs are left-brained by default.”
So here’s the problem — VCs analyze. That’s bad for us startups. Our metrics are crappy. Our customer base is small. Our revenue stream is shitty. Insert whatever your biggest problem here is. You’ve got a fact about your company that’s bad. We’re doing something we basically don’t have any business doing. That’s why it’s crazy.
Let me give you an example.
I’m going to talk about the first deck we used when we went out to raise our Seed round in 2013. Like I said, we raised an Angel round right after Techstars ended. That was in June of 2012. So at the beginning of 2013, we put out initial feelers on raising the next round. Frankly, the deck we put together was complete garbage. We were well-intentioned, but we didn’t think about how to actually engage a VC.
Part of the problem was that we were told VCs want to see an information-rich manifesto. I think that advice is accurate. They love to get as much information as possible from us. That way they can engage their gigantic left brains and make a decision and tell us no before we even get to pitch. Huge time saver. Not good for us.
So here’s a great example of a really shitty slide we had. I’m going to pause for a second and just let people read for a moment and see how bad it is.
You can boo a little bit.
This is a great example of a really bad slide. We’re both over-explaining what we do and sounding so generic that a VC can’t help but think, “I’ve seen 3,000 other companies that claim to solve data science problems.” We allowed the VC to compare us to other companies without showing them what makes us different.
Here’s another bad slide.
I can’t believe we put this in. The geekiest investors might understand what’s going on, but there’s so much code here that it’s impossible to grasp. The worst part, even if they did get it, it says nothing about our business. It just shows that using us requires custom code. It’s really bad.
I can’t believe how stupid this slide is. It’s so hard to understand. Once a VC does understand it, the numbers are stupid, just ridiculous. Pipelines are supposed to start with a gigantic potential ARR and then decrease as you work through the funnel. So in here, we go from nothing to $164,000 to $1 million to $9,000. WHAT? Yeah, we didn’t know what the hell we were doing.
And here is the slide we had for our budget.
I don’t know what we were thinking. Why would we think that putting a budget into a pitch deck would be a good idea? Look at the things we just admitted:
- We have no idea what our customer acquisition cost is.
- We have no idea what our customer lifetime value is.
- We have no idea how to handle enterprise.
So who wouldn’t want to give us $2.5 million?
So this is what it was like. The VCs just murdered us.
So what did we do wrong?
We engaged the left half of the VC’s brain. We gave them exactly what they needed to pass on us without a second thought. And like I said, it was pretty brutal. We didn’t know what to do at first. We were running out of money. There was a point where we stopped paying ourselves as founders. But, we eventually picked ourselves back up and got started.
We had no problem raising an Angel round. We had to increase the ask twice. At the end, we were still over-subscribed. So we had done this well before. What was it that we had done well? Basically right-brained them. Our pitch in the angel round was all about storytelling. There were no metrics. There were no charts. We had no projections or market landscape. All we did was tell a story. We didn’t even have a deck. We’d just show up at a VC meeting and we would play the video from our Techstars Demo Day. And yes, it was awkward to sit there and watch somebody watch a video of you. But it worked.
“What was it that we had done well? Basically right-brained them.”
So how did it work? We short-circuited their brain. We didn’t give them any way to engage analytically. We allowed them to connect with us emotionally.
Here’s what we did.
We went back to that Angel round plan. We’d achieved a lot as a business, even if it wasn’t in terms of raw metrics. So our goal was to make VCs feel that progress.
I’ll break it down.
Instead of a slide saying, “Here’s what the product does,” we told the VCs exactly how customers were using us. The actual product wasn’t the point. We wanted to tell a story about our customers.
We made the VC feel customer pain. So we told them how hard the problem we’re solving is, how much work it takes our customers to build something themselves or to try to use our competitors. Most importantly, we made the VC feel like we do, that we’re really the only thing on the market that solves this problem.
We showed customer examples. We included three case studies from our customers, one slide each, just a simple screenshot of custom dashboards our customers were able to create, ranging from pretty simple to pretty complex. They were all completely different. We showed the VC how powerful our product is by giving clear examples of just three customers.
We talked about the future. We showed some logos of companies in our pipeline. That was it. No dollar signs, no market sizing, nothing. It made the VC feel the potential, and we didn’t give them an opportunity to start analyzing.
We talked about our team. Our team is our biggest asset. We have a great founding story. Ryan, Kyle and I have been best friends since high school. We have big tech names on our resumes. We have Google and Salesforce in our backgrounds. We’ve worked on relevant products with Google Analytics and the Salesforce development platform. Our team slide is probably the longest slide we had. We wanted to force the VC to leave thinking, “Man, these dudes are great.”
We asked for help. VCs often have ego problems. They want to feel like they’re useful. They want to know what you’re good at. But, they also want to know how they will help you if they get involved. So we just told them how they could be useful. We’re good at product. We’re good at tech. We’re good at marketing. We’re not good at finance. We’re not good at sales. We told VCs that we wanted their help with the finance and sales side of the house. Instead of VCs going, “There’s no way I can invest in a team like that, that doesn’t have those core skills,” they ate it up. They wanted to know how they can help.
The End Result
[The end result] was 11 slides (12 including the title slide). We pitched this in 2013, so I’m a little rusty on these slides, but I’m going to try to go through it.
1. Basically here’s the opportunity. We’ve spent the last year working with a bunch of different companies to figure out their needs around custom analytics. We’ve identified a common problem, and we have exactly the right technology to solve it. There’s already a huge number of SaaS companies, $22 billion by 2013, and their customers are demanding analytics.
2. The problem is that building a customizable analytics solution is hard to begin with, but sharing analytics with your customers is impossible. It’s really hard. There’s nothing else on the market that does this today. SaaS businesses have to build their own.
3. So what do we do? We’re the first analytics solution that’s perfect for a SaaS business. Our cloud hosted APIs make it possible for SaaS businesses to create charts and dashboards for their customers.
4. Now let’s talk about some case studies to show you some examples. Here’s an example of one dashboard somebody built, which is a company called Zeumo. They did this in a day. It was built by an intern. They did it quickly because they needed analytics right then for their customers.
5. Here’s another example from Kickfolio, which by the way is a 500 Startups company now called App.io. Kickfolio implemented their first dashboard the night of their launch. This is the newest version of their dashboard. You can see this dashboard looks nothing like the previous one, but it’s all powered by Keen.
6. Here’s a third one from Active Prospect. They built this amazing customizable dashboard for their customers in two weeks. We saved them hundreds of thousands of dollars and over a year of development time, and that was their words, not ours. Again, you can see there’s a lot of custom segmentation that’s going on here. This is a really complex UI that they built, again, just using us.
7. And it’s working. We have all of these customers who are just loving what we’ve built.
8. We’re really excited about the future. There are a lot of really great companies who we’ve already talked to up to this point. We think we can get into a lot more. We feel really good about this.
9. Here’s the founding team — me, Ryan and Kyle.
10. We’re experts in the competitive landscape and developer ecosystems. We know how to design and scale developer platforms, both technically and in terms of adoption. Kyle worked on the Google Analytics team before being three-time employee number one, one exit, one profitable, one venture-backed and still successful.
I was a lead architect on the Salesforce API, which handles over a trillion records a month. And Ryan was a technical product manager of Salesforce’s development platform, where he doubled customer adoption. It doesn’t hurt that we’ve worked together and have been best friends since we met in high school, almost 14 years ago.
11. The analytics space is huge, and our technology is flexible enough to grow into other markets. But for now, we’re turning people down to remain focused. The cool thing is SaaS is just the first $100 million opportunity. There are other industries, other data types and groundbreaking data features to capitalize on.
That’s it. We deliberately omitted almost everything that you always hear you should include. All that stuff can do is fire up the VC’s left brain. Just don’t do it. Engage on your terms. Assert what makes you awesome. Do some storytelling to get that right brain active.
Let me sum it up.
VCs’ tools are all left-brained. Disarm them by giving them a deliberately right-brained pitch. Bring them to your level, tell a story, and make them feel what you want them to feel. I guarantee it will give you better results.
A very important disclaimer: I’m not telling you to lie or to answer VC questions dishonestly. When you get into a meeting, the VC will engage you. It’s your job to keep the conversation on your talking points. But, if they veer off your path, you have to answer honestly. You’ll only bury yourself by lying.
You can watch Daniel’s full presentation here: