It’s no secret the fundraising journey can be a long and difficult process. There’s no fool-proof guide to successfully fundraising for your startup, but if you want to give it your best shot, you’ll need to work on creating an effective pitch deck. And as fundraising in 2020 quickly shifted away from conference rooms into Zoom rooms, the pitch deck has become an exceptionally critical component of the first step to a successful fundraise — securing that meeting.
Luckily, the DocSend Startup Index produces data-driven research into real-time fundraising trends and predictions about what the most successful (and least successful) pitch decks look like and how it, therefore, resonates with VCs. We publish this research based on years of analyzing anonymized data points with pitch decks shared across DocSend’s platform, giving us exclusive insight into the black box that is startup fundraising.
We then put that research to work to further help founders through our Pitch Deck Analyzer (PDA) as part of the DocSend Fundraising Network. The Pitch Deck Analyzer evaluates a number of criteria related to the structure, format, and order of presentations that are common among the most effective pitch decks. Using the PDA, we’ve analyzed over 3,000 pitch decks in the last year from founders raising a Pre-seed, Seed, or Series A round.
When reviewing and analyzing thousands of pitch decks, we’re asked a lot of fundraising questions ranging from the structure of a deck to investor outreach strategy and more. Fortunately, we have some strong insights and data to share in response to many of these frequently asked questions. Here are some of these questions and our best advice based on our research and expertise.
How do I determine how much money is appropriate to raise for my round, and should I disclose this in my deck?
There’s no hard and fast rule to know the answer to the first part of this question, so we encourage you to take a look at our Pre-seed, Seed, and Series A reports which will help determine how trends fluctuate and what’s standard. Our research found that teams who successfully fundraised for their pre-seed round stayed under $1,000,000, while those raising their seed round raised on average $1,800,000, and those in Series A raised just above $8,000,000, on average. Within each range of numbers, the final amount of capital raised also differed depending on the number of people on the founding team, their average age, as well as the team’s gender makeup (female teams raised significantly lower than male teams).
If you’re about to fundraise and you don’t know the appropriate amount to raise, keep those averages in mind, but it’s also beneficial to know that the more you raise, the more you spend and the higher the expectations are on your performance and traction. Ask for what you absolutely need to get to your next milestone (one year to 18 months down the line) and raise that, no more. Raising more just because you can is a very slippery slope.
In terms of communicating your fundraising goals in your pitch deck, the market says it’s preferable to include your ask within your deck. Take one slide toward the end of your deck to list your round, your ask, and to provide a brief breakdown of funds, which can be as simple as a pie chart or a few bullet points. It’s much easier for an investor to understand where you came up with a number for your ask if you give them a general idea of where you’re going to put that capital to work.
How much traction do I need to get my early-stage company funded?
The good news is that it’s entirely possible to successfully fundraise without significant traction, but the caveat is that it depends on your situation. For example, if you’re a team with a proven track record of building successful products and companies, you won’t need as much traction as a team of founders who are giving it a go at their first rodeo. If this is the case for you as an unproven founder, then gaining strong traction — gaining users, receiving customer validation, developing a robust pipeline — becomes a compelling story and can very well compensate for your inexperience. Whether you’re seasoned founders or new to the game, communicating in your pitch deck that you have a strong team is crucial for early-stage companies.
Sometimes other factors are more compelling and can therefore make up for a lack of traction. A massive market size coupled with favorable market conditions and industry trends can tip the scale in your favor. For example, as a new post-pandemic world is emerging, companies innovating in the Future of Work space with little traction may be in a more favorable position than another startup with more traction but a less timely endeavor. In your pitch deck, it’s crucial, then, that you convey a narrative that emphasizes your advantage.
When it comes down to it, though, strong traction is great leverage to have as an early-stage company. Whatever wins you have, our research shows that Pre-Seed and Seed pitch decks that dedicate at least two slides to showing it off are the most successful. This means that if you have fabulous traction, don’t cram it all into one slide! Spread it out over a few slides — any investors viewing your deck will have no choice but to notice it more. For more established companies raising their Series A round, a robust traction section is even more crucial. It’s important to dedicate at least three slides that show off multiple types of traction in the form of revenue numbers, growth metrics, and customer satisfaction, to name a few.
Will I be able to fundraise if my product is only an idea?
While nothing is a sure bet, our research suggests that the odds may be against you if your product is only at the idea stage. In fact, according to our latest pre-seed research, 90% of companies that successfully fundraised in 2020 had an MVP in alpha, beta or GA. This means in order to increase your odds of success, perhaps you should hold off on fundraising until you’ve created a more sophisticated prototype that is getting a sizable customer base excited and you’ve had a few promising pilot studies or are developing a strong waitlist of potential users. Again, though, if you’re a team with an abundance of experience under your belt, then an idea may just well cut it for you — just make sure you communicate this in your deck.
Regardless of how far along you are with your product, you’ll want to include some form of visualization of your product in your deck. This means that if you’re still in the idea stage or only have an early alpha version, you’ll still want to include some sort of image of your product, which can look like anything from a few screenshots to a series of wireframe renderings. Providing a visual component is much more digestible and engaging than a series of mere bullet points enumerating your product features.
Why isn’t my deck getting responses from VCs?
This is the big question after all, isn’t it! Unfortunately, there’s no simple answer. We do have a few suggestions, however, that may help you come closer to figuring it out. The first step is to review your pitch deck. If you’re not communicating your story clearly enough, you’re hurting your chances of getting responses from VCs. Here’s where it might be advantageous to apply to the DocSend Fundraising Network. Our pitch deck analyzer — calibrated based upon more than 100,000 successful decks — will evaluate your deck for free, and we’ll send you feedback with data-driven insights that inform you where your pitch deck excels and where it could improve. And if it does pass our quality bar, it will get accepted into our network where we’ll showcase your newly-polished deck to dozens of quality VCs.
Another important step is to make sure that you’re reaching out to the right investors. Our research shows that contacting more investors does not yield more funding dollars. If you’re building a hardware product but reaching out to VC firms that primarily invest in software, you’re likely looking in the wrong place. You may have built a fantastic product and crafted a beautiful, clear deck to show it off, but it’s all for naught if you’re not being smart about your outreach strategy. Each VC has their own set of specific preferences that they’re looking for, whether it’s in regards to the stage of the company, product-readiness, or industry, so don’t be discouraged if you’re not getting responses from all the VCs you’ve targeted. Re-evaluate where to direct your energy so as not to burn out in what is already an exhausting process.
How can I amplify my VC outreach?
To get data-driven feedback on your pitch deck and to amplify your VC outreach, submit your pitch deck to the DocSend Fundraising Network. Alternatively, if you have fundraising experience to share, consider taking our fundraising survey which allows for our research to be produced, or contribute your story to our blog.