Here at DocSend, we’re always monitoring how founders craft their pitch decks, seek meetings, and pitch investors in order to uncover fundraising trends and evaluate changing investor behaviors. You can check out our Weekly Fundraising Trends and our research-based Startup Fundraising Playbook, and if you’re looking for feedback on your pitch deck, we’ve put our research to work to further help founders through our Pitch Deck Analyzer (PDA) as part of the DocSend Fundraising Network. 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.
According to our 2020 pre-seed research, there were three notable shifts in how investors interacted with pre-seed pitch decks. Compared to 2019, investors in 2020 spent 51% more time on the competitive landscape section, 46% more time on the product section, and 28% more time on the business model section.
The increase in time spent on these sections can be summarized by the fact that investors are no longer looking for just a brilliant idea. They’re also looking for a mature, well-developed vision ready for execution. Your product slides, business model, and competition section should therefore work in tandem to articulate where your product fits into the marketplace and how you plan to carve out a space for yourself. Let’s dive into how to create these sections of your pre-seed pitch deck so you’re adequately prepared to meet investor scrutiny.
Your product – how to best articulate it
Key insight: Investors spent 46% more time on the product section in 2020 than they did in 2019. Additionally, only 11% of startups who raised capital hadn’t moved beyond the idea stage, meaning that over 89% of pre-seed stage startups that successfully fundraised had some version of their product in an alpha or beta stage.
How to create your product slides: Your product section is one of the centerpieces of your pre-seed pitch deck, but most founders don’t show it off enough. Some founders are tempted to pack everything about their product onto a single slide, but our data suggests listing out a few features over the course of three to five slides allows your deck to flow in a way that makes it easier to absorb.
Regardless of your product readiness, you should also offer a visual representation of your product by providing a few wireframes or screenshots. Accompany those images with a list of a few key features that explain how your product actually works. This doesn’t mean you’re diving into every single feature or getting too into the weeds about the backend technology that makes your product special. Remember that the pitch deck is just a vehicle to secure a meeting with an investor — so you should show it off, but you don’t need to go overboard.
Image: Airbnb’s original pitch deck
Your business model – showing it’s scalable
Key insight: In 2020, investors spent about 28% more time on a deck’s business model section than they did in 2019, meaning your path to monetization is just as important as your product vision is to an investor.
How to create your business model section: This section also doesn’t need to be overly complicated, but it should relay enough information that demonstrates that you’ve put ample thought into it. A single slide in your pre-seed pitch deck with the words “freemium model” and “direct to consumer” answer some questions, but it also leaves an investor wondering if you’ve properly thought through how you plan to grow.
That means that in two to three slides, you should answer the following:
- Who are the customers you’re selling to?
- How will you make money from them?
- How are you going to reach them?
If you haven’t settled on one path to monetization, don’t try to compensate for your uncertainty by listing off every possibility. Remember that at the pre-seed stage, you’re still in the iteration phase, so it’s expected that you’re not married to the business model you’re proposing.
Image: Mint’s pre-launch pitch deck
Your competitive landscape – tackle it, don’t avoid it
Key insight: The time spent on the competition section increased by 51% from approximately 35 seconds in 2019 to about 53 seconds across all decks in 2020.
How to create your competition slide: The basis of a good competition slide includes the names of at least a few other companies that you’re directly competing with and identifies how you’re doing something different from them.
A visual aid can help you out with this — i.e. a two by two matrix or a chart with checkboxes. But don’t just put a two by two matrix or a chart on a slide and leave your viewer to interpret it — especially if you’re entering a crowded space with a lot of players. There’s nothing more confusing to an investor than listing out many companies in one quadrant without explaining your unique value proposition. Add a sentence or two in your pre-seed pitch deck that states your differentiation and makes sense of the competitive landscape. Spell it out nice and clear!
Image: Apteo’s pitch deck
More startup fundraising resources
To get data-driven feedback on your pitch deck and to get connected with committed and quality VCs, submit your pitch deck to the DocSend Fundraising Network.
Additionally, 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.