As VC focus shifts and scrutiny intensifies for pre-seed fundraising, is your pitch deck investor ready?
For pre-seed founders, back-of-the-napkin pitch decks and minimum viable PowerPoints are a thing of the past. As more investor money flows into the system, and more and more founders enter the space, the criteria for founders looking for pre-seed funding grow more stringent.
Our recent research shows that VCs spent more time scrutinizing pre-seed pitch decks than in years past, with three sections, in particular, standing out when compared to 2019. Here, we look closer at pre-seed fundraising trends founders can act on to make their pitch decks stand out.
Trend #1: VCs spend nearly a full minute reviewing competitive landscapes
As far as pre-seed pitch decks go, the competitive landscape section is having its Cinderella moment—moving from the middle of the pack in 2019 to a fan favorite for VCs in 2020. Time is extremely valuable for VCs, and a 51% jump in time spent on this section means that VCs now spend nearly a minute here.
If they’re spending a minute digesting competitive landscapes, it means it’s important to them. So in this section, show what you know and how you stand out. Your competitive landscape section should be where you outline your product’s uniqueness and how it relates to and differentiates from competitors in the space.
Stand out by showing you know your true competitors.
Investors want to see that you not only know your competitors but can clearly articulate how your product stands out from them. But don’t necessarily aim for the big dogs (i.e. the Facebooks and Ubers) in your space.
Think about which companies and products most closely compete with yours, such as companies at similar stages or those that just received funding. If you can clearly show investors how your product intervenes in ways theirs can’t, you’ll have a better chance of standing out.
Trend #2: Time VCs spent evaluating product readiness jumped up 46%
Last year showed a 46% increase in the time investors spent reviewing product readiness slides. At the pre-seed stage, this signals investors are looking for finished products or products in some stage of completion. Companies that develop and showcase a ready or later-stage product stand a better chance of attracting investors.
Go deep into your product readiness here. Investors are ready and willing to spend time on this section, so give them detailed product features and highlights. In three to five pages, you can show wireframes, video demonstrations, and product shots of certain key features.
Stand out by leaning into the shift toward early viable products.
More investor money and founder noise mean it takes a lot more to get VC attention. While almost unheard of five to 10 years ago, this means you might need to push your product into alpha and beta testing in order to get funding.
More than half of the companies in our pre-seed dataset from last year had products in already-launched or alpha and beta phases. If you can, think about developing your product before or in conjunction with your fundraising plans.
Trend #3: VCs spent 28% more time scrutinizing business models
Investors spent 28% more time on the business model sections in pitch decks in 2020 than in 2019. This suggests pre-seed founders need a clear sense of how they plan to monetize their cool idea. If investors are willing to spend more time here, it means you need a well-thought-out business model to show them.
Make it clear you’ve given your business model some serious thought. How do you plan to monetize your product and how will that plan evolve over time? Is your business model easy to understand? Investors don’t expect you to have everything figured out, but they do want to see you’ve thought about your plan and how it can evolve.
Stand out by developing your business model alongside your product.
Start thinking about your business model long before building your pitch deck. Map out your monetization plans and product-market fit while building your product. It’ll make your product look more organic and show investors that you’ve thought about these plans from the ground up—that you’re building a business, not just a product or pitch deck. This strategy will make it easier to communicate your monetization plans in memorable terms that specialists and generalists will understand.
Don’t lose sight of the bigger picture
Keep in mind your pitch deck sections are interrelated, so don’t approach these three sections in isolation. Develop your product section in relation to your competitive landscape and monetization plans.
Thoughtfully building these areas as interrelated parts reflects how much time and research you’ve put into your business, and it shows investors that you’re a fully-fledged business even at such an early stage. As earlier fundraising stages continue to grow more competitive, this helps you convince investors you can build out into the next big thing.
To dive deeper into pre-seed fundraising trends, pitch deck analysis, and a pitch deck template, check out our fundraising playbook.