Data from our Funding Divide and Pre-seed report show early-stage deals have been hit especially hard as the macro environment has grown uncertain: year-over-year funding for these new startups dropped by about half in Q2 2023. Investors making pre-seed deals are focusing intently on long-term profitability over shorter-term growth, and startups at this earliest stage need to show a sustainable path to profitability, decreasing VCs’ investment risk.
With risk aversion driving VC funding decisions, founders need to sharpen their storytelling and demonstrate traction to instill confidence in VCs and stand out.
Keep reading: 3 pitch deck changes that make VCs pay closer attention
To succeed in this hyper-competitive landscape, early stage founders need to rethink their approach to the achilles heel of the entire fundraising journey: the pitch deck.
Here are some key insights from our latest research to give founders a leg up:
Shift from growth to profitability to minimize risk
VCs lean in on traction, business model, and financials sections in 2023.
Roadmap your product’s path to long-term success
Successful pre-seed companies linked their product and business model sections at the start of their decks, showing how monetization flows from their unique solution.
Show how your traction and monetization plans are integrated
VCs gave more scrutiny to business model and traction sections in decks that didn’t get funded.
Avoid elaborate pre-seed competition sections
Competition section had the biggest year-over-year drop in investor scrutiny.
As investor engagement remains flat in 2023, early stage founders can expect VCs to spend less time than ever reviewing their pitch decks. Your narrative and order of slides—with fewer words saying more—is key.
|The new pre-seed opener 2023
Company purpose → Why now? → Product → Business model
Given many VCs’ interest in startups’ paths to profitability, highlighting up front how a business model emerges organically from the product may be a winning tactic for pre-seed founders.
Timeliness is also important for pre-seed companies: successful decks put their Why now? Sections at the front of their decks whereas unsuccessful ones buried theirs in the middle.
The successful pitch deck flow
|Type of slide
|% of decks with section
|Order within deck
|Fundraising goals (The ask)
Demonstrate value in your team slide
The team slide is a must-have, no matter what stage you’re at. In early stages, VCs are investing in the teams as much as they are in the business idea, so making a strong impression here is key.
Focus less on big market numbers (and more on the approach behind them)
The market size section outlines your current business conditions and future growth potential. VCs shared that numbers in these sections matter a lot less than the approach a founder took to get to them. Clearly outlining the rationale behind market calculations is an especially important part of establishing trust with investors at the early stages.
Reviewing your business model section? Say more with less
Your business model section gives investors a clear understanding of how your company will make money by summing up your monetization plan and go-to-market strategy. Show how you’re going to make money and why you went with the business model you did. But, keep it brief and simple. You want investors to quickly understand how you’re going to make money, so use charts and graphs as helpful ways to explain the flow of money between who’s selling and buying.
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