If you’ve ever hired someone, you probably know what it’s like to skim through CVs.
You’re not deciding who to hire, you’re deciding who to interview. You want to quickly check if each person has relevant experience and skills, and pass on those that don’t. You have dozens to get through. This is why CVs are all formatted similarly - to let hiring managers quickly get the information they need.
If your CV is a 3-page narrative telling the story of your career, you’re going in the ‘pass’ pile, regardless of how relevant your experience.
And so it is with early-stage investors and pitch decks. While hiring manager will skim CVs and ask “can this person possibly work here?”, VCs will read a deck and ask “can this company possibly be worth billions?”.
That’s the only real question they have to answer from a deck.
Their thesis (whether personal/firm-wide and public/private) will be their heuristics for how they make this decision. And I believe they make this decision in about 30 seconds.
It’s often said that investors will spend 3 minutes reading a pitch deck. But having seen the stats, I think it’s much, much less. If they finish it they’ll reach 3 minutes. But you probably have more like 30 seconds.
Having only 30 seconds feels unfair, and it probably is. But it’s just the nature of the system. Investors get hundreds of decks a month, and it takes up a huge amount of mental energy to go through. One deck is about a booking system for dentists, another is about AI infrastructure, another is about an app for parenting, another is about logistics for international shipping.
For investors to understand and have an opinion on each of these is unrealistic.
So they’ll make a decision very quickly about whether or not to spend more time on this particular deck. That isn’t a decision about investment, it’s a decision about if the opportunity is interesting.
This is why investors ask for a short, specific deck
It feels unfair to see investors on LinkedIn to say your deck should have only six slides. You have a story to tell! You’re making this company your life’s work, and it’s impossible to that justice in six slides.
But you have to treat the initial pitch deck like your CV. Readers will skim for relevant information. Make that information clear and easy to find. If you have a very long deck then they won’t find that information quickly and will simply pass.
For an investor to believe that a company can be worth billions of dollars, three things need to be true:
#1 There is a real problem that people have
#2 This team can create something to solve that problem
#3 If they solve it, they can make a lot of money
There are six common questions that they will ask to help them see if these conditions are true. Some investors will care more about some questions than others. Some will specialise and only care about certain problems or solutions. A good early-stage deck will let them scan for these things.
These questions are:
Tell me about the team’s experience (proves #2 above)
Tell me about the problem, that it’s real and big (#1)
Tell me about the solution, and how it solves that problem (#2)
Tell me about traction so far, to validate all of the above (#1 & #2)
Tell me how you’ll make money (#3)
Tell me how you’ll grow (#3)
This is why investors ask for short slide decks in a specific format. It’s not laziness, it’s to tell you their personal APIs and how to get information they care about into their brains.
I have a hunch that most pitches get passed on not because investors don’t like the opportunity, but because they don’t understand them. You want to tell your full story because it’s important to you. But if you tell that story you will likely confuse investors.
And as with most communications problems, this misunderstanding isn’t the recipients fault.
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I didn’t write this article because I’m great at making decks, quite the opposite. It’s a reflection of the things that my pitch decks did poorly, at least at first. As always, I’d love to know your views on this. You can find my new Twitter handle here.
Or just shout if you see me in the street.