Quote: “It’s just business; nothing personal” – Mario Puzo from The Godfather
I had the chance to review five pitch decks this week (a bit slow; it is the summer) from startups looking for funding. Now, if you are assembling a “pitch,” there is an abundance of guidance available about basic contents. Many financial sponsors and angel investors have them on their websites and if that fails, you can use our “Perfect Pitch.” You can find this by clicking through the Entrepreneur Power Play Book tab on this blog (just follow the “Rookies” string.) Many startups ask us to critique their “deck” and offer our comments and observations. We are always glad to do so (gratis) – our standard caveat is like the quote from The Godfather – the comments are just business – nothing personal. Almost all are taken in the spirit in which they are offered.
I must admit, I am usually impressed by the passion and creativeness of theses presentations, but I also focus on their principal purpose which is to raise money. So, what surprises me the most?
Very often, it is the lack of two elements which I think are fatal flaws – and both revolve around what the O’jays proclaimed – money, money, money, money. First, “how much do you need?” and second, “how are you going to make it?” Why a startup thinks any investor, at any level, has no interest in these two points remains a bit of a mystery to me. Now, I know what you are thinking… he is a CPA and, of course, he wants to see detailed financial projections. Not so fast, grasshopper, what about even a half-baked conceptual discussion?
If you are asking for money, why not make three simple basic points – how much you need, how you are going to use it and how it will help get you to the next level. By the way, the odds of all of this working out as you planned are slim to none, however, investors want to know that you thought about it and have some fiscal discipline to, at least, venture how you will manage these precious resources.
The old “if you build it, they will come” theory of a business model is also DOA in the eyes of an investor. Let them know your estimates of market size, unit sales and revenue per unit. If you are providing a transaction based service and think you can get $5 as your “take” on each deal, let an investor know what you are thinking and why. Some undeveloped thoughts alluding to how this may one day become a revenue stream are not going to help your cause.
So, keep those creative juices flowing and please continue to dream and innovate. Just remember that while it is great to fly at 30,000 feet – keep in mind you do have to land the plane every once in a while.