Over the course of working with 128 founders who've collectively raised $1.5B in Series As from 100 different investors over the past 2 years, I found I was giving a lot of the same advice - especially it came to how to most effectively tell the stories of their companies. I've decided to open source that advice - hoping any company looking to go down the venture capital route and raise an A will find it helpful!
It feels very helpful, thanks. It's good to have things informed by lots of deals as opposed to speculation.
In my experience the conversation eventually has to be about the product you're selling at the moment - preferred shares in a private company. It may be that for the founders you work with, your role is to sell the actual financial product.
"This is how your preferred shares will increase the fund's IRR and fit with the investment themes and click for LPs" is really all people who actually write checks need to hear.
To some extent the preponderance of rich fools is the ultimate refutation of the very idea of a deck. You're really selling a high-risk, high-reward opportunity via a financial instrument your buyer will repeat-buy, and you should focus on communicating these fungible aspects of what you do instead of what makes you special.
I want to stress this (as a VC investor) - “Make sure your grandmother could read this and understand what it is that you do and why it is better than what we have today.”
The number of times that I’ll read a deck and go “Ok, so I still have no idea what they do” is too high... I’m a slow one though, so it could be my own shortcomings!
Same but I ascribe this to some kind of ambition. Startup founders figure the investor wants a huge ambitious startup.
“Deliver ice cream on demand” is too narrow, and anyway its just what they do now. In the future they’ll deliver all frozen food, then food, then other stuff, and then they’ll expand to moving stuff around for companies... really, they solve motion problems.
So you get a tag line about solving motion problems, or mobility solutions and inventory solutions and of course that means financing, and finally you see a video and notice all the examples involve ice cream.
Right - it's why we suggest founders start with a one-liner that describes what they do right now, that's clear enough that investors have a concrete picture of it in their heads. Once they've established that foundation, they can cast the vision / make the argument of what $B company that foundation allows them to build towards.
This happens a lot on landing pages. I've seen people post "Show HN" links here and even after reading all the copy on their landing page I still can't figure out what the product does, what problem it solves, or why I should use it.
Very true - simplicity is probably the #1 thing I emphasize. Often founders are so in the weeds that they forget investors are learning about their company for the very first time, and information overload is real.
Analogies can be helpful if they're straightforward and accurate, and the company you're comparing yourself to is well-known and has a $1B+ market cap (at minimum). Beware of using analogies that are either overly convoluted or inaccurate. As I suggest in this guide, you can test out whether or not the analogy works by trying it out on a couple people that know nothing about your business and asking them to explain back to you what your company does.
Thanks for sharing it. I also recommend 'Writing Business Plan by Sequoia'[1].
I have been collecting storytelling resources from legendary founders and vcs for years. Feel free to check it out and download it if you found it useful! [2][3]
Thank you! That's definitely a good one; just wanted to flesh out a little what each slide in the deck is meant to accomplish -- and how to knit it all together into a coherent narrative.
This is great! One improvement would be to not use an example that's "meta". Your example company is "YC Series A". It takes mental effort to separate the series A narrative that is your article, and the series A narrative that is your example company. This problem is at its worst on the "Use of funds" slide: "We're raising $50k to scale to supporting $1.5B in Series A funds raised annually." The couple of seconds spent in interpreting that correctly is an avoidable distraction.
Just avoid the common trope of examples that are "meta"!
That’s a good point - I went back and forth on what to base my sample slides off of. Ultimately, it was important to me to protect the privacy of the founders I work with, and was worried that any non-meta example I used would be taken to resemble any company I had worked with. I also didn’t want founders to copy the deck wholesale, but instead to adapt it to their specific situation, so I chose an example that doesn’t apply to any startup. Of course, the numbers used shouldn’t be taken too seriously anyway :)
That's critical, of course! The advice here assumes you have a solid business, existing relationships with or warm connections to investors, etc. and that's why YC helps with those parts.
This was very well written. Noting the expectations for 'hard tech' vs normal and breaking down the traction metrics discretely was huge for me. We've contemplated retaining an experienced "Outsourced CFO" to help us nail which metrics and models need to be conveyed in a pitch deck but this article shores up so many of the questions that we've had. I'm now fairly confident that I can carry on with QuickBooks and Excel in churning a deck like this out in-house.
We talk about this in the "Relationships" section of our Series A guide (https://www.ycombinator.com/library/1s-relationships), but in short: introductions from other entrepreneurs and your existing seed investors that can't lead an A themselves (typically, if you're raising an A, you've raised previous rounds of funding).
Surely that is the foundation for everything else. Note I only skim read the article, so maybe missed it.
Edit: “Once you’ve established that you’ve already built something impressive, then you have the credibility you need to show how it could grow into a massive company.”. But it doesn’t really cover that every part of the presentation needs to push credibility - or am I just thinking more seed-stage investments? The story should ooze believability?
Credibility comes from both the progress you've made with your company, as well as the relationship you build with the investor. We cover how to build credibility in your relationships with Series A investors in our Series A guide (https://www.ycombinator.com/library/1s-relationships). In short, the best way to establish credibility is to consistently predict an ambitious goal and achieve it.
We created a community for founders to exchange feedback on their startup pitches and pitch decks. Would be great if you shared this in our group of 1200 members and growing - it is just what everyone in there needs... https://www.facebook.com/groups/pitchback/
I’d argue that for the majority of founders, they’re both important - knowing someone gets you in the door, but having a compelling pitch and story (with the metrics to back it up, which assumes you’ve done the hard work to build a solid business) is what you need to get to a term sheet. Of course, there are always exceptions - like the extraordinarily well connected founder who’s had a successful prior exit might be able to raise purely on the basis of relationships and reputation.
i've seen many founders in my direct vicinity raise lots of money simply because of who they know or charisma, and with a very short deck with basically just an idea and nothing more. i've also seen other founders who were super nerdy and crazy talented, and wrote a library/toolkit that became very succesful, and who never raised any money despite endless pitch decks and actual revenue and customers. IMHO investors just want to invest in copies of themselves instead of making the right decision and investing in someone smart who they might not relate to or like. finally, if you have relationships and charisma, then most likely you haven't had time to actually build something. those who build don't have time for networking or public speaking.
Not to be a downer or anything but this post just exemplifies how much I would hate starting a company, especially funded by VCs. When they say Silicon Valley is not for everyone, I believe them. Kudos to people that actually propel through this and get what they want.
I would definitely be interested to learn more about approaching VCs at the pre-seed/seed stage & pre-revenue/product market fit. Some questions I would love to see answered:
How do you raise money in stealth mode? (not saying that stealth mode is good, but it's crazy that people raise large sums of money before having a public facing product).
How do you get in front of VCs who haven't heard of you yet? This seems a bit easier in a Series A round as your investors can talk to your seed investors and there's probably a crunchbase page of your company.
How do you give your business a valuation before it's launched? I've been struggling a lot with this one, I've ran through the TAM/SAM/SOM but honestly feels like a shot in the dark still.
It helps to have a pre-existing network or pedigree but it's not necessary. Research your space and opportunity. Become the #1 expert in the world. Then start talking to others. They will be impressed, and eventually you'll network your way to people you want raise money from.
It takes years if you're new to a space, but it can be worth it.
As far as I can tell if the team is prestigious enough, i.e. famous founders or stacked pedigrees, it can raise a few million without a single line of code. There are many examples of this that can be inferred if you look at crunchbase and linkedin start dates for various companies.
> How do you give your business a valuation before it's launched? I've been struggling a lot with this one, I've ran through the TAM/SAM/SOM but honestly feels like a shot in the dark still.
It is, and pre-launch it's honestly more whatever the market will bear.
