In 2023, VCs spent around 20% less time reviewing pitch decks than the previous year. Now, startup leaders have just over two minutes to convince investors that their idea is worth pursuing. Many entrepreneurs lose count of the times they get rejected by VCs, but that doesn’t mean you should give up. Remember MongoDB, the Founder Institute and Google were among the companies turned down before they went on to raise billions of dollars.
To turn frustration into action, here we have summed up the latest pitch deck trends and the main reasons why investors are currently rejecting decks.
Pitch Deck Trends To Keep on Your Radar
When writing your first pitch deck, you’ll often receive advice about clearly showing your compelling value proposition, a solid plan for growth, your market opportunity, and company financials. But let’s dig a little deeper.
Opt for Fewer Slides
Nowadays, founders are opting to use far fewer slides, mainly because investors are reviewing more pitch decks. So, don’t go over 10 to 15 pages. Start with a strong intro, including the logo and tagline, followed by the mission and the significant market problem. Investors today are looking for your “why now” to be right at the start of a pitch deck.
This isn’t a new trend, but also make sure to use references to other companies early on in the deck that help investors see if your startup fits with their investment thesis. For example, “Venmo for fundraising” or “Airbnb for office spaces.”
Aim for Purpose
Another big shift in the VC world is that investors are spending a lot more time on the “purpose” slide — the “why are you particularly doing this.” Make sure you have your founder-market fit down to a T, looking at inception, primary drivers and what the current team looks like. Adding brand names or logos from the companies you’ve worked at can add some credibility.
Also, remember that many investors are after businesses that have not only a solid financial plan but also a desire and strategy to reduce their carbon footprint and positively impact communities.
Present Clear Metrics
Then, an obvious one: Be super clear with your metrics (about revenue and partnerships, for example), and explain how you monetize your business. Highlight past financials and future projections in a succinct way. For example, Facebook’s original pitch deck from spring 2004 was extremely clear about its expansion plan: “By September 1, 2004, thefacebook.com network will have more than 200 member schools.”
Don’t Forget the Social Proof
And if you want immediate social proof, consider including case studies or showcasing customer testimonials. This slide could show positive feedback from satisfied customers, quickly establishing trust and credibility. In our digital age, it also can’t hurt to highlight your social media presence and the popularity of your channels or handles. It shows you are “down with the kids” or understand the modern audience.
Differentiate Your Company
Always include a section about your main competitors and highlight the differentiators or competitive advantages. This will set you apart from the crowd as it often gets left out of a pitch deck. Even in its early days, Airbnb nailed this part. They created a clear visual representation of their competitive landscape using a quadrant comparison chart.
To round up, one of the final slides that many startup leaders leave out or get wrong is how much money they want to raise and what for. Keeping it vague will not do you any favors. Be specific about your dreams and ambitions. Are you wanting to move into new markets by a certain date? Or invest in research and development to launch a new product?
5 Reasons Investors Reject Pitch Decks
Let’s dive right into these…
1. Concepts & Language Are Too Complicated
Even if the investors you are pitching to are pretty tech-savvy, it’s much easier for them to scan some slides that use simple language. Think of the pitch as a conversation, not a full-blown Shakespeare performance. It doesn’t matter how technical your startup is; it’s more important to have a memorable storyline and evoke an emotional reaction.
You want to recreate what people are flocking to ChatGPT for: Getting the answers to questions like “Explain Blockchain for a 13-year-old.” Your startup idea should be dumbed down, leaving out all the jargon and buzzwords that only a handful of people in your industry will understand. Investors come from a range of backgrounds, so don’t alienate them.
Also, stay away from cliches like “game-changing,” “revolutionizing,” or “disruptive.” Opt instead for analogies by examining your business strategy and looking at company comparisons in terms of revenue and key metrics, among other aspects.
2. Visuals & Text Are Unattractive
Visual content and infographics are a must. If you can provide a video demo, do it. Screenshots of your product or service, even better.
The design of a pitch deck gives a business its personality. But if you think investors will eagerly read through the excruciatingly small font of a 50-page slide deck, you are wrong. Too much text means your pitch deck is automatically dull and hard to digest. So, don’t get comfortable with long paragraphs. White space is a better friend — and so are bullet points and icons.
A renowned mistake in design was Nutanix’s slide 4 of an early pitch deck. They used unrelated splash imagery at the bottom of the page, far too many boxes and the slide seemed unnecessarily busy with confusing imagery.
Branding should be simple with a maximum three-color palette. And some other simple rules include sticking to classic fonts or using no more than one image per page.
Timelines can sometimes be confusing with too much information, so instead, a tiled layout with alternate colors could help visually show bite-sized info. Attractive pie charts or graphs with an eye-catching subtitle containing a metric should be startups’ true north.
Remember to watch out for small details, too: Why don’t boxes line up? Why are certain subtitles larger than others? Have you compressed images? Why are slide transitions inconsistent? Why does the company logo color change?
A pitch deck isn’t to get someone to invest; the goal is to get an initial meeting or next meeting booked. So, you can save some of the juicy details for later instead of overcrowding slides.
3. Metrics Are Confusing or Absent
Some accelerator programs or investors expect a certain percentage of month-over-month growth, so you must use solid statistics. They don’t have to be perfect or guarantee profitability early on, but they must exist.
Confusing metrics will turn off investors. And that’s a mistake many startups make in early-stage decks. In an effort to woo investors, startup leaders often over-diversify revenue streams. By showcasing all the different ways your company will make money, it shows a lack of direction. Investors want to work with founders who are focused. Plus, they also know resources are limited. So, by pursuing multiple opportunities, investors may predict that startup leaders will spread resources too thin and suffer in the long run.
Like everything, a business that executes one thing exceptionally rather than many things at a mediocre level wins.
Finally, be modest with your numbers rather than exaggerating. If you say you will get to a billion Monthly Recurring Revenue in 5 years, investors won’t believe you. If you say you will be the next Google, they’ll laugh. Instead, follow Monzo’s footsteps, where their early slide decks show clear and visually appealing metrics.
4. You’ve Completely Missed Your Target Audience
Often, founders feel they need to shift their personality to suit their audience of investors. But if they’re not familiar with who they’re presenting to, startup leaders might risk not connecting — and even offending — potential investors.
For example, using a communication style that is too direct, straightforward, and even blunt doesn’t always sit well with investors in long-standing industries like healthcare, insurance or banking. Likewise, you might not want to be too stiff with investors in innovative industries like AI, entertainment or robotics, whose approach might be more energetic and casual.
This is why it’s vital to study your investors’ dynamics and history to understand the industries, sizes and stages of the companies they fund. Most VCs have websites that feature the kinds of businesses they’re looking for and their funding approach, which inform how they communicate and connect with their portfolio.
Also, remember that your investors might differ hugely from your customer target audience — and you must adjust how you communicate with both accordingly.
5. Your Ego Is Bigger Than Your Pitch
Although founders steer startups in the right direction initially and come up with innovative ideas, a company is not entirely focused on a founder, and the pitch deck shouldn’t be either. When presenting a startup idea, the product, its audience and the industry should come before the founder and team, unless there is a deep personal connection or story.
When showing your team, it’s also not mandatory to include pictures, and if you do so, make sure they don’t overpower the entire slide — it might scream, “me, me, me!” Take, for example, Crema.co’s founding team slide, where they included a selfie, their names and their role — but nothing more. With no notable past experience or useful information about themselves, this slide doesn’t serve any purpose to investors.
And, while we can’t deny that the founder-market fit is essential, extensively listing your achievements and previous experience might come off as self-centered. Making it all about yourself will distract investors and make them think you’re pedaling your own profile instead of your company. So, it’s best to keep to informative and relevant information when it comes to yourself and your team.
Tips for Revamping a Pitch Deck
If you’ve already put together a pitch deck that hasn’t yielded the results you’re looking for or is currently looking jumbled, here are a few tips to help reorganize ideas.
- Downsize: Investors are spending far less time going over pitch decks, and they will also likely look down at their watches as you’re presenting. So, make sure you have no more than 15 slides. When sizing down, remember to prioritize the essentials like “why me,” “why this,” and “why now” — and question if the information in other slides could simply be mentioned in conversation during your presentation.
- Keep a concise structure: When polishing a pitch deck, founders should already have a structured outline of the message they want to convey and their main points. Start with a captivating intro to grab their attention, and don’t forget to include a clear call to action so investors know what to do if they’re interested in your idea. Stick to your narrative, visual aesthetic and tone from beginning to end.
- Be moderately visual: There’s nothing worse than a pitch deck with too much text. At the same time, there’s nothing worse than a pitch deck with too many graphics and images. Slides should drive your arguments home, but they must not distract from your words by confusing your audience. For example, if you’re talking about your financials, you can simply include a chart for projections and a chart for your balance sheet.
- Think like your audience: While you’re hyperfocused on cleaning up your presentation, you might forget your sole aim is to answer investors’ questions so they know exactly what your company does and what you need. As you’re reviewing, adding and cutting information, take the time to practice investor questions and see if your presentation answers them. What is your addressable market size? Who are your top three competitors? Team members can also give you invaluable feedback from their outside perspectives.
Final Must-Have Elements to Win Investors Over
Knowing investor expectations can be hard, but your pitch deck can never go wrong if it includes critical elements like market fit, your leading team, a customer acquisition strategy and competition.
Another factor worth mentioning to investors, but it is often left out, is your insurance coverage. When VCs invest in your business, they want reassurance that their money is in good hands — and nothing does this quite like adequate insurance. For example, having Directors and Officers insurance will let investors know you’re serious about protecting yourself — and them — if a claim is ever made against the company.
And suppose your startup is tech-related, like many in today’s digital age, Cyber Liability insurance will cover your assets in the case of a data breach or cyberattack. Knowing your risks is just as important as knowing your opportunities, which is why the right insurance can make or break your startup’s chances to succeed.
At Founder Shield, our experts constantly monitor developments in industries to help turn promising startups into risk-averse, thriving companies. Get in touch with us through a quick application so we can get started protecting your hard work while you focus on getting your pitch decks right.