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Investment packaging of startup: how it works

Tuesday, September 14, 2021

Startup Jedi

We talk to startups and investors, you get the value.

The diamonds are shown on black velvet under a bright lamp —  they look even more attractive. A similar logic works with startups: a well-packaged and submitted project can count on more investors' attention and better close the rounds. The finer details of the packaging process were told by Pitch School founder Eugene Korolev.

Packaging is really crucial

I’ve always liked two things: public speaking and entrepreneurship. Four years ago, we organized a conference for startups, and at that conference, I realized that these two passions are definitely worth combining. Our conference had a pitch session with 10 startups. Most of the founders were unprepared for performances and proved to be terrible —  they lost the chance to interest their projects investors and media, wasted money and time. The projects themselves were quite promising.

I realized that there was a market, and the investment packaging of a startup would be in demand. And it was. We now have clients from Russian-speaking countries, Europe and Southeast Asia. Especially among Russian-speaking clients there are many questions with public speeches: Americans have been taught this since childhood in school, and from us only in the course of speaking skills.

What investors want

There are several basic rules for packaging a startup, which we have developed from the experience of working with dozens of startups. The key requirements of investors have not changed for a long time, but this does not prevent many startups from partially ignoring them and not telling them in detail — but in vain. It is necessary to give the investor the information that he really needs.

There are 4 key points that investors pay attention to. Any startup needs to be ready to talk in detail about these points.

First, the team. The main thing in any startup. What kind of people are doing the project, how competent they are in business and in the field in which the startup works. How much they are a team, are immersed in the project and what competencies they lack.

Secondly, the product. What exactly does a startup do, whether the target audience needs it, how is this solution better than competitors? If we are talking about deep tech projects, it is important to understand the possibility of making a product in principle.

Third, the market. How many potential consumers have a product, how much they are willing to pay and how their numbers change over time. Foundations are not interested in the million-dollar market, the scale should be larger.

TAM (total market volume) of one hundred million dollars may well be of interest to European and Russian funds. I assume that it is possible to work with a smaller market, and the lower acceptable value is an interesting topic for research.

In the presentations of startups, the market assessment is usually noticeably underestimated or noticeably overestimated, and often even made a “ shot in the dark”. This happens for several reasons, and often they simply do not pay enough attention to this point, or they cannot pay it: there is no available data.

It is worth evaluating your potential market in as much detail as possible. Look at the product from different angles and find as much indirect data as possible. After performing several calculations on different data, you can get a fairly accurate weighted estimate. These calculations should be shown in the pitch deck.

Fourthly, timeliness. Why should this product be made now? There should be conditions that will help the startup grow. If you don’t know them, you should look hard. If you can’t find them, maybe you should think about a beer. It is mandatory to write about growth drivers in the presentation.

Another significant slide with which there are often problems is competitors. There are different ways to make this slide. For example, make two slides. On one, a graph with two axes: "Usability" and "Price". Distribute competitors according to the schedule and show: there are cool solutions, but they are expensive, there are medium and affordable ones.

And on the next slide, show the competitive advantages.

You can make a direct comparison: in one table, show the presence of important features for the client from all competitors. Here it is important not to slip into a too detailed analysis of 150 points. The table should be short and show the main advantages.

It is essential to show competitors of the same scale as you. When a competitor of Google or Amazon appears in the presentation, it is bad. The only thing worse is the phrase "we have no competitors". Do you want to compete with a giant? Show him the vulnerable point at which you are aiming.

A specific service, a specific difference between you and the giant. For example, you make a private pay-per-view browser that doesn’t show its users' data to anyone. Google is a competitor? From a browser’s point of view, yes, but it is not of primary value to a narrow target audience of private browsers —  anonymity. Then that’s where he can win.

How to build a  Pitch Deck

Classic versions of investment presentations do not lose their relevance. If you look at the graduates of the last batches of top accelerators, their presentations will be, in general, similar.

We use a combination of Sequoia pitch deck template, Guy Kawasaki, Startup Show presentation + our own developments. This is quite suitable for most projects, we see good results.

Therefore, I can say that the classic investment presentation templates are quite relevant. There is not much point in coming up with something fundamentally new — the key points for the investor are highlighted, the very logic of the narrative is set.

You can go another way. If a startup has a really interesting and important development history, then you can build a presentation on it: tell how the product appeared, how it grew, what obstacles it was able to pass through and what it strives for.

This approach is able to distinguish your pitch jack from many standard counterparts, but both the team and the investor should be ready for an unusual approach. Many investors just want to see the tracking and a good product description.

Design: simple or cool?

Visual style is very crucial. When we paid a lot of attention to the visuals and made a special style for the presentation, we saw a very good effect. At conferences, noticeably more people are suitable when the design is "delicious" and the presentation is cool.

Creating an individual design is more expensive than a standard solution, but it pays off. The visual helps to convey the idea better, distinguishes the pitch deck among others and, as a result, increases the effectiveness of the presentation. Therefore, I am sure that you should not skimp on design.

Visual hook

People who watch a presentation usually spend no more than 10 seconds on a slide. And it is far from the fact that they will watch it to the end at all, if they are not interested in the first two slides. After all, you need to view many more decks before the end of the working day.

We take this into account and build the presentation as a good series: we give a small "hook" on each slide, which makes you look further. And the first series should be the most exciting.

The very first slide with a description of the project is the most important. If it is not immediately obvious what you are doing and what is cool, then you definitely need to redo it. So that everyone understands and gets into your idea.

How does startup packaging work?

We take startups on planting, sometimes pre-planting. We conduct in-depth interviews with the founder and find out the main thing about the startup: in what value the product has, what competences the team has, to which markets they plan to go, what is important for them to get from investors.

Also, we collect information like detectives and care about small details. We look at the project with fresh eyes and often find something that the team itself does not see. More often than not, these are the unsolved important parts of the product and business that the founders already see as obvious truths.

We collect information in a single whole and put it in a pitch deck. We can help with the financial model, with the refinement of the business plan. With such requests startups come to us after the first meetings with investors who request such documents.

When all the materials are ready, we help the company find a relevant investor and build communication with him. We do the intro — then it's the work of the founder.

We are constantly updating the presentation based on feedback from investors and experts. Often, good thoughts come only when you see the result in your work and want to improve something.

We also often make a set of presentations: one for public speeches, and the other for sending by mail. The second one usually contains more text that explains the content of the slides (see an example).

We will coordinate the finished presentation with the founder and give it to experts and investors for a review, who can give feedback on the quality of the pitch deck. We make edits and only after that we go to real investors. We are also finalizing the presentation based on their feedback.

An essential part of our work is preparing the founders for public performances. We teach you how to properly stand on the stage, communicate with investors, and speak beautifully and clearly.

We save the startup time for communication with investors and preparation of all materials. After all, creating presentations is not the main activity for the team. They need to make a product, not draw slides.

Fundraising is a huge job and any way to speed it up becomes a competitive advantage 



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