So you’ve lined up some investors who wanna hear your pitch. Congrats! You’ve already accomplished more than 90% of the gurus giving startup advice on Quora. Go ahead and celebrate that little factoid for a minute or two and then come back here — we’ve got a lot to discuss. Specifically, how to make the metrics in your pitch deck woo your audience by reinforcing your vision.
First, a little perspective: your current metrics — however sexy — will not, by themselves, get you funded. Investors consider a lot of other factors. The metrics you choose to include in your pitch deck should demonstrate your company’s hypothesis or rationale (why you’re doing what you’re doing).
Another thing about metrics: they’re not static. They’re a snapshot. Just think of how many online businesses look good on Tuesday, only to get flushed down the toilet once Amazon tweaks their algorithm on Wednesday. Certainly your metrics will carry more heft if you’ve got paying customers. But whatever your metrics look like, potential investors will always ask themselves whether they could help improve on them: “Are their customer acquisition costs reasonable? Is 6 mos to recover CAC too long?” If investors see any positive wiggle room in your metrics, you’re not in, but you’re not out either. “Not out” is a hopeful place to be.
Another thing to remember about potential investors is their vision for your company. Most will require you — by contract — to include them in all major business decisions. If you take their money, you gotta take their advice. So on top of your current metrics, they’re also looking to see whether you’re teachable, professional, and not a total douche bag. Investors are 100X more likely to give money to entrepreneurs who look like sane, fun people to work with.
Reid Hoffman, one of the founders of LinkedIn, says the typical partner in a VC firm is exposed to 5,000 pitches a year, looks more closely at 600 to 800, only to do one or two deals. Depressing? Kind of. But if you can make your pitch compelling, exciting, and duh! why-didn’t-I-think-of-that obvious, than you’re at least in the game.
Here’s a simple checklist for framing the metrics in your pitch deck:
Apples to Apples comparison: When putting your metrics in context, you have to get the category right. That means if you’re pitching SaaS, your customer acquisition costs (CAC) should be compared to other SaaS products like Apptio or Pitchbook… NOT Zynga, Candy Crush, or World of Warcraft. Of course getting the comparison right means defining the type of business you’re in. That is something a LOT of intelligent entrepreneurs bungle.
It fits into the arc of your story: Your pitch deck’s job is to hold the attention of your audience until the very end. It will include your story. It should move quickly to frame the problem you’re going to solve or the opportunity you’re going to grab. Once that’s established, you can then safely reveal your metrics, knowing your audience is up to speed. If you reveal numbers too quickly, you could easily break their concentration, kill momentum, and encourage annoying questions before finishing.
For example, if you’re pitching an app targeting the millions of Americans who (sincerely) join gyms every year but never go, you first have to take your audience on a journey. Make them feel the pain of frustrated people who can’t commit to going to the gym… who hate themselves for being overweight… who have failed over and over at fitness accountability. You’ve inserted a giant hook into their emotions and now your metrics — downloads per month, recency, user engagement — will appear more credible and authoritative.
It resonates with your audience: You gotta know who you’re presenting to. If that means bringing them cupcakes, so be it. Losing your dignity is a small price to pay for collecting a fat check! Seriously, find out who will be in that room when you do your pitch and tailor it to their biases.
I’m not saying to throw out your presentation and start over with a new pitch deck. What I’m saying is that a few well-placed comments or references could endear one of the audience members to you. You gotta remember, if they vibe with you, they’ll talk you up to their partners. Your odds of getting funding increase. It’s psychology 101.
Look up each investor online. Find out what their investing philosophies are. Find out what they’ve written about the startup world. Almost everybody today has a paper trail. For example, maybe one of your investors has a vendetta against PayPal. He loathes their ignorant customer service and crappy exchange rates, allegedly. As it happens, your new payment service addresses this very problem. So, while revealing how fast your service is getting picked up by online vendors (growth rate), throw in a counterpoint to why you’re a better play than PayPal.
Reveals hidden information: Your investors are typically smart humans. The good matches will know something about the space you’re entering. They probably have an idea about the metrics typical for your industry. What you want to show them in your pitch deck is why you’ll be successful in a market where so many others have failed.
So for example, if you’re seeking funding for a new mobile ad service to compete with Google, you wouldn’t drone on about the rising number of people who shop with their smartphones. That’s old news, aka you wouldn’t lead with metrics re: the “hottest consumer mobile usage trends.” Instead, you’d show them how your service is attracting the 65% of AdWords account holders who are sick of overpaying with each click simply because they haven’t been able to crack the Quality Score code.
Now, a quick warning about how NOT to use metrics in your pitch deck:
Endless Bullet Points: If you’re a data head, it’ll probably won’t come easy for you to leave some of the metrics you’ve gathered out of your pitch deck. But you have to, because your audience only cares about a few of them at this point.
Remember, this is a first date. You don’t need to be all up in their face with metrics they didn’t ask for. That means, if you’re primarily raising money to scale up because you’ve got a working system in place, show them month-over-month and year-over-year growth. Leave the social media mentions out of the pitch deck. Save all non-critical metrics in a handout and give it away after the presentation.
Bragging Rights: Your company may legitimately be a hot item, a darling if you will. You’re gaining traction, everybody’s noticing and you’ve got shiny metrics to show for it. In fact, you’ve analyzed every conceivable threat to your baby and whaddya know… there are none. You’re ready to disrupt a whole industry!
So, should your pitch deck let your metrics speak for themselves?
Nope, not at all. There are no SURE things in the startup world. Your investors could probably poke 1,000 holes in your numbers if provoked. Venture capitalists in particular have no problem taking down cocky entrepreneurs (see Shark Tank). Insert your best (appropriate) metrics into the story of your pitch deck and then stand back and listen (humbly) to their feedback.
Panic Buttons: Every young business faces obstacles. Investors know this. They expect you to acknowledge risk factors, which turn up in your metrics. It’s your job to speak to these risks — low conversion rate, high churn rate, employee turnover — and communicate your plans for solving the problem. This is a good time to demonstrate your willingness to seek their advice.
White Lies: Unless you’re a sociopath, you probably don’t plan on lying to potential investors. But it could happen if you start projecting financials 1, 3 or 5 years out. It’s in the future — that hazy tomorrow – where assumptions morph into the ol’ BS metrics. Yes, it’s true that some investors will expect to see detailed financial spreadsheets for the year 2021, but those are the overly sensitive control freaks you probably want to avoid. Any investor who’s been around the block knows that for startups, long-term metrics are just a loose framework for planning purposes.
Many investors will tell you that they only put money in “metrics-driven companies.” Of course that’s become a cliché but your pitch deck has to show them that you’re one of those companies. Make it easy for them to grasp by delivering your key metrics at exactly the right time in your pitch deck.
So, what do you think? Are you ready to start pitching? Remember, always feel free to reach out if there’s something we can help clarify or better prepare you for your investor presentation.