So you're a principal of cosa focused on application layer and consumer investing with a particular focus on disruptive business models. Formerly Edina was at Canaan, where she launched the Canaan beta seed of consumer seed focused practice, she co lead, founded it and built it up and investing in a variety of different investments. Anything else before we get started?
I think that's a that's a good place to start. Great. Thanks, Tim. Awesome. So I'm gonna I hope I leave you guys with three main takeaways. And so the first one, is it did it. Switch. I'm on slide two. Can you guys see slide two?
On the same slide one? God, okay, I'm on slide two. So I don't know why that's not working. If not, I can just sort of talk through it with apps. And then we have tech support.
Do I wonder if, because you're doing the screenshare. It might just be frozen on the first one. But maybe we just talk through it. And we can sort of see if we can figure it out later.
Let me Can you guys what do you guys see now? Let me stop the share and restart. Maybe
I do you mean to jump let me jump off the zoom, maybe jump back on that I don't recommend. So I've stopped the share. Sorry, guys, always fun to start with some technical difficulties is
precisely how to nail your pitch. Resume errors Zoomers up with you know, this is why it's very important to have a one pager because if you can't slip and flip between pages on your slide deck, the pager into all the work for you. Let's see if this works. Now. Can you guys see the deck I see nailing your pitch. And there we go to the races.
So hopefully you guys start off better than I just did. Even though we did 15 minutes of tech prep. But anyways, so how to nail your fundraising pitch. So key number one is know your audience, the best founders understand their users, whether that is an end consumer, or an enterprise customer, they've done the research to understand what motivates their customers, how they make buying decisions, and also what their customers like and, you know, don't like as much about their own product. When fundraising, your VC essentially becomes your customer. And so before you begin pitching, or even building your deck, it's really important to do your research beforehand to understand the firm's and the partners that you intend to pitch. Right. And you need to understand the motivation and also the lens by which they evaluate businesses. When you understand how VCs think and what motivates them, you then have the ability to be a little bit more critical about your own business and evaluate your own company from their perspective. And that's really powerful. Right? That knowledge allows you to proactively address any concerns that they might have. And really make sure that you position your business in a way that is both authentic, but in a way that will be well received by the VC for said differently. Pitch the way that VCs think. So what do VCs think about? Everyone always says product market team. And yes, that's definitely true. But I thought it might be worth diving a little bit deeper. And so these are some of the questions that we add Kavi typically have whenever we enter any pitch, you know, this is you know, this is by no means comprehensive, and every firm and every investor will have their own flavor or interpretation of this. But I think it's a good starting point. So, you know, one of the questions that will ask is, you know, what proprietary insight, is your business built on? Right? Or is there proof that the business is inflecting? And if it's very early stage, if it's a pre seed or a seed stage company, we might say, What have you done? What testing? Have you done? or what have you done to validate that this, that there is pent up demand for this product, right, that users want this product to exist? Are there accumulating advantages? Why now we know that timing is everything. What about the current market makes it conducive for your business to thrive? What are some of the nuances of the market dynamics? Is this an attractive market? Is there some sort of proprietary technology or clever business model that we can quote or quote, quote, unquote, hang our hat on? Right? And something that's really critical is why is this team uniquely qualified to tackle this problem? Right, and this goes in I'll talk about this a little bit later. This goes far beyond And University emblems and logos.
Another question is, what is the scope of the founders ambition? What are the two to three key risks of the business? And what risks Will you retire with this round of funding? And so if you have an understanding of the questions that VCs are going into your pitch thinking, then you can make sure as you tell your story that you are proactively answering these questions. Which brings me to the sort of second critical piece that I always advise founders, storytelling matters, the best pitches tell a compelling story that helps the investor build conviction. A common misconception that we see all the time is that founders will say, well, VCs really love data, they love numbers. And so I'm going to present a lot of data to you on a bunch of jam packed slides, and you're doing yourself a disservice. If you do that. What you want to do instead, is you want to tell a cohesive story, and leverage data to substantiate your story if and when that data is available. So I want to give you guys a couple of tactical tips as well. Something that I have every founder who works with me on like prepping for fundraising and pitching do is to, before they even start drafting pen to paper or building a single deck, a slide in the deck, I will say put together a list a bulleted list of every single reason that an investor should invest in your company. And also a bulleted list of every reason they should not invest in your company. Right? for the reasons to invest. I say pick the top three reasons and make sure that as input emphasize throughout the story, you want that to be the you want those three things to be the main takeaway that the investor leaves with, right, and for the reasons not to invest, you want to systematically counter. So what do I mean by systematically counter? For example, let's say you're a software company that has some machine learning application, but your gross margins are low today, call it 50%. And that's because you're taking a human in the loop approach. But you know that once your systems mature and become more intelligent, your dependency on human input will lessen and margins will become much more attractive. On your financial slide. Before you give the opportunity for the investor to say, well, your gross margins are low, you want to call it out and say something along the lines of We are at 50% gross margin today, because we are leveraging a human in the loop approach. And while this comes at the expense of gross margin in the short term, we think that it is the superior approach in the long term, for XYZ, XYZ reason. And we see a clear path to getting to 75% plus gross margins with further automation. And if you want to be even more sophisticated, and if you think that this is going to be a big sticking point and a reason that investors might choose to pass, what's even better is to include an additional slide on this point in the appendix, right, that shows something along the lines of well, this is how many product ops people that we have today that are supporting X number of customers. And this is how we credibly see it scaling up initially but scaling down as we automate so that you can substantiate that claim of getting to 75%, gross margin, any any reason or sort of any point of friction or a sticking point that your investor can use not to invest in your company, you want to show that you've thought about it and and that you have a habit solution to that potential problem. And having an initial sort of supplemental appendix slide shows that you've thought about things you're detail oriented, and that you understand the key risks in your business. And then finally, the first couple of minutes of the presentation are the most critical. Within the first one to two minutes, an investor has in most cases decided, is this something they're going to lean into? Or is this not that interesting, just putting yourself in the seat of the VC for a second. We are pitched all day every day. And realistically will only make a handful of investments in any given year. And so if the deck isn't interesting if the pitches and compelling, if it's difficult to read, if we're not under it's not we're not following what you're saying, then the easiest thing to do is to actually, you know, pass and potentially stay in touch for the next round.
And so what's a good flow? I'm going to caveat this by saying that there is no one right way to do this. But I would say that a high percentage of the top pitches that I see have a slide on each of these points in roughly this order. Now I don't think we need to go through each one of these because some of these are pretty self explanatory, but I do want to call out a few of them, where I think that there's some important nuance that often gets lost or where I see founders make common mistakes that are easily avoidable. And so just kicking it off with the title slide. Sounds easy enough, right? I was recently looking at the early stage decks of several of our more successful companies that have recently exited. And I noticed that nearly all of them had the title. And then they had a single statement, they had distilled their value prop into a single statement on that title slide nearly all have them. In the case of open door, it was liquidity for residential real estate. In the case of DoorDash, it was we enable every restaurant to deliver, it's a very small thing. But the investor knows going in a sense of what it is that you're going to talk about, and what it is your product your company is doing. And it sets the right tone off the bat. The second is a problem certified. And it's so critical to frame the problem from your perspective. And I also think that this is a really great opportunity to introduce emotion to really build a more compelling story. And there are two ways that I've seen founders be successful doing this. The first is with an image, sort of like a picture tells 1000 words. And the second is with user personas. And I'll give you two examples. So in the first case with a picture tells 1000 words, I recently spent time with a company that was building an alternative to single use plastic. And on the first slide, they had an image that should have the ocean with a bunch of plastic that had built up and some marine life that was basically suffocating on this plastic. And it sort of hooked my attention. I was like this is so upsetting. And then the founder proceeds to share that 18 billion pounds of plastic annually, is dumped into the oceans. And so I had that sort of visceral reaction of like, Oh my gosh, this is such a problem. And then it was substantiated by the magnitude of the magnitude of the problem, which was much larger than I would have even initially guessed. And then they've helped me write then I've leaned in, I'm excited to hear the rest of the story. I can talk through the, through the user persona example as well. So a company that I was involved with in the past is building innovative auto insurance products for lower income consumers. And the first slide up with the title slide said, you know, there's this woman, let's call her Sally, she's a single mom working two minimum wage jobs to make ends meet. And she still can't afford auto insurance. And so she's she's driving uninsured in California. And then the next slide tells me that well actually 17% of drivers in in California driving uninsured. And actually the problem is way more widespread than that there are five states in the US, where more than 20% of the driving population is driving uninsured. And so that did a couple of things. One is I'm so upset for Sally that she's in this position to is like I can't believe the magnitude of this problem. And three, it's like well, but this is also a really compelling business opportunity potentially to solve this. Right. And then we could do some good doing so. And so that's that's really how you want to think about telling a story, you know, appealing to the investors emotions in an authentic way. And also substantiating substantiating what you're saying what's with some data.
Another important thing I think is worth calling out on this slide is the competitive landscape. I encourage all founders to address competition head on, right sometimes, you know, there are definitely categories that are noisier than others. There's some categories where there's sort of you know, quote unquote, king or queen of the category and then a long tail and, and that king or queen of the category is often the the white elephant in the room. And I'll see founders just try to avoid it altogether, or react really, defensively. The best thing to do is to present the competitive landscape, who do you perceive to be both direct and indirect? Compare competition, and react offensively. Right? You want to play offense versus defense? Why is what you are doing superior? Why is your approach going to win in spite of whatever is happening in this competitive landscape? Right. bold vision. That's another big one. You know, we definitely like founders that are very pragmatic and know how to get from zero to one. But we also want founders who inspire us and who enable us to dream with them about what the future can entail. So if all goes well, Where will your company Maybe in 10 years, that's particularly at the early stages, that's something that we're very excited to hear. Team is also worth calling out. You know, sometimes I see founders just sort of skip over the team are sort of included. It's like part of the checklist. And that's one of the biggest mistakes that you can make, because particularly at the early stages, so much of what we're investing in is the team. And it's not just logos and headshots, but it's really giving us an understanding of why is this team, the best team to tackle this problem of everyone in the world? Like, what about your approach, or your perspective on the market, or your set of experiences, or your tenacity, gives makes you uniquely advantage to solve this problem. That's what we're trying to understand. And if you want to be really sophisticated, you will also talk to us about, you know, who are the next critical key hires that you need to make, because that shows us that you are self aware that you understand where there are gaps on your management team and get bit of an understanding of you know, where you're going to actually use the funds when it comes to hiring. Something that will often ask, during the partner pitch presentations, actually at KB is not just who are the critical next hires. So if you tell us you a head of marketing, but we'll say can you actually send us LinkedIn profiles of who the ideal aspirational candidate will be? Because we want to see like, do they understand the kinds of experiences and the kinds of team that they need to build to execute on this vision. And it oftentimes throws founders for a loop. So you know, if you pitch Kavi definitely come prepared their financials, you know, at sea, this is less relevant, but at and beyond, it is very important to include a financial slide that has a very basic p&l, right, that's very easy to read, what we're looking at doesn't need to be more than 10 line items, what we're really looking to understand is, what has your historical performance been to date? Are you do your projection seem credible? What is the cost structure of the business and sort of some of the acquisition costs? And then does the company fundamentally understand the unit economics but mostly their burn, so many companies run, so many companies, you know, have to close shop because they run out of money. And so being able to, like, fully understand and manage your burn is really critical, and shows that you're being thoughtful? And then finally, the ask, know why you're raising the amount that you're raising? This is something that
has frequently come up recently is, you know, we see a lot of founders who are going out to raise a series A, and they tell us it's a $20 million, series A and then we've just looked at the financial side, and the burn is 200k, ramping up to 500. Can you say, Well, why do you need $20 million, and they can't tell us. And that's an immediate hit to your credibility. It's fine if you want to raise that money, but you need to know why you're doing it and what you'll do with the money. And then another sort of mistake that we've seen happen quite a bit that is easily avoidable, is when founders go out asking for too much relative to where the business is, and aren't reading the room. So they might go out saying that they need 20. There's some funds, who would invest in them if they were raising 10 to 12. But then they passed because the founders raising 20. And then everyone else passes and then the founders say, Well, actually, we're now we're raising 10 to 12. And then it's sort of your your fundraising process has cratered, right, you've, you've lost the leverage in that situation, because now every will all the other founders are saying, Well, everyone else passed. And so now you're in this unfortunate situation. Whereas if you give a range of what you actually need in a little bit higher that you're raising, you want to get 20. But you say, okay, we're going up need 12, raising 12 to 15. If you execute Well, if you fundraise successfully, you'll oftentimes see the situation where there's so much demand that investors are bidding up the round and saying, like, actually, we think you should raise 18 to 20. And so something that we often tell our founders, assuming that the business is performing well is ask for less to get more. And actually, on this on this last point, I touched on this a little bit, but I do think it's worth reiterating beyond these slides. The appendix should be your best friend, you really like you want to be concise and what you include here. But for any sort of points of skepticism that may arise in your business or any questions that the investor will have. You want to use an appendix to be able to address each of them and you're able to actually jam packed those slides with more data and more information, etc. On the appendix side, so please, please, please use that like have that as your sort of secret weapon. And then finally, the devil is in the details. Your pitch deck is the first. Maybe Second, if you have a website and investors have looked at your website, but is one of the first impressions that you're giving of yourself, your team and your company. And it's so, so, so important that you spend the time editing and polishing it until you're confident that it represents you. Well, we pay I think founders would be shocked to know how much we pay attention to the formatting, whether they're using the correct punctuation, whether the color scheme makes sense, whether they're, whether there's enough margin and whitespace on the deck, I have one partner, if there is not enough margin, on the slides, he's he's checked out, you've completely lost him. Right? People would be so shocked to hear that. And you know, one of the things I can attribute to is, you know, it, it shows that you as a founder are thoughtful and detail oriented. Right at the earliest stages. There's such there's so little data that we have to go off of. And so we're looking for signal in other places. If you were consumer app, when you're building a consumer app, and you're presenting a poorly designed deck, how can we gain competence as you're not going to build a poorly designed UI, right? If there are very blatant and consistencies throughout the deck or you know, grammatical errors, or things that don't line up the worst is, whenever you your financial your p&l doesn't match the unit economics that you're quoting, then how can we gain confidence in the you know that you're the kind of founder that thinks about all the details, and so please, please, please, double, triple, quadruple check all of these things. I know it can seem trivial when you're doing something as hard as what you all are doing. But it really makes a material difference when it comes to pitching until a couple of very easy, again, trivial sounding things that make a difference. One is length. In most cases, for an early stage company, you should be able to effectively communicate your story in 20, or less, or 20 or fewer slides, excluding the appendix.
Consistency, like I said, format and grammar numbers presented should be consistent throughout leading versus descriptive titles. And this is something that we feel quite strongly about. So whenever you're pitching, the investor is looking at your deck trying to listen to you have thinking about their own questions in their mind probably get getting distracted on their phone. And so you want them to be able to read your title slide and that be a key takeaway. So you don't want it to be team, like your slide should not be to your tie, your slides should be, we are a world class team with 20 years of experience in XYZ industry, right. And so that is the key takeaway not title. And then finally, use whitespace, less is more, you know, don't include text or images just to fill up space, everything should be really intentional. The deck is just intended to be a visual supplement to what should be a rich voiceover, and story. And I'll leave you with this practice, practice practice, I can't say practice enough. And you want to practice with both with folks who are very familiar with your business and those who are less familiar for those who are less familiar, you want to make sure that they're able to follow the under, they're able to follow this story and understand some of the key pieces that you're trying to communicate. Sometimes when you're in the weeds as a founder, it makes a lot of sense to you, but less so to someone who is not as involved in your industry or with your business. And you also want to practice with folks who are very closely informed about your company. So something that we do with almost all of our all of our companies is when they're getting ready to go out and fundraise for a later round of financing. We encourage them to come in and present to our entire partnership, even though we're already existing investors. And we'll give them really constructive critical feedback as people who are both familiar with the business, and who can really look at it from the lens of an investor. And I would highly encourage all of you to really use your user existing investors in that way. So that is what I have for you. Now this is where you can find me and happy to answer any questions.
Dayna Thank you so much for that. Lots of great detail in there. And we already have a bunch of questions. Folks are curious about many different components here. So as always, if you're in the audience listening here, several 100 of you are, please feel free to fill out the q&a form. Matt Burns has been in the scene picking some of these but we'll start with one from Jessica Benson, who's curious about essentially I'm rewriting her question for her. Essentially, the different kinds of formats of pitch deck. So mostly what you described here was sort of a classic PPT, a you know a deck that sent over and she's curious about the difference between a deck versus an email that you might versus maybe a teaser, you know what should go into each of those different formats. And should folks prioritize one over the other?
Yeah, there's, there's typically a couple of different decks, there's one deck that you'll typically use for the first meeting with an investor at a firm. And the goal. And that's really what I'm alluding to with this one, the goal of that one is to get the investor interested enough to lean forward and want to do diligence and spend more time. That deck will also be quite similar to the deck that you will probably use whenever you're presenting to the entire partnership, at the end of the diligence process, usually, to sort of get final confirmation and hopefully get a term sheet. Oftentimes, during diligence, there will be a another deck that is less of the storytelling and has some more that is more similar to a lot of the information that you're seeing in the appendix sides, it might be a little bit Meteor, right and begin to some of those things, dive deeper into the unit economics into the financials, dive deeper into the customer, to go to market, to your sales pipeline, to the customer logos, all those different kinds of things, in terms of what you send in advance, I typically like it when when founders send this word like this initial pitch deck, if we're if we are, if we are, if we know that we're going to meet. And we've calendered it, I think it's great to send this in advance, what you can do is you can send it via doc send. And I would encourage you to do that. It's annoying from an investor's perspective, but it can be very helpful for a founder because you can track who's looking at your deck and when. And what I would encourage you to do is also send different docs and links to the different firms. So you can also track things that way. But I think the teaser deck, or refuse refusing to show the deck is oftentimes more frustrating than it is effective.
And then, along the same line, I mean, maybe the difference between, you know, teasers versus full decks. Stephanie drosha, asks, whether there's sort of a minimum or maximum for the number of slides, you had said, less than 20, during your presentation. But I'm curious, is there a minimum number of slides, you know, is there just too little in a deck where you're like, you know, what's going on here, there's just no substance.
I mean, if there's like three slides, right, if there's like a title slide. And you know, Brandon and ask slide and then one on the last probably too little, I would say you could still be effective in 10 slides for a cedar series, a stage company.
And similar to this question, Dan, a little is asking specifically for deep tech companies or hardware companies or anywhere where there's a significant technology risk, you know, how does that come out in a pitch deck, because when you're going through your list of I think there were 10, or 12, different categories, there really wasn't a space for like, you know, biochemistry or like that the plastics when you're giving as an example?
Well, so that would be and I can potentially go back here. So that would be instead of business model, you can instead talk about sort of the technology differentiation, or like the technology that you built. But that can also go into solution. Right? The solution is essentially, what is the product that you built? And when is it more deeply technical product? There's more to explain there. And so we'll be it'll be a little bit Meteor that can also tie into why now, but like, why are we not? Why do we now believe that is technically feasible to build this highly sophisticated product in a way that wasn't in the past? And so, you know, you definitely can tweak some of these for the kinds of business that you are, you know, for the kinds of business that you're solving, like I said, this is, you know, this is not one size fits all, but you should definitely too, and it also ties into the bold vision, too, right? So the solution is like, this is the technology product that we built, why now it would be something along the lines of, you know, why is it Now technically feasible that you're going to be able to do this? The team also ties into it, is this the right team that can build that technical product? What is the bold vision? Where does it go from here? And then the real question that people typically have with hardware products is like, you know, is there is there software subscription component or something else, or just selling the hardware that's often not super interesting. And so there's different ways that you sort of, can be flexible with this kind of structure to really tailor to the kinds of business that you're building?
You know, obviously, beyond, you know, having a holistic, you know, quality presentation, Is there ever a concern of giving too much information or just TMI for something like solution or why now,
so for if you think that the thing that is the most, you definitely don't want to put the most proprietary thing about your company in the initial deck that you send out, right, and so if there was a lot of IP, that's something that you would see in the sort of diligence deck that I alluded to, right when an investor has basically said like, I'm really interested in leading and now we're at the stage doing real diligence and we want access to a data room. That's, that's typically the phase where you start providing some of that information.
Got it? And Ryan gherardi here. So obviously, a lot of decks are decks, their PVT is but one of them rises we've seen particularly since COVID is video or video demonstrations, either of the product itself with the entire pitch, and he's interested on, you know, do you like videos? Is video acceptable? You know, is there a right length to a video? For a pitch? What do you think about that as a format? Is it for the demo? Or is it for the entire pitch? I think for both, yeah. So separately, so you know, it's good for the demo, or is it good for the pitch or vice versa?
Yeah, for the demo, I think it can be quite good. So I often say like a demo says 1000 words, and we oftentimes will ask to see some sort of demo. Whenever it is, you know, in the diligence process. Once you build rapport with the investor, I think it's fine to do the to do the demo live, right? There's, I'm usually more understanding if there's a little, I mean, look how my presentation started. But you know, when you're presenting to the partnership, right before you're at the term sheet stage, I actually encouraged a lot of founders to do a video recording of the product demo and speak over it, right to make sure in case there is some sort of a or something is down that you don't see that happen, sort of at such a critical point. In the diligence process. I haven't seen the entire video pitches. You know, I've heard of founders doing this. I think those kinds of things, the video pitches, the investment memos, not creating a deck, those can work for some, some founders, but I would say for the vast majority of founders, I still think the pitch deck is the most effective type of delivery.
Great. And we had an anonymous question very early in the presentation on whether there has ever been a pitch deck that you didn't like, turn down the company, and the company later turned out to be successful. And, you know, did you take any sort of lessons learned from that? So there's any kind of company come to mind where you're like, you know, disgusted, but then, you know, it turned out to be some sort of success.
Not one that immediately comes to mind. I'm sure there might be one. And like, not that it was like that, if I found that deck was like, disgusting to use that word. Yeah, but not as excited. Yeah, yeah. And there are I mean, there, there are decks that are like not super optimized, where there's like something super compelling, either very experienced founding team, or serial entrepreneur or some sort of proprietary Terry technology, or some undeniable sort of demonstration of initial product market fit or really attractive financials, in which case, like some of the things that we've talked about, about, you know, it sort of, you can anchor on those kinds of things, as opposed to the pitch deck. But it's always good to sort of, there's no harm in like, also making sure to really like optimize the pitch deck and make sure that you're putting your best foot forward is what I would say.
We only have two and a half minutes left, unfortunately. But we have an anonymous question about how much forecast should you give it a deck representation, particularly at the earliest stages?
Yeah. So typically, on the p&l side, we'll see a year or two years of historicals, potentially broken up by quarter and then we'll see a year or two years of projections.
And following up on that, and another anonymous question, possibly from the same person, possibly not. Let's say you go back to an investor you've seen before, in a prior round, sow a seed, and you're raising a series A and those early projections weren't met, you didn't meet the forecast that you were sort of projecting. They're asking how do you rebuild confidence in your new numbers, considering that you sort of missed a prior decade of previous year?
Okay, most founders Miss, most of the projections are not right. And so that is actually something that like, yeah, I wouldn't, I wouldn't be as concerned about that. I would be more concerned about you know, have you address whatever concerns the investor presented to you beforehand. And if the concerns were that a we don't think that you're going to hit meet the projections, then you need to return saying like, okay, we're being more thoughtful. This is why we didn't make meet our projections. And this is why we think that moving forward, we have more reasonable projections and that we're better positioned to actually grow in this capacity or something like that.
And we have about one minute left. So I think this may be the last question but but Jonathan McGuire is asking sort of how do you build relationships with VCs? You know, over the course of a pitch deck, is that something you can ask during that the asked section of a pitch deck maybe to other angels or folks surrounding, say, coastal adventures? Or should they ask to be limited just to the capital fundraise? Sorry, can you ask question again? And just Yeah, like, how do you how do you build out your sort of VC network as you're sort of fundraising? Can you build out the network through the pitch deck? Basically,
yeah, I don't know that you don't really necessarily build a network through the pitch deck, what I would say is, if you think that you're a good fit for coastal ventures, I would recommend reaching out, we have our emails on our website. And we are all very accessible on Twitter and LinkedIn and a number of other channels. And so it's always good to start building relationships with investor as early as possible. And so if you think that there's a good fit, you'd like to work with us and you're sort of in a sector and stage that fits our mandate, please, please reach out, we'd be more than happy to start building the relationship. We're very open this is to say that we're very open to you know, cold outreach. And then the other way too, is you know, if you know, a founder in our portfolio, that's always a great way to get to know us. We always take a meeting from an introduction made by one of the founders of our portfolio.
Thank you so much. Well, that's Dana tech, Lou of Khosla ventures. Thank you so much for joining us for nailing your pitch and many more sessions to come stick around. Thanks, Sam.
