Looking for Venture Capital? Avoid the 3 Biggest Pitch Deck Mistakes
Venture capital is a form of financing investors offer to small-scale business or startup companies. Provided, these companies should have the potential for long-term growth! Venture capital comes from prominent investors and investment banks, besides other financial firms. In general, Venture Capital (VC) is quintessentially allocated to startups with potential for exceptional growth. Additionally, it’s also for companies that have developed at a rapid pace and appeared poised to continue getting expanded shortly.
But How Should You Avoid Mistakes When Looking For VC?!
Now, coming to a question that most entrepreneurs ask! How to avoid pitch deck mistakes while looking for venture capital?
So, a pitch deck, aka, a startup or the investor pitch deck, happens to be the presentation! And this presentation helps potential investors to learn the fundamentals of your business. In general, no matter how strange it sounds, the main goal of the pitch deck is not to secure funding!
A majority of entrepreneurs understand that avoiding mistakes while creating pitch decks is understandably a mandate. As they say, the pitch should be crisp and clear. A lot of startup beginners consider it to be important.
But what they fail at realizing is to understand what venture capitalists look for. On this note, here’s introducing the fundamentals about VC, a.k.a venture capital.
Venture Capital Fundamentals
VC, no wonder, has its own share of advantages and disadvantages for startups. But commonly, venture capital deals include large ownership chunks of companies created & sold to investors through self-governing partnerships established by VC firms.
At times, the partnerships comprise a pool of similar enterprises. Generally, the most important difference between private equity and venture capital deals is that VC focuses on emerging establishments seeking considerable funds initially.
On the contrary, other deals try to fund more established and larger companies looking for the equity infusion or possibilities for transferring the ownership stakes.
Banks, investors, and corporations comprehend the risk behind investing in unverified startup companies. So, there’s a chance for high returns compared to safer investments.
3 Pitch Deck Mistakes to Avoid While Looking for VC
It is noteworthy to state that VCs invest in companies that meet the respective criteria. Thus, a lot of startups might not be appropriate for VC investments as they do not fit into the profile of the VC-backed company.
In general, VCs are the clients. And you are just trying to sell them on the idea and vision of your startup establishment in exchange for investments. So, this means that you also need to know what they actually seek.
Customers are not able to buy from the company in case the products don’t troubleshoot their issues. Just in case you think your business doesn’t require a VC, why would a customer invest in your services or products?
The ones who work with early-stage entrepreneurs over decades will realize one thing – smart founders with inordinate ideas make mistakes, that too, consistently.
Thus, to ensure that you don’t follow the same path, here’s introducing the three biggest pitch deck mistakes to avoid. Read on.
Pitch Deck Mistakes to Avoid While Trying to Get VC Money
#1 An Unprofessional Market Plan
Your go-to-market plan is the way you intend to attract customers’ interest. As an important aspect of startups, it impacts greatly on business profitability.
For a tech-enabled virtual assistant company, direct sales sound a great mode to reaching out to customers. However, this method might not work when price points are low! Plus, it becomes way too expensive to pay salespeople. Additionally, predicting the leads that turn into prospects might be difficult.
So, rather than wasting time on those aforementioned things, a company should focus on testing the paid search. It works fantastically as it can turn out to be an efficient way to convert new consumers.
When the go-to-market strategy is based solely on marketing, it becomes weak. Thus, it’s imperative to create a plan that comprises actual numbers and shows the financial figure for spending. Incidentally, it must also include the number of customers that the firm expects to convert.
On the contrary, services or products having higher ticket price can opt for direct sales. In such cases, your plan must show the process for getting leads, besides the assumed conversion rate.
#2 Poor Figures
This is the second Pitch Deck Mistakes! Let’s first consider what venture capitalists actually do. As VCs invest in startup companies, they take risky decisions. However, they have the expectations that the startup will offer a higher return. So, this means that the projected statement for profit and loss requires showing big revenue figures.
Just in case it’s not expected to grow rapidly in the next four years, the company isn’t a great investment for VCs.
Thus, profitability should not be your primary consideration, provided your business is not in the early days. For the pre-revenue startups that intend to reach marginal profitability in some years, it’s a great opportunity for VCs. For, VCs’ fundamental objective is to maximize returns.
#3 A Too-Niche Market
Finally, this s the third Pitch Deck Mistakes! VCs require seeing a huge market for the service or product. Again, this ties back to how these professional offer higher returns! A huge market indicates the potential for the startup to emerge.
When the market size is not too big, one may want to:
- Avoid VC investment dollars, or
- Go back to the product just to see whether or not something more appealing (for the larger market) can get developed (for example, by adding features that increase the market size)
The last tip that you should consider is keeping your pitch deck succinct to the most! Also, create just a single slide for individual topics. However, you may feel that you require more than just one slide for an elucidated description for a particular subject!
In such cases, you need to create one slide that comprises only fundamental information. Additionally, you can create one or two extra slides too more specifically as backups. Thus, this concludes everything to learn about the Pitch Deck Mistakes!