FILE – How Elon Musk Would Get VC. (AP Photo/Refugio Ruiz, File)
Venture capital (VC) funding is highly sought after by entrepreneurs, but only about 100/ 100,000 ventures actually succeed in securing it, about 80/100 fail with it, and only about 20/100,000 ventures actually succeed after they secure it. Despite the scarcity of VC and the high failure rate, many entrepreneurs seek VC with VC pitches, or seek help from the business-school-and-incubator network to create “winning” pitch decks.
While most pitch decks include standard elements like product/service description, market analysis, management track record, and financial details, the reality is that pitch decks are a very poor predictor of venture potential – and sophisticated entrepreneurs and VCs know that. No one can forecast your potential from a pitch deck. As an example, about 10 of the world’s leading VCs rejected Steve Jobs, and about 12 rejected Google.
That’s why VCs wait for Aha, i.e., real evidence (proof) of potential, not just words on a page. There are 4 types of Aha based on the real results of billion-dollar entrepreneurs. In this article, we will explore 4 types of pitch decks based on these 4 types of Aha that improves your chances of getting VC if you still want it when you get to the particular type of Aha – 94% of billion-dollar entrepreneurs took off without VC.
The Previous-Unicorn Pitch Deck: If you are an entrepreneur who has already achieved unicorn status with a previous venture, you will find it relatively easy to attract VC for your new venture. This type of pitch deck showcases your track record as a successful entrepreneur. For instance, Elon Musk’s pitch deck might simply state, “Hi, I’m Elon Musk, and I’m considering starting a new venture. I’ll provide more details later. In the meantime, send your checks to the following address.”
The Unicorn-Technology Pitch Deck: Entrepreneurs who have developed a billion-dollar technology that addresses a significant market need have a strong chance of securing VC. This type of pitch deck emphasizes the proven efficacy of the technology and its potential to disrupt the market. For example, a technologist like Herb Boyer might introduce his pitch deck by saying, “Hi, I’m Herb Boyer, and my colleagues and I have successfully pioneered the field of genetic engineering.”
The Unicorn-Strategy Pitch Deck: Entrepreneurs who have already launched their ventures and demonstrated their unicorn-level strategy have an advantage when seeking venture capital. This type of pitch deck highlights the venture’s successful execution and market traction. An example could be Pierre Omidyar, the founder of eBay, saying, “Hi, I’m Pierre Omidyar. I started an online auction company and had hundreds of thousands of auctions last month and have the potential to grow into millions.”
The Unicorn-Entrepreneur Pitch Deck: Pitch decks from unicorn-entrepreneurs who have successfully launched a unicorn venture and are starting to dominate their emerging industry can generate significant interest from VCs who want to invest in a potential Unicorn-Entrepreneur due to leadership skills. These entrepreneurs have already demonstrated their ability to create a successful business, making it more likely that VCs will want to invest. For instance, Mark Zuckerberg’s pitch deck might include a confident statement like, “Hi, I’m Mark Zuckerberg. I recently launched Facebook and have already captured a substantial user base, starting with Harvard and Stanford students. Now I plan to expand to the rest of America and the world.”
The Best Pitch Deck
The ultimate pitch deck is one that you don’t need because your venture is already growing rapidly without VC funding. Jan Koum’s experience with WhatsApp exemplifies this approach. Having built the company with angel capital and achieving profitability, Koum only accepted VC funding after eight months of persistence from a VC firm. A pitch deck from him might simply state, “Hi, I’m Jan Koum. I built WhatsApp with $250,000 in angel capital and we’re already profitable. So, actually, I don’t need your investment. Please, buzz off.”
MY TAKE: While pitch decks are all the rage, it’s essential to provide real proof of potential. Empty promises and inflated claims can only go so far. By learning from unicorn-entrepreneurs who have achieved remarkable growth without VC funding, you can gain valuable insights into building a strong business foundation. Remember, VCs are looking for tangible evidence of success. Aim to offer real proof that demonstrates your venture’s potential and your skills, and you’ll increase your chances of securing venture capital investment