Ideal presentation for a startup: 3 minutes 44 seconds to convince investors
Creating a company is an extremely difficult process. Attracting capital is an important step for many IT startups, which, however, is associated with difficulties for those who do it the first time. Given this, we would like to shed light on what is the process of successfully attracting seed financing.
DocSend , a startup that provides users with secure and private file sharing services, such as job offers letters or legal agreements, analyzed over 200 presentations to figure out the right way for a startup to move from self-development to seed investment, or from cooperation with business -angels for serious funding from venture capital firms.
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In collaboration with Tom Eisenmann , a professor at Harvard Business School, they studied the business of companies that were able to raise $ 360 million in total.
What did they find out? All the results of the study can be found here .
They learned that companies, on average, need about 40 meetings with investors and a little over 12 weeks to successfully complete the seed investment process. Investors view a startup presentation briefly - on average for 3 minutes and 44 seconds.
It is easy to conclude that the more investors you come into contact with, the more chances you have to attract financing. Unfortunately, this is not the case. Of course, to some extent, the number of investors with whom you meet affects the number of business meetings held with them. Note: in the above example (graph on the left) an entrepreneur may have several meetings with the same investor, therefore the number of meetings may be more than the number of people with whom we were able to contact.
By contacting a large number of investors, you will get more meetings with them, but this does not necessarily help get more money. Focus on the quality of business dialogue with investors. On the graph to the right, we compared the number of investors with whom we managed to make contact, and the amount of funds invested in the company. The dependence here is insignificant, and if it comes to that, there is even a reverse trend.
As such, the relationship between the number of investors with whom we managed to make contact, and the number of funds invested in the firm is not there. If you connect with a large number of investors, you will hold meetings with them. However, there is no relationship between the number of investors with whom it was possible to negotiate and the volume of proposed investments.
It would be better to find companies that are already interested in your activity, and first of all to focus on working with them.
In general, sowing investments by business angels are more common, compared to similar investments by firm-funds. According to David S. Rose, who works as a business angel, seed seed firms annually invest 1,500 startups in their development, while business angels invest approximately 50,000 firms in the development.
This discrepancy is partly explained by the fact that seed funds invest in one of the 400 startups they are considering, while business angels choose one out of 40. These numbers are far from accurate, but they show that if you want to attract the attention of any company, You need a great presentation, and you need to know all the strengths of your business.
According to information from the DocSend website, despite the fact that financing from business angels is more common, investing on behalf of funds has more preferable characteristics. If you have the opportunity to receive money from the seed fund, you will receive twice the amount in a shorter period of time - 30% faster. You will also need to contact only 40% of investors (compared to receiving investments from business angels).
In addition, seed investment funds can act faster and provide more cash than business angels. The average amount of time required to receive money from firms was four weeks less, compared to the same time when working with business angels. In addition, the amount of investment provided by the seed funds was 36.8% more than expected, whereas in the case of business angels, this value was 18.9%.
The average volume of presentations that we analyzed was about 19 slides, and most of them were made in a similar format. The table below shows the types of pages that were commonly used, sorted by how often they appear in presentations. The table also defines the average volume of each section relative to the volume of the entire presentation, provided that this value was indicated by [its authors]. We classified the pages according to the categorization recommendation list from SequoiaCapital.
If you are creating a presentation to get a seed investment, you will most likely need to include the 10 slides shown below. Of course, a slide called “Team” is included in the presentation by default. But you will also need to add slides telling about the company's goal, the size of its market and its competitors.
The order of the sections [in the presentations that analyzed DocSend] was standard except for a slide with information about the team. This page was either at the beginning or at the end of the presentation, but never placed in the middle. Of the 200 startups that the company studied, most of them placed this page at the end of the presentation, not at the beginning. This approach is consistent with the advice of Reed Hoffman, who recommends that companies post their thesis on proposed solutions at the beginning of a presentation, rather than a page with information about the team.
The order of slides, which DocSend determines as the most effective, is very similar to the recommendations of SequoiaCapital. The only elements that have changed location are slides describing the product and the team.
The question arises: What does the presentation pay the most attention to? If you spend time correcting your presentation, which slides should you focus on? To which part of the presentation to expect questions from the audience? The table below shows the average amount of time spent studying each category of slides.
Although the “Finance” section attracts the most attention, only 57% of successful presentations contain it. Basically, such a low percentage of use of this section is due to the fact that many companies at the early stage of financing do not yet have financial results. Virtually all presentations of startups at the seed stage and many of the presentations of round A do not contain serious financial data.
If you include this section in your presentation, be very careful and think carefully about its content, as investors will be especially careful in viewing this section. Make sure that the slide dedicated to your team (in whatever part of the presentation it is) also looks as convincing as possible.
Interestingly, in almost none of the presentations studied, the amount needed by the project and the conditions on which the team was ready to work with investors were not mentioned. It is always better to voice this information orally in person — it can change depending on who you are communicating with.
The most important are the pages with information on finance, team and competitors, judging by how long investors have been studying these sections.
How long does a standard seed financing process take? According to information on the DocSend website, on average, it takes 12.5 weeks. However, we found that real data can deviate significantly from the mean. For 20% of companies, it took 20 weeks or more to complete the study, and the other 20% took 6 weeks or less. The longest period of successful receipt of funding - 40 weeks.
To close a round of funding, you need perseverance. In 15% of cases, the completion of this procedure takes from zero to five weeks. In almost half of the cases, this takes from 11 to 15 weeks, and with a probability of 17%, it will take you 16 weeks or more to close the round.
Companies that failed to successfully obtain financing, surrendered, on average, after 6.7 weeks. Perhaps these companies failed simply because of a lack of patience: firms that succeeded reported that the process took longer than planned. On a scale of one to five, where 3 is “as expected,” and five is “much longer,” the average score for seed financing was 3.6.
Although patience is usually a virtue for startups, it is important to understand when to stop, take a step back and look at the situation with a fresh look. Three quarters of all companies that could not get seed funding were going to try again — on average, it took 8.9 weeks to plan a retry — enough time to grow the business and make the necessary connections.
Funding for Round A is much less common than investments at the sowing stage. According to the DocSend website, one round A financing procedure accounts for nine seed financing procedures. It turns out that the crisis of round A continues. Despite the smaller amount of data, we were able to compile some statistics on the differences between seed financing and financing of round A.
If you have the opportunity to attract financing in round A, the investment process will be easier than in the case of seed financing. This procedure lasts less, brings more cash and requires fewer investors than in the case of seed investment.
It is very interesting that, despite everything that we read about the “crisis of financing of Round A”, this method of investing in the later stages of the company's development lasts shorter compared to the seed investment. Companies surveyed in the study spent 9.6 weeks on successfully completing the financing process in Round A. At the same time, they needed to negotiate, on average, with 26 investors. Of course, the example examines a very small number of companies, so perhaps it is not sufficiently representative, as Russ Hiddleston, one of the founders of DocSend, explained to me.
User needs and other economic conditions affect which business models will be most successful in raising funds. Although the trends in this area are constantly changing, in the past 12 months, four types of companies have been most successful in attracting seed financing: b2c companies (32% of the total number of funded start-ups), b2b companies (also 32%), marketplace (22% ) and hardware startups (14%).
Marketplays attracted the largest amount of funds at the seed financing stage (on average $ 1.73 million). They are followed by hardware companies (about $ 1.3 million), b2b startups (about $ 1.2 million) and consumer business (about $ 945 thousand).
Successful marketplaces are quite rare, however, when they manage to get ahead, they gain the potential for significant growth like Airbnb. To attract funding from such a company takes a lot of time. And although businesses from this category earn big money, it will take more time to convince investors that your startup will have success.
The run-up in terms of companies of different types is not surprising. Consumer start-ups occupy the largest share of the seed investment market, since for such companies it is cheaper and easier to launch a minimally viable product - the same thing happens in the b2b realm.
PS You can prepare for attracting investments using the presentation template developed by the FRII experts [ Slideshare , Keynote , PPT ]:
DocSend , a startup that provides users with secure and private file sharing services, such as job offers letters or legal agreements, analyzed over 200 presentations to figure out the right way for a startup to move from self-development to seed investment, or from cooperation with business -angels for serious funding from venture capital firms.
')
In collaboration with Tom Eisenmann , a professor at Harvard Business School, they studied the business of companies that were able to raise $ 360 million in total.
What did they find out? All the results of the study can be found here .
They learned that companies, on average, need about 40 meetings with investors and a little over 12 weeks to successfully complete the seed investment process. Investors view a startup presentation briefly - on average for 3 minutes and 44 seconds.
It is easy to conclude that the more investors you come into contact with, the more chances you have to attract financing. Unfortunately, this is not the case. Of course, to some extent, the number of investors with whom you meet affects the number of business meetings held with them. Note: in the above example (graph on the left) an entrepreneur may have several meetings with the same investor, therefore the number of meetings may be more than the number of people with whom we were able to contact.
By contacting a large number of investors, you will get more meetings with them, but this does not necessarily help get more money. Focus on the quality of business dialogue with investors. On the graph to the right, we compared the number of investors with whom we managed to make contact, and the amount of funds invested in the company. The dependence here is insignificant, and if it comes to that, there is even a reverse trend.
As such, the relationship between the number of investors with whom we managed to make contact, and the number of funds invested in the firm is not there. If you connect with a large number of investors, you will hold meetings with them. However, there is no relationship between the number of investors with whom it was possible to negotiate and the volume of proposed investments.
It would be better to find companies that are already interested in your activity, and first of all to focus on working with them.
In general, sowing investments by business angels are more common, compared to similar investments by firm-funds. According to David S. Rose, who works as a business angel, seed seed firms annually invest 1,500 startups in their development, while business angels invest approximately 50,000 firms in the development.
This discrepancy is partly explained by the fact that seed funds invest in one of the 400 startups they are considering, while business angels choose one out of 40. These numbers are far from accurate, but they show that if you want to attract the attention of any company, You need a great presentation, and you need to know all the strengths of your business.
According to information from the DocSend website, despite the fact that financing from business angels is more common, investing on behalf of funds has more preferable characteristics. If you have the opportunity to receive money from the seed fund, you will receive twice the amount in a shorter period of time - 30% faster. You will also need to contact only 40% of investors (compared to receiving investments from business angels).
In addition, seed investment funds can act faster and provide more cash than business angels. The average amount of time required to receive money from firms was four weeks less, compared to the same time when working with business angels. In addition, the amount of investment provided by the seed funds was 36.8% more than expected, whereas in the case of business angels, this value was 18.9%.
The average volume of presentations that we analyzed was about 19 slides, and most of them were made in a similar format. The table below shows the types of pages that were commonly used, sorted by how often they appear in presentations. The table also defines the average volume of each section relative to the volume of the entire presentation, provided that this value was indicated by [its authors]. We classified the pages according to the categorization recommendation list from SequoiaCapital.
If you are creating a presentation to get a seed investment, you will most likely need to include the 10 slides shown below. Of course, a slide called “Team” is included in the presentation by default. But you will also need to add slides telling about the company's goal, the size of its market and its competitors.
The order of the sections [in the presentations that analyzed DocSend] was standard except for a slide with information about the team. This page was either at the beginning or at the end of the presentation, but never placed in the middle. Of the 200 startups that the company studied, most of them placed this page at the end of the presentation, not at the beginning. This approach is consistent with the advice of Reed Hoffman, who recommends that companies post their thesis on proposed solutions at the beginning of a presentation, rather than a page with information about the team.
The order of slides, which DocSend determines as the most effective, is very similar to the recommendations of SequoiaCapital. The only elements that have changed location are slides describing the product and the team.
The question arises: What does the presentation pay the most attention to? If you spend time correcting your presentation, which slides should you focus on? To which part of the presentation to expect questions from the audience? The table below shows the average amount of time spent studying each category of slides.
Although the “Finance” section attracts the most attention, only 57% of successful presentations contain it. Basically, such a low percentage of use of this section is due to the fact that many companies at the early stage of financing do not yet have financial results. Virtually all presentations of startups at the seed stage and many of the presentations of round A do not contain serious financial data.
If you include this section in your presentation, be very careful and think carefully about its content, as investors will be especially careful in viewing this section. Make sure that the slide dedicated to your team (in whatever part of the presentation it is) also looks as convincing as possible.
Interestingly, in almost none of the presentations studied, the amount needed by the project and the conditions on which the team was ready to work with investors were not mentioned. It is always better to voice this information orally in person — it can change depending on who you are communicating with.
The most important are the pages with information on finance, team and competitors, judging by how long investors have been studying these sections.
How long does a standard seed financing process take? According to information on the DocSend website, on average, it takes 12.5 weeks. However, we found that real data can deviate significantly from the mean. For 20% of companies, it took 20 weeks or more to complete the study, and the other 20% took 6 weeks or less. The longest period of successful receipt of funding - 40 weeks.
To close a round of funding, you need perseverance. In 15% of cases, the completion of this procedure takes from zero to five weeks. In almost half of the cases, this takes from 11 to 15 weeks, and with a probability of 17%, it will take you 16 weeks or more to close the round.
Companies that failed to successfully obtain financing, surrendered, on average, after 6.7 weeks. Perhaps these companies failed simply because of a lack of patience: firms that succeeded reported that the process took longer than planned. On a scale of one to five, where 3 is “as expected,” and five is “much longer,” the average score for seed financing was 3.6.
Although patience is usually a virtue for startups, it is important to understand when to stop, take a step back and look at the situation with a fresh look. Three quarters of all companies that could not get seed funding were going to try again — on average, it took 8.9 weeks to plan a retry — enough time to grow the business and make the necessary connections.
Funding for Round A is much less common than investments at the sowing stage. According to the DocSend website, one round A financing procedure accounts for nine seed financing procedures. It turns out that the crisis of round A continues. Despite the smaller amount of data, we were able to compile some statistics on the differences between seed financing and financing of round A.
If you have the opportunity to attract financing in round A, the investment process will be easier than in the case of seed financing. This procedure lasts less, brings more cash and requires fewer investors than in the case of seed investment.
It is very interesting that, despite everything that we read about the “crisis of financing of Round A”, this method of investing in the later stages of the company's development lasts shorter compared to the seed investment. Companies surveyed in the study spent 9.6 weeks on successfully completing the financing process in Round A. At the same time, they needed to negotiate, on average, with 26 investors. Of course, the example examines a very small number of companies, so perhaps it is not sufficiently representative, as Russ Hiddleston, one of the founders of DocSend, explained to me.
User needs and other economic conditions affect which business models will be most successful in raising funds. Although the trends in this area are constantly changing, in the past 12 months, four types of companies have been most successful in attracting seed financing: b2c companies (32% of the total number of funded start-ups), b2b companies (also 32%), marketplace (22% ) and hardware startups (14%).
Marketplays attracted the largest amount of funds at the seed financing stage (on average $ 1.73 million). They are followed by hardware companies (about $ 1.3 million), b2b startups (about $ 1.2 million) and consumer business (about $ 945 thousand).
Successful marketplaces are quite rare, however, when they manage to get ahead, they gain the potential for significant growth like Airbnb. To attract funding from such a company takes a lot of time. And although businesses from this category earn big money, it will take more time to convince investors that your startup will have success.
The run-up in terms of companies of different types is not surprising. Consumer start-ups occupy the largest share of the seed investment market, since for such companies it is cheaper and easier to launch a minimally viable product - the same thing happens in the b2b realm.
PS You can prepare for attracting investments using the presentation template developed by the FRII experts [ Slideshare , Keynote , PPT ]:
Source: https://habr.com/ru/post/293444/
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