How to make a presentation for investors

There are only a few days left until Angel Day, when startups financed by us this summer will present themselves to investors. Y Combinator finances startups twice a year: in January and in June. And after ten weeks we invite all our familiar investors to the presentation of the achieved results.


We call this day Angel Day, because most investors are independent “angels”. But at the presentation comes more and more venture investors, and more recently, several potential buyers.

Ten weeks is not so much. A typical startup most likely has nothing to boast after ten weeks of existence, but a typical startup fails. If you look at startups that created great things, you will find that many of them started with a prototype that was released in one to two weeks of continuous work. Startups serve as a refutation of the "hurry - make fun of people."
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(Excess money seems to be as harmful for startups as excess time, so we also don’t give them too much money.)

A week before Angel Day, we are having a rehearsal called Demo Day. At other events Y Combinator we allow guests, but not on this day. No one, with the exception of other founders, is destined to see rehearsals.

Presentations on Day of the Demo usually turn out to be rather unattractive, but this was to be expected. We try to select the founders who are able to create a product, and not just talk beautifully about it. Some of the founders have just graduated from college, or even are still studying there, and they have never had the opportunity to perform in front of a group of strangers.

Therefore, we focus on key things. On Angel Day, each startup will have only ten minutes, and we convince their creators to focus on just two tasks: explain (a) what they do, and (b) why it will be needed by users.

Such tasks may seem simple, but in fact everything is not so simple, because the speaker does not have experience in speaking, and he has to explain the technical issues of a mainly non-technical audience.

When startups hold presentations for investors, the same situation constantly repeats itself: people who are unable to explain anything speak to people who are unable to understand anything. Almost every successful startup, including stars such as Google, at some point had to deal with lack of understanding and the refusal of investors. Was this the reason for the founders' inability to explain or the stupidity of investors? In most cases, the one and the other.

On the last Day of the Demo, we, the four founders of Y Combinator, noticed that we were saying almost the same thing as at the two previous events. Therefore, on the same day at dinner, we gathered together all of our advice on speaking to investors. Most startups face similar problems, so we hope that these tips will be useful to a wide audience.

1. Explain what you are doing.
When an investor considers a very young startup, the main thing that interests him is whether the startup has created an attractive product. And before you judge whether your product X is good, they need to understand which category it belongs to. Investors will be very annoyed if, instead of a clear story about what you do, they will have to listen to something like an introductory word.

Tell us what you are doing as early as possible, preferably in the first sentence. “We are called Jeff and Bob, and we have created an easy-to-use web-based database. Now we will show it to you and explain why it will be in demand. ”

If you are a master of public speaking, then you can afford to break this rule. Last year, one of the founders spent the entire first half of his speech on a fascinating analysis of the shortcomings of the generally accepted desktop paradigm. His presentation was successful, but if you, like most hackers, are not a great speaker, then you had better choose a more reliable path.

2. Go quickly to the demonstration.
A demonstration explains what you did, much more efficiently than any verbal description. The only thing that deserves mentioning before the demonstration is a description of the problem you are trying to solve, and an explanation of its importance. But spend no more than 1/10 of your allotted time on this, and then proceed to the demonstration.

In the process of demonstration, you should not just list the functionality. Instead, push away from the problem you are solving, and then show how your product solves it. Demonstrate the functionality in a sequence that leads to a goal, and not in the order in which they happened to appear on the screen.

If you are submitting a web application, assume that the network will mysteriously disappear thirty seconds before the start of your presentation, and come with a copy of the server software running on your laptop.

3. A concise description is better than a vague one.
One of the reasons why the founders avoid clear definitions in the description of their projects is that at this early stage there are many ways of development. The clearest definition seems unnecessarily concise. For example, a group that has created a convenient web-based database can avoid this name for its application, since it can become much larger. In fact, it can become anything at all ...

But, as experience shows, as you strive (in a mathematical sense) to describe something that can be anything, the richness of your description tends to zero. If you call your web-based database "a system that allows people to jointly benefit from information," then this name will go into one investor's ear and exit through the other. They will simply ignore this phrase as a meaningless stamp, and will wait, with ever-increasing impatience, that in the next sentence you will nevertheless explain what you really did.

Your main task is not to paint everything that your system can turn into, but just to convince the investor that you deserve to continue the conversation. Therefore, treat this problem as an algorithm for finding a solution by successive approximations. Start with a clear, although perhaps too narrow definition, and then maximize it. The principle is the same as in incremental development: start with a simple prototype, and then add functionality, while maintaining the efficiency of the code at any time. In this case, “code performance” means that there is a clear definition in the investor’s head.

4. Do not talk and hold a demonstration at the same time.
Let one person speak and another work at the computer. If both the first and second will be done by one person, then he will inevitably begin to mumble, bending over the monitor screen, instead of clearly addressing the audience.

As long as you are in front of the audience and look at it, politeness (and habit) makes it pay attention to you. But as soon as you stop looking at people, switching attention to something in your computer, they immediately get distracted by completely extraneous thoughts, and this should not happen until the end of your presentation.

5. Do not spend much time on secondary issues.
If you have only a few minutes, spend them on a story about the capabilities of your product and why it’s great. Secondary issues, such as the presence of competitors and your resume, should be presented with just one slide, on which you will briefly run at the very end. If you have impressive summaries, just show them on the screen for 15 seconds and say a few words. As for competitors, list three main ones and say one sentence with a description of your advantages over each of them. And this part of your speech should be heard after everyone understands what you created.

6. Don't get too into the details of the business model.
Actually, talking about how you are going to make money is not bad, but mostly because it shows that you are not indifferent to this question and you thought about it. Do not go into the details of your business model, because (a) this is not what a competent investor is interested in in a short presentation, and (b) whatever business model you have at this moment, it is most likely erroneous .

A venture investor who spoke recently at Y Combinator spoke about the company in which he had just invested. He said that their business model was wrong and had to be changed three times before they managed to find the right solution. Moreover, the founders were experienced guys who created startups earlier, and who have just managed to attract several million dollars of investments from one of the leading venture capital companies, but even their business model turned out to be wrong. (And yet this investor has invested money in them, because he expected that at this stage it would be nonsense.)

If you are solving an important task, then you will look best of all, talking about this and not about the business model. A business model is just a collection of assumptions, and assumptions about things that you most likely are not very good at understanding. So do not waste precious moments on rubbish that can be spent on a story about valuable and interesting things that are well known to you: the problem you are solving and what you have managed to do by now.

Besides the fact that the story of the business model will not be the best use of time. If it also seems completely wrong, it will force out from the memory of investors the facts that they should have remembered. In the end, they will remember you as a start-up with a completely stupid plan for making money, and not a company that is solving a certain important task.

7. Talk to the audience clearly and slowly.
On the Day of the Demo it is easy to notice the difference between people who already have some experience of free swimming and performances in public, and have not yet spoken.

To speak in front of many people requires a completely different voice and manner of speaking than in a normal conversation. Daily life makes it impossible to practice this. If you do not know how to say it yet, treat your performance as a trick, for example, juggling.

But this in no way means that you should speak like some kind of announcer. Listeners are disabled when they are spoken to in this way. Therefore, you must speak in this artificial manner and at the same time maintain the appearance of a natural conversation. (A similar rule applies to literature. A good writing style is a conscious effort designed to seem spontaneous.)

If you want to pre-record and memorize your entire presentation - this is normal. This method has already helped some groups. But be sure to write down a few phrases that can give the impression of spontaneous, informal speech, and present them just that way.

And yet - speak more slowly. At the Day of the Demo, one of the founders mentioned one acting rule: if it seems to you that you are speaking too slowly, it means that you are speaking at a more or less correct speed.

8. Let someone say one
Often startups tend to demonstrate that all founders are equal partners. Instinctively, they do the right thing; Investors do not like unbalanced teams. But trying to demonstrate this by dividing the presentation into parts is already too much. It is a distraction. There are less straightforward ways to show your respect for each other. For example, when one of the groups appeared on Day of the Demo, the main part of the report was voiced by the more sociable of the two founders, but he described his partner as the best hacker he had ever met, and there was no doubt about the seriousness of his words.

Identify one, by the strength of the two best speakers, and let them speak mostly.

Exception: if one of the founders is an expert in a particular technical area, it may be useful if he talks about it within a minute. Such an “expert judgment” can increase confidence, even if the audience does not fully understand all the details. If Jobs and Wozniak had ten minutes to present the Apple II, it would be nice to give Jobs nine minutes and one minute somewhere in the middle of Wozniak to talk about some complex technical design problem that he managed to solve. (Although, of course, if we are talking about these two, Jobs would have talked himself all the ten minutes.)

9. Stay confident
Due to the time constraints of the presentation and the lack of technical knowledge of the majority of the audience will be difficult to evaluate your work. Probably, at first, the most important confirmation of its value should be your own confidence in it. You will have to demonstrate that you yourself are impressed by what has been done.

And just to demonstrate, and not to say. Never say "we are passionate" or "our products are great." People will simply ignore this - or, even worse, they will write you off as demagogues. Such a message must be submitted implicitly.

What you should not do is seem nervous or cramped. If you really created something worthwhile, you provide a service to investors by telling them about it. If you do not believe that your startup is so promising that you provide a service to investors, giving you the opportunity to invest money in it, then why are you investing your time in a startup? And if this is true, then perhaps you should change the scope of your company.

10. Do not try to appear larger than you really are.
Do not worry if your company is only a few months old and does not have an office yet, or if your founders are technicians with no business experience. Google was once like that, and everything worked out pretty well for them. Wise investors are able to look through such superficial flaws. They are looking for not complete brilliant presentations, but talent, even if not experienced. All you need is to convince them that you are smart and are doing something worthwhile. If you try to hide your inexperience too much, try to look corporate, or pretend to understand unfamiliar things, your talent may simply go unnoticed.

Do not be afraid to frankly admit your ignorance in matters that you have not yet understood. But, on the other hand, one should not purposefully draw attention to it (for example, including a slide about what can go wrong), just as one should not pretend that you understand the question more deeply than it really is. If you are a hacker and speak to experienced investors, then, most likely, they recognize a lie better than you think it up.

11. Do not write too many words on slides.
When there are too many words on a slide, they simply stop reading. So take a look at your slides and ask for each word the question: “Can I cross it out?” This also applies to meaningless embellishment. Try to include no more than twenty words in each slide.

Do not read the text from the slides. Slides should be the background, and you should stand facing the audience and turn to it, and not look at the slides and read them to people behind your back.

Sites with a lot of elements do not look very good at demonstration, especially in the projection on the screen. At a minimum, use a font size where all the text is easy to read. But in such sites there is still nothing good, so maybe you should simplify the design.

12. Specific numbers are good.
If you have any data, even preliminary, give them. Numbers bump into memory. If you can argue that the average visitor is viewing twelve pages, that’s great.

And mention only the numbers that relate directly to you, and no more than four or five. You should not voice the volume of the market in which you work. Who really cares if it is 500 million or 5 billion dollars a year? Talking about the volume of the market is all the same if a novice actor told his parents how much Tom Hanks earns. This is all well and good, but you first need to become Tom Hanks. The most important thing is not whether he earns ten million a year or a hundred, but how you yourself go to a similar level.

13. Tell about users
Investors looking at start-ups at an early stage are most concerned about the fact that you created something based on your own a priori theories about what is in demand, but in fact nobody needs it. Therefore, it would be nice if you talk about the problems of specific users and how you solved them.

According to Greg McDoo, he said that one of the things Sequoia Capital is looking for is “mediated demand”: what are people doing now with inadequate tools, what does their need for your product show?

Another sign of demand is the willingness of consumers to pay for something big money. It is not difficult to convince investors that there is a demand for a cheaper alternative to something in demand, while preserving in it the qualities that made the product popular.

The best stories about user needs are stories about your own needs. All famous startups have grown from the needs of the founders themselves: Apple, Microsoft, Yahoo !, Google. Experienced investors know this, so similar stories will attract their attention. Almost as good will be the story about the needs of people you know personally, for example, your friends or brothers and sisters.

14. Let them fall into the memory sonorous phrase
Professional investors listen to a lot of presentations. After a while they simply cease to distinguish them. Therefore, your very first step is to be among those who are remembered by them. And in order to guarantee this, you need to come up with a meaningful phrase that describes you and can be stored in memory.

In Hollywood, such phrases seem to look like "X met Y". In the startup world, they usually look like “X for Y” or “XY”. So, Viaweb was "Microsoft Word e-commerce."

Think of a similar phrase and clearly (but by chance) say it in your speech, preferably at the very beginning.

In addition, you can use a useful exercise: sit down and try to come up with a resonant phrase that characterizes your startup. If you fail to do this, your plans may not be clear enough.

Translation of the essay from English was done by the employees of the translation agency www.perevedem.ru .