pitching a leap of faith - go.hockeystick.co

LEAP OF FAITHPITCHING A

A guide to building a high impact pitch deck

RAYMOND LUK

Pitching A Leap of Faith | © Raymond Luk 2021 2

TABLE OF CONTENTS

Introduction 4

Chapter One

Deep dive on the problem

11

Chapter Two

Explain the market opportunity

20

Chapter Three

How do we make money?

36

Chapter Four

Team, Traction & The Intro

46

About the author

& Hockeystick

54


W hy should you read another resource on building your pitch deck?

There are hundreds of guides out there and countless opinions

about what’s right. As you read this, somewhere in the world on a Zoom call

or in a boardroom, an entrepreneur is hearing feedback on their deck, such

as:

This guide is different. You won’t learn how to game the system to get a top-

tier VC to invest. This isn’t a template where you fill in the blanks. I can’t tell

you how to build a great business.

A Leap of Faith is a guide for using your pitch deck to tell your unique story,

ensuring all the components support each other and avoiding the mistakes

that most entrepreneurs make.

Pitch decks are the standard for how tech startups engage with venture

capitalists, but the principles in this guide apply to any business, any type of

funding, at any stage.

Instead of giving you assorted tips for each slide, I explain how the slides

in a pitch deck are connected to each other. I guide you through a clear

and understandable process for building a pitch deck that tells a single,

compelling story.

“Your market’s not big enough”

“I know three people doing the same thing. But better”

“Your unit economics don’t show you can ever make money”

Introduction


How to use this guideIf you haven’t started your deck yet, this guide will help you get started. You

should complete each chapter before going on to the next. Breaking up

your slides also makes it easier to scrutinize each section on its own before

putting them together to tell your unique story

If you already have a pitch deck, you can jump right to the sections where

you need help. But if you’re out there pitching, keep in mind that you’re

probably not getting feedback on just one slide. This guide will help give you

tools to do an overall evaluation of your deck.

When you pitch an investor, you’re asking them to make a leap of faith. Why?

Because you’re raising funds to invest in the future. Not everything is certain.

That’s true whether you’re applying for a bank loan or finding an Angel

investor to bet on your idea.

Your job and your pitch deck’s job is to bridge the gap between where you

are now and that future you’re trying to build. You don’t need to bridge the

entire distance, but you need to narrow that gap, so they feel safe taking that

leap.

Practically, this means you need to show traction. It can be the launch of a

minimum viable product (MVP), landing pilot customers, filing a patent or

doing customer research. Every case will be different, and every investor will

be comfortable ‘leaping’ a different distance.

A lot of entrepreneurs think investors want you to ‘de-risk’ an opportunity.

This is not the right way to look at it. No matter what they say to you, investors

are more motivated by greed than fear. Most conversations about risk arise

because the investor isn’t convinced the opportunity is big enough relative

to the risk. Or they love the potential but doubt whether you can achieve it

with your team or resources.

Why A Leap of Faith?


Anyone who’s pitched knows how difficult it is to decode the feedback.

You met an investor who said they would be interested if you hit certain

milestones. Then you went back when you achieved them but they’re still

not willing to invest!

The more you pitch the more different and sometimes opposite feedback

you get. Your neck will start hurting from swiveling. Who should you believe?

Feedback on your pitch deck is not one thing, but a combination of things.

It’s feedback on your overall business. Do they like

your kind of business or are they just not that into

cryptocurrency exchanges? This is about fit between you

and them.

It’s feedback on what stage you’re at. You’re too early for

their fund.

It’s feedback on the pitch deck itself, which this guide

willbe helping you with.

It’s feedback on you. Do they like you? Do they believe what

you say and how you say it?

Why pitch deck feedback is so confusing.


So when you get feedback like, “you’re too early, come back in six months

when you have more traction,” you have to decode what that means. It might

mean exactly what it says, and it might be a polite way to say ‘no.’

The good news is that you don’t need to know what an investor is saying

100% of the time. You’ll develop this skill with experience. But feeling

confident about how you’ve put together your pitch deck will help you

feel less confused. You’ll be able to separate feedback about the deal from

feedback on your strategy.

Feedback on your deal, positive or negative, gets you to yes, or no faster.

That’s good. Feedback on your strategy can sometimes be useful but might

not be. As the saying goes, when you ask for money, you’ll get advice.


When you’re grinding through pitch deck revisions, it’s easy to lose sight of

basic things going through the investor’s minds when they go through your

pitch deck.

“Explain it to me like I’m five.” A lot of pitch decks fail at this basic principle in

the rush to cram in everything great about a company. Much of what’s in a

pitch deck is confusing and unclear because not enough effort was made at

making it clear. Don’t make this mistake.

It’s ok for them not to like you, but not ok for them not to

understand you.

Putting yourself in the investor’s shoes.

Investor: “Do I understand what they are trying to say?”

Remember that you are the expert in what you’re saying. Your mind will fill

in the blanks if your words are unclear. But the investor can’t. As a form of

practice, some people say to try explaining your business to your parents. I’m

not taking any responsibility if you try this.


I know you believe every pixel on your pitch deck. But assume your reader

is skeptical. Good investors are. When you say the market is a billion dollars,

you’d better back it up. Saying, “if we only get 1% of this market, we’ll be a

billion-dollar company,” is not believable. Neither is “there’s no competition,”

or “this market is ripe for disruption, ” or “we’re first to market.” Find someone

skeptical to review your work. Someone not afraid to tell you what you don’t

want to hear. E.g., your parents.

Tip: When you ask a friend or advisor for feedback, don’t

just look for positive affirmation. Ask for specifics: “How

does my problem slide rate on a scale of 1 to 5? What do

you not like about how I describe the market? Pretend

you’re a skeptical investor and pick 3 things you don’t

believe on my financials.”

Investor: Is the story believable?

This is probably the number one thing entrepreneurs overlook. Investors are

mostly investing in you, i.e. the jockey not the horse. From this perspective

your entire pitch deck is a way to evaluate your talent, intelligence and ability

to execute.

Yes, your financial projections are based entirely on assumptions. You

know that and they know that. So why bother? Because it establishes your

personal credibility. Those assumptions reveal how you think.

This is why, except for copywriting and design, you should never outsource

developing your pitch deck to a consultant.

Investor: Is the entrepreneur credible?


There are a lot of blog posts on the proper order of your slides. Don’t read

those. You can tinker with this later. A good slide deck should flow like a

movie trailer:

This slide ordering is a good starting point:

1. Intro slide - your elevator pitch

2. Problem - an analysis of the problem you solve

3. Solution - an analysis of how you solve that problem

4. Why now - proof now is the time (not later)

5. Traction - what you’ve done so far

6. Market size - what your market is, how big it is

7. Product - the unique features of your product that solve the

problem

8. Team - why your team is the best to do it

9. Business model - your engine for making money

10. Go to market - how you get to your customers

11. Competition - who else is doing this, what alternatives are

12. Financials - how your business makes money

13. Ask / use of proceeds - how much do you want and why?

Whatever order you choose you absolutely must have one of each of the

above slides. Try taking even one out and the entire story falls apart.

In a world full of danger (the problem) but also great beauty

(the market), a ragtag group of rebels (your team) faces

insurmountable odds (competition) in the hope of a better

future (financials). Will they succeed (the ask)?

The order of your slides.


Do not start at slide one and create each slide in the order they’re presented.

There is a better way to do it that builds your pitch deck from the ground up.

Divide the slides into sections, then group related slides together. Each

section has a goal you’re trying to achieve and a self-assessment at the end.

Don’t move on until you’re satisfied with each section. Below, I’ve divided

my slides into 6 sections.

Doing it this way builds a strong foundation of your story and forces you to

think about how an investor hears the whole story, not just one slide. The

“big three” sections cover the problem, the market opportunity and how you

intend to make money. The other sections are about you: why are you the

best person to execute this vision, and what have you done so far?

Describing the need for your product in way that captures the imagination and makes the investor think: the world needs this!

Proving the market is big enough and ready enough to create a space to build a successful company.

Creating a business model and plan to go to market that makes money.

Assessment: have you made the investor feel the pain you’re solving?

Assessment: have you proven there is a big opportunity and the time is now?

Assessment: is your plan to make money exciting, but believable?

The order you should make your slides.

1 Deep Dive on the Problem

2 Selling the Market Opportunity

3 Making Money

Problem

Slides

Slides

Slides

Solution Product

Market Why Now? Competition

Business Model

Go toMarket Financials The Ask


Showing you have the right team to build this company and showing off your early traction.

Assessment: have you shown why you are the best team to capture this opportunity?

Assessment: does your traction show you have momentum?

Assessment: do you have an elevator pitch that is simple and exciting?

4 Proof Points

Let’s dig into each section...

Slides

Team Traction Intro

Deep dive on the problem

CHAPTER01


CHAPTER ONE 01Deep dive on the problemSlides: Problem, Solution, Product

Examples of “who” statements:

The problem

A lot of pitch decks gloss over the problem statement. But if the reader

doesn’t believe the problem there is no point for them to continue. So what

is a compelling problem and how do you put that into a slide?

Start with who.

Who has this problem? The more specific you can be the more compelling,

i.e. painful, the pain point will be like vitamins vs painkillers. Vitamins are

great for maintaining good health, but no one has to take them. Whereas

people who suffer from pain have to take a painkiller. And they need to do it

right now. You want that sense of urgency.. Now describe who has the pain.

Below is a table outlining how sharp you can make your ‘who.’

Bad Better Best

Businesses... Medium-size businesses over 500 employees...

North American manufacturing businesses between 500-1000 employees.

People... Urban condo residents in major cities...

Young parents who cannot afford a detached home and who are raising their first child in a condo.

You cannot have a problem statement without describing who has the

problem


What is the problem?Now that we know who has the problem, we can move onto describing

the problem itself. Do not, I’m seriously begging you, define your problem

statement as a lack of your product:

See how I cleverly inserted my product in there? Now logically the solution

is...VitaPoet! We’re not ready to talk about your product in the story, yet.

I find the Value Proposition Canvas by BMI a good place to start and a great

resource all around. I’ll summarize two key concepts: pains and gains. Your

problem will address one and probably both.

The existence of those pains or lack of those gains causes the dissatisfaction

that your product satisfies.

People don’t have access to a wifi-enabled juicer that can also read poetry.

Defining pains and gains:

Pains are things your customers avoid Gains are things your customers desire

Obstacles to achieving something: ■ “I can’t find what I’m looking for” (search cost

obstacle) ■ “It’s too expensive” (price obstacle) ■ “They don’t make shoes to fit my foot size/shape”

(feature obstacle).

Things they want but don’t have yet, or don’t have enough of:

■ I want to make more money ■ reduce expenses ■ get better insights from my data ■ find more customers.

Emotional pains. This could be fear of missing out, feeling overwhelmed with choice, or risk of failure.

Less tangible desires like “feeling aligned with the values of the companies I buy from.”

Can you talk for 30 minutes about the problem you’re trying to solve without mentioning your product?

http://https://www.businessmodelsinc.com/about-bmi/tools/value-proposition-canvas/


Pains and gains are not hypothetical, they’re currently being experienced by

your target customers. This means you should be able to describe them in

detail. It’s a red flag if you can’t.

Politicians know how to do this. You’ve probably heard a variation of this: “I

think of little Billy B. from Whitby, Ontario whose parents lost their jobs when

the local car plant closed down. They’re struggling to buy school supplies

for their son…”

Make your problem vivid and believable. Do it for Billy.

Examples of problem statements:

Bad Better Best

Kids give up on learning music because it’s too hard.

High school kids lack easy access to music instruction and group practice outside of the classroom. It’s too expensive, time consuming and not fun.

We did a survey of 500 high school kids enrolled in music class as well as their teachers and parents. 80% wanted more opportunities to learn and play music but could not find any resources, or could not afford private tutors.

Air travel is incredibly frustrating. Flying through large airport hubs keeps costs down for airlines but is fundamentally inefficient. You can’t fly where you want to go directly.

There are over 14,000 private runways in the US, which sit unused 99.9% of the time. Flying through regional airport hubs increases travel time, wastes fuel and increases traffic congestion for communities within one hour of major airports.

Self evaluation: Does your problem statement paint

a vivid picture of what it is and who experiences it?

Do you give the impression that you could spend all

day talking about this pain?


What is The Solution?Do not fall into the trap of putting screenshots or product diagrams on the

Solution slide. Why? Because just staring at a glossy photo of your product

does not make it obvious how you solve the problem. No matter how much

you want to show off your MVP, be patient. We’re not there yet in your story.

Before getting into specific products and services start with answering how

you address the pains and gains. What is your perspective on solving the

problem? Eg if your product is a mobile app I’m assuming your solution has

something to do with integrating into a user’s existing routines.

Example: mobile app for runners

Customer experience before your solution

Customer experience after your solution

PAIN: I’m not training properly, missing my race goals and eventually give up

PAIN SOLVED: I have custom training programs based on sports science and data collection.

GAIN: I want to run faster, stay motivated, and meet other runners

VALUE GAINED: I run with an encouraging community, have friendly competition, and improved my running speed.

So far we’ve only described features in general. A lot of entrepreneurs get

hung up describing specific features of their product as the solution to the

problem. To avoid that, use the Easy Button approach:

Your solution should match the problem, regardless of what form your

product takes. In the running app example above, we’re proposing a

solution to runners overtraining by delivering data-driven custom training

feedback. Does that make sense as a solution? If runners could hit a big red

button and get that solution, would they want it? The answer should be yes!

This is sometimes called problem-solution fit in Lean Startup jargon. It

means you’ve developed a convincing solution to a problem before

validating whether specific product features are viable.

If you replaced your product with an Easy Button is it still a convincing solution to the problem?

Self-evaluation: does your Solution slide show good problem-

solution fit vs listing product features? Would the reader be

convinced even if the product was an Easy Button?

Your customers problems

Your solution

Running App

Real-time audio feedback

Artificial intelligence Coach

How your app solves overtraining problem


ProductYou’ve finally arrived at a point where you can describe your product or

service! Most entrepreneurs are pretty good at this.

But wait. I still don’t think you should just have screenshots or photos of your

product or a demo. Why? Because how your product solves the problem is

often not captured in a visual of the product itself.

The diagram on the right is much better at highlighting how your product

uniquely solves the problem. Even if you include a screenshot it will

probably be a small part of the overall impact.

Comparison of product slide designs:


Depending on your business, you may have one product slide or several. If

it’s something novel or highly technical, you can spend more time educating

the reader. But don’t overdo it. As a rule, only show on a slide what

specifically addresses the problem-solution fit. Don’t show anything that any

reasonable person would expect from a product like yours. Focus only on

what’s unique.

It’s not about hiding your product; investors want to see it! It’s about making

sure your images tell your unique story.

Many entrepreneurs include a roadmap for their product. Where can it grow

into? How much bigger can it be? This is good to include, but you do not

need to include your entire product development roadmap. That can be one

of your “back pocket” slides.

Your roadmap should plant the seed in the investor’s mind that your product

can become even bigger and better in the future. They can find out in the

second meeting.

Tips for your product visuals:

Don’t Do

Screenshot of a credit card payment form Screenshot of 1-click ordering button

Picture of a POS system Picture/animation of how your contactless payments work

Picture of your vegan leather wallet Highlight features like greater durability, the ability to make more interesting designs, and a cruelty-free logo

Self-valuation: does my product slide directly tie

back to the Problem and Solutions slides? Does it

show how my product creates value, i.e. solves the

problem? Are any of my visuals redundant?


Chapter One Checklist:

Can the reader close her eyes and see and feel the

problem you’re describing? I.e. is it real?

Have you focused as much on who has the problem as

what the problem is?

Do you describe a solution that does not mention your

product features?

Does your product slide clearly tie back into the problem

and solution?

Do your product visuals highlight how your product

solves the problem, or do they just show off features?

Explain the market opportunity

CHAPTER02


CHAPTER TWO 02Explain the market opportunitySlides: Market, Why Now, Competition

You’ve identified a problem worth solving, and you’ve found a solution that

fits. You’ve described a product that is the next best thing to an Easy Button.

The Market, Why Now, and Competition slides are where you get investors

excited about how big and exciting the market opportunity is.

This is the most difficult section of a pitch deck and particularly challenging

for early stage companies. Why? Because on the one hand, you want

precise numbers to be credible. On the other hand, you’re trying to create a

new market, or redefine an existing one, rather than being a late entrant in a

mature space. You’re not going to find much published research on a market

you create.

There needs to be demand for your product. Otherwise you’ll have no

revenue. How much revenue your investors want is based on the type of

funding you’re after.

There’s gold in them thar hills.- Yosemite Sam


A venture capital firm wants to eventually see huge revenues, so your

company is worth a huge amount, and they can generate returns minus all

the companies they invest in that don’t work out. That’s why VCs need to be

convinced your market is not only big; it’s huge.

Angel investors would love a massive exit, but they don’t have the same

pressure as a VC fund. They’re investing out of their own money and not

competing with other Angels in the sense of needing to generate a specific

rate of return..

A bank or a lender doesn’t want an exit at all. They make the most money by

receiving a regular stream of interest from you over the long term.

You should always find a big market for your business. That’s a good

business strategy. How big the market has to be in your pitch deck depends

on the type of funder you’re pitching.


Market Size

No one likes estimating the size of their market. Stop thinking there’s an

entrepreneur out there who’s better than you because they love market

sizing. It’s stressful walking the tightrope of too big and not believable vs. too

small, but reasonable.

My advice? Always do a bottom-up analysis. This will take way more time

but will help you avoid:

■ Quoting high-level numbers that have nothing to do with your specific business. E.g.

“Internet usage is growing 10% per year” or “The enterprise software market is a $50

billion dollar a year industry” or “every night, 70% of human beings eat dinner.”

■ Showing a graph or a quote from a 3rd party source unless you’ve read the report and

are an expert at its findings. You don’t want a well-placed investor dart to land on this

slide and pop your entire pitch deck balloon.

■ Not being able to react when investors poke holes through your market size analysis.

Poking holes in market sizing is an Olympic sport.

So get comfortable making big assumptions that other people may not

agree with. At least you’ll be able to explain how you got there. It will be your

market, not someone else’s. Here is how to get started:

1. Segment your market. On the Problem slide at the beginning, we already described

(right?) who your customer is and isn’t. You should write down the key characteristics

of your customers, e.g. consumer vs business, location, size, demographics, age.

2. Look for high- level stats from government sources (US Census Bureau, Statistics

Canada, etc), 3rd party research and anything credible you can find on Google. You

won’t find everything in one place, so don’t try. You’re collecting bits and pieces of

information that you’ll stitch together later.

3. Make some assumptions. Only have US statistics? Divide by 10 for Canada and

multiply by 3 for the entire world. Suppose 90% of businesses have no employees

(because they’re sole proprietors or shell companies) and 20% of businesses are in

your sector.In that case, your target market is 18% of whatever number you find for the

total number of businesses.


4. Make some more assumptions. What % of the market do you think has the biggest pain

and will be most open to your product? What % is least served by other competitors?

What % do you think you can reach initially? These are all assumptions, but now you

are truly getting to a market size that reflects how you see the world. Don’t be surprised

if your assumptions lead you to a place you don’t like, e.g. a market that’s too small. Go

back and iterate but be careful you don’t end up describing a world you don’t believe

in.

You might feel that your bottom up analysis is not as good as some research

analysts. You’re probably right. But there isn’t an analyst covering your

space anyways, and if they are, you have to be sure they define your market

segment the same way you do.

For the rest of your pitch deck, the goal is to be detailed and credible. A great

way to establish credibility is to push back on the investor’s push back. Has

an investor thrown out a statistic they read about your space? You’ll be able

to question their numbers by walking them through how you got to yours.


If you don’t know what TAM/SAM/SOM means, read this article. There is an

entire cottage industry explaining this concept, and I’m covering it in this

guide only because it’s become a de-facto standard

■ TAM = total addressable market. This is the total amount of revenue that can be earned

in a product category for a market. This is not your market. It’s the bigger market your

product exists in, eg “all restaurants.”

■ SAM = serviceable available market. Unless you’re a monopoly, in which case stop

reading this guide, you will never capture the TAM. SAM carves up TAM into smaller

chunks, e.g. geographies, e.g. “all restaurants in North America.” This is still a theoretical

market size that you cannot achieve, at least not in a reasonable timeframe.

■ SOM = serviceable obtainable market. This is the actual market you can capture based

on factors like your financial resources and competition. Think of it like your eventual

market share if you are successful.

A lot of people mistakenly think that a big TAM shows there is a huge

opportunity. This isn’t true because TAM is not achievable. If you want

to show there is a big market opportunity, focus on showing there is a

big enough SAM for you to grow your SOM. If there is a crowded market,

what you can realistically achieve (i.e. your SOM) will be smaller due to

competition. See why these acronyms are confusing?

TAM/SAM/SOM, or for the love of acronyms

https://www.toptal.com/finance/market-sizing/total-addressable-market-example


Comparing good vs bad approaches to TAM/SAM/SOM:

All animals

Cost of wildlife

damage to N.

American homes

Urban

Pests

All non-lethal

deterrents

RaccoonsAnti- wildlife

sprinkler market

In the above example you don’t need numbers to see that what’s on the left

is unconvincing. “All animals” is too big and vague a market (even though

there are a lot of them). “Urban pests” is also a big number but too broad.

By the time you get to your SOM, the user still has a lot of questions about

raccoons.


The TAM on the right is better because it defines how much people spend

repairing wildlife damage in total. Of that, some people resort to lethal means

(no comment) and within the SAM are wildlife removal services and other

alternatives. The SOM for your anti-wildlife sprinkler system now makes

much more sense. Even if you defined it bottom- up, it’s tangible.

Self-assessment: can you describe in detail how

you arrived at your market size? Is the market big

enough that you can realistically grow into the

business you’ll be projecting later on the Financials

slide?


Why Now?Markets are not static. If they were, there would be no disruption and no

startups. The Why Now slide is your chance to explain what is changing.

Here are some examples:

■ Demographic changes like longer life expectancy or people having children at a later

age

■ Technological changes like the advancement of artificial intelligence

■ Societal changes like mass adoption of remote working

■ Regulatory changes like increasingly strict data privacy laws

Of course, the most obvious ‘Why Now’ is quoting someone else saying, “the

market for X is growing 20% per year.” That seems to be the gold standard,

and I see it in most pitch decks.

Try to avoid using 3rd party quotes like this because they’re often not exactly

the market you’re targeting. And you want to show how your product is

changing or disrupting your market (or creating a new one), not entering an

already crowded market.

Overall it’s best to describe what’s changing, i.e. Why Now? In terms of

changing customer pains/gains and other high-level changes in consumer

or business behaviour. This is an easier way to make the investor feel FOMO

than quoting an analyst.

Your Why Now slide should look like this and, often combining this with your

Market slide makes it even better:


Example of how to demonstrate “Why Now?”:

This captures the imagination much more than just saying the market is

growing.

Don’t just say demand is growing for your product. Explain the fac-

tors driving that demand.

Self assessment: does your Why Now slide describe

what pains/gains or market conditions are changing

to create the opportunity now?

More raccoons due to

increased urban density

Increasing demand for

wildlife-friendly solutions

New sensor and AI tech


CompetitionThis is second only to the market size slide as the place where pitch decks

go to die. There is probably a psychological basis for entrepreneurs not

wanting to find competitors because it’s too painful. Most parents think their

children are the most beautiful. Few go looking to disprove it.

The number one thing people forget is that the point of the competition slide

is to establish credibility, i.e. your credibility. What’s on this slide (and what’s

left out) tells the investor a lot about you:

■ Have you done your due diligence? I.e. if you haven’t been diligent about finding

competitors, what else are you not being diligent about?

■ Can you explain why you chose certain criteria to compare with your competitors?

Why do those matter?

■ Are you being honest about how you stack up?

Saying there is no competition is saying there is no market, or

there is one you just don’t know about it

Being “first to market” is seldom true, and it only takes one counter-

example to deflate your argument. There are usually better

competitive advantages.


Here are the two classic templates for competitive analysis:

Otherwise known as More is Better, this table compares features letting

the investor draw the obvious conclusion that more checkboxes is better.

Avoid using this for your competition slide because:

■ Features are easy to copy and are not strong competitive advantages

■ The features you list may not be important

■ You’re probably leaving out features competitors have that you don’t

■ You’re implying that it’s a crowded market when the rest of your pitch deck should be

saying your product is new and innovative

Easily

copied

feature

ThemThem

You

Feature

no one

wants

Feature

no one

wants


The other classic competition slide looks like this:

Better product

Stuff they have less of

Worse product

Stuff we have more

of

I call this the Lonely Logo Matrix because you will do anything to make

sure yours is the only logo occupying the top right-hand corner.

The 2-axis map can work if the axes describe criteria that matter and get to

the heart of your problem-solution fit. A good way to format this slide would

be to use half of the slide for this graphic and the other half explaining why

you chose those criteria. I see this in 1% of pitch decks, and they really stand

out for how convincing they are.

Before copying and pasting that logo in the top right, try this self-evaluation

of your competitive criteria:

Evaluating your competitive criteria:

It matters because...Competitors can’t do the

same thing because...

X-Axis Criteria list three reasons list three reasons

Y-Axis Criteria list three reasons list three reasons


Good vs bad competitive advantages:

Bad Good

Features - they’re easy to copy Proprietary IP e.g. we own the patent on this drug

Price A business model e.g. freemium - the competition would cannibalize their market if they did this

Brand Values e.g. we exist to provide tools for women entrepreneurs

Establish competitive advantage

Finally, make sure your competitive analysis establishes some advantage,

not just a difference. Spend some time thinking about things you do that are

difficult to copy or counter.

Self-assessment: have you proven why your

competitive criteria matter? Have you shown

how you have advantages your competitors can’t

duplicate?


Chapter Two Checklist:

Have you done a bottom- up market sizing that you can

explain in detail to an investor?

If you use external sources, are you sure they describe

your specific market and not some big but unrelated

market?

Did you describe things that are changing that create

an opportunity for your product? Not just “demand is

growing by X%?”

Can you explain in depth why you chose certain criteria

to compare yourself with your competitors?

How much time did you spend looking for competitors?

Have you listed competitive advantages that are

convincing?

How do we make money?

CHAPTER03


CHAPTER THREE 03How do we make money?Slides: Business Model, Go To Market, Financials, The Ask

The Business Model, Go To Market, Financials and Ask slides are all about

describing the engine at the core of your business that, eventually, creates a

growing, profitable business.

Most pitch decks I see really miss the mark. We see a lot of random numbers

that are not connected to the rest of the business strategy. If you are an early-

stage company, assume that your reader understands that not everything

will work out exactly as you project. But that doesn’t mean they don’t want

you to convince them that you’ve thought things through.

At some point, perhaps at this exact moment, you’ll feel annoyed that

investors are looking at your financials as if you have a crystal ball. You might

be thinking, “do they want me to lie to them and tell them my projections are

100% accurate?”

As your business grows, the expectation is obviously that you’ll have better

data and more accurate predictions. But at the early stages, you’re being

asked to be diligent with your business model, so the investor feels you’ll be

diligent with their money.


Business Model SlideThis is not your pricing. This is where you describe how you intend to sell

and how it eventually makes money.

■ Will you sell direct or indirect or both?

■ One-time or recurring revenue?

■ Products or services or both?

■ Freemium? SaaS? Ad-driven?

First, make sure you explain why this is the ideal business model for your

business. Every business model will have different components, but yours

should have at least these:

■ How you acquire customers (which you’ll go into more detail on the Go To Market

slide)

■ What pricing model you’ll use, and your initial price point

■ High-level assumptions, or actual data, on unit economics, i.e. the costs to service that

client (manufacturing, inventory, salaries for service staff, technology platform costs,

etc)

■ What improves as the business scales e.g.. manufacturing costs fall as volumes

increase, improving unit economics.

The ideal slide is a diagram showing a flywheel effect, i.e. how your business

gains momentum and starts spinning with less and less energy (i.e. money)

required. You can achieve this in different ways:

■ Network effects or virality in your business (more users attract more users)

■ Economies of scale (things get cheaper as you grow)

■ New technologies (breakthroughs allow you to do things you couldn’t do before or

automate costly processes)

■ Perceived market leadership (people try you first because they think you’re #1)

Lower acquisition costs

Higher margins

Increasing usage

How you acquire customers

direct sales

marketing

partnerships


An example of a business model slide showing a flywheel effect:

Your slide will have actual numbers or estimates if you don’t have actuals

yet. Your flywheel doesn’t need to be the perfect perpetual motion machine.

Focus the investor’s attention on the one or two unique things about your

business model and how you’ll make money.

If you’re struggling with this slide, pick a competitor

and try building this slide as if you were analyzing

their business.

Yourplatform

The

Market


Go to MarketA surprising number of pitch decks omit this slide. That’s a mistake because

after you’ve found a great market and built a great product, you still need

to say how you’ll get the two together. If you build a better mousetrap, will

customers beat a path to your door?

This slide is an extension of your business model slide, which shows how all

the parts of the engine work together to make a profitable business. The Go-

To-Market slide focuses on channels. That is, sales and marketing channels

for how customers learn about you and decide to buy, plus distribution

channels for how your product actually gets delivered.

Many entrepreneurs struggle with this slide because they haven’t spent

much time figuring out a Go To Market strategy. They don’t know exactly

what channels they’ll use, and they don’t know enough about the costs of

each.

■ Digital marketing - if this is one of your channels, you need information on advertising

costs and conversion rates leading to your customer acquisition cost (CAC).

■ Direct sales - there are decent metrics out there about the potential revenue one

salesperson can bring, e.g. 4-5x base salary per year.

■ Channel partners - how much margin do channels take? How much do you need to

invest in these channels?


Once your channels are established, you should build up a timeline that

shows what go- to- market tactics you’ll do at what time, including marketing

tactics, new product launches, strategic partnerships, etc. Like your product

roadmap, this shouldn’t be a detailed project plan. Just show the big things

you’ll do, like expanding to a new country or launching a new integration.

These inflection points will drive changes to your financials, like increasing

revenue.

Besides building confidence that you’ve done your homework, the investor

also wants to check that you have the funding in place to execute this plan.

Most people underestimate the costs of getting to market and getting the

volumes of business they are projecting. Don’t make this mistake. It’s ok that

you can only afford one or two channels initially, but show that you can

expand to others.


The FinancialsThe reason I wear glasses now is because of years staring at tiny numbers

copy and pasted from Excel into the Financials slide.

There are 5 things your Financials slide should do; the rest can be in that

giant Excel file you or your CFO lovingly crafted.

1. Quickly summarize the past. Unless you literally started your business last night, you

need to show a history of any funding, expenses and revenue. When are you running

out of money?

2. Show expenses that match your business model and go to market. Expenses should

correspond to the main cost drivers of your business model: e.g. software development

or manufacturing or advertising. Don’t just put “salaries.”

3. Show revenue growth that follows from your business model and go- to- market

strategy, e.g. when do you start seeing the impact of investments in your marketing or

have new product launches?

4. Show the size of your losses / negative cash flow. This equals your need for funding.

Show what the new funding does, e.g. gets you to breakeven or a growth milestone to

raise more money.

5. Don’t show monthly or quarterly projections; it’s too much detail. Annual is enough

unless you’re about to hit an inflection point (like breakeven) within 12 months.

Idea: create a plugin for Powerpoint that disables pasting from Excel.

Expected outcome: many more startups get funded.


The AskThere is no reason not to have an Ask slide in your pitch deck - even if you’re

doing “informational” pitches. The Ask is the whole point of the pitch deck.

The number on this slide should say, “this is what we need to achieve our

vision and build something huge.” The amount you’re asking is an important

signal itself. If you’ve painted a huge vision and showed great traction but

you’re under-asking, the investor will wonder why. If you’re asking way too

much you’ll leave the impression that only throwing lots of money at the

problem will solve it.

If you’ve done the work on all the other slides in the deck, then:

■ The amount you’re asking should be related to ballpark losses / negative cash

flow you need to fund to reach our next milestone. Don’t just say “$500,000”

because that’s what you heard a pre-seed round is these days. I’m not saying to

ask for the minimum.

■ For the use of proceeds, avoid generalities like “salaries” or “working capital.”

List the top 3-4 things (that were already established on previous slides) that

you need to do with this funding. The use of proceeds should buy a result.

A lot of entrepreneurs ask if they should state details like their valuation

in their deck. My advice is to state your valuation if you have a funding

round in progress. Why not? Otherwise, I would leave it out because it’s not

necessary for your story. If they’re asking you for your valuation, you’ve done

something right.


Chapter Three Checklist:

Does your Business Model slide show how you make

and spend money, or is it just your pricing or revenue

model?

Does your Go to Market slide show the costs of using

different channels, even if they’re assumptions?

Have you summarized your financial history in your

Financials, so the investor knows where you are

currently?

Do your Financials show changes like increasing

sales and increasing or decreasing expenses based

on inflection points in your product or go- to-market

strategy?

CHAPTER04Proof points


CHAPTER FOUR 04Why You?Slide: Team

Pretend you are an investor. Now pretend you were pitched your idea by not

one but three different teams (your worst nightmare). Assume they are all

just as competent as you.

This is the right mind frame for your Team slide, aka Why You?

Reid Hoffman did you a huge favour by inventing LinkedIn, so you do not

need to put your entire CV on this slide. Put a headshot (do not think about

not having your photo) and a link to your LinkedIn page.

Then focus everything else on why you and your team are better than those

other teams pitching the same idea. PhD in your field? Check. Worked as

a commercial pilot for ten years before coming up with this drone idea?

Check. You’re a level 90 Druid in WoW, so you know all about virtual

currencies and the need for an exchange? Mention that!

I’m definitely not saying that you need fancy credentials or decades of

experience to be successful as an entrepreneur. I started my first software

company right after graduating with a degree in Classical Music (a fact that

has appeared in my pitch decks, never). Anyone can start a company and be

successful, which is how innovation happens.

Name, Role

• Relevant skill • Unique experience

• Useful track record

Combined

Expertise

Superpower 1

Name, Role

• Relevant skill • Unique experience

• Useful track record

Name, Role

• Relevant skill • Unique experience• Useful track record

Superpower 2

Superpower 3

Our team


But you still need to answer Why You? You can do that by listing unique

experiences, credentials, and even your passion for this space. Unlike some

people, I think listing key Advisors can give this page a boost as long as

they’re credible.

I think the ideal Team slide has two or three short bullet point bios of your

key team members - the same for two or three key advisors. Then a couple

of summary statements about the “superpowers” of this team.

Example Team slide layout:

Do not list every person on your team or include

all their bios. Just mention what they contribute

to your team, eg “2 engineers with supply chain

experience.”


TractionSlide: Traction

If your pitch deck is how you ask an investor to take a leap of faith, then the

Traction slide shows everything you’ve done to minimize the gap you’re

jumping over, e.g. by getting a running start. Some people begin with

the traction slide if they have metrics that will grab an investor’s attention.

Other people think it’s jarring to start with proof points before you’ve even

explained what you do. Sometimes it’s the ‘wow’ factor you need at the end

of the pitch.

I like to put Traction after Why Now but before all the numbers on the Market

slide. If you’ve gotten their attention with your problem, solution and the

urgency, then this slide says ,“Look, we’re already making great progress.”

What counts as relevant traction? Only what proves that the assumptions

of your business model are true. Revenue may not be relevant depending

on how it’s earned, e.g. a one-off contract vs a repeatable client. User

engagement is usually top of the list. What shows that your users love your

product, can’t live without it and are willing to pay? If you are a science-

based company, research and development milestones show traction.

Traction means “grip,”e.g. a tire on a road. Instead of thinking about the

biggest numbers you can find, use numbers that show your product is

starting to achieve grip with your customers and market. Grip is what starts

to turn the flywheel.

The earlier your business, the more that traction is a story, not a spreadsheet.

But if it’s a story based on real data, it’s just as compelling.


The IntroSlide: Intro or Title Page

This is also known as “we’re waiting for the partner to join so we might

as well look at something useful.” If your pitch deck is being read, not

presented (like on Hockeystick), this is actually an important slide. Your

reader may be on her iPhone making a quick decision whether to keep

reading.

A lot of pitch decks waste the prime real estate on the first slide. Having

a giant logo, a fancy graphic and a tagline sure looks like the title page

of a slide deck. But who cares? There’s only an upside to using the first

impression to encapsulate what you do, where you are and what you’re

looking for. Don’t worry; you’ll have the rest of the pitch deck to tell your

story.

https://hockeystick.co/


Big

Logo

Logo

Company

Name

“We build the future, now.”

Logo, usually too big

Unnecessarily large hero image

Redundant company name Cryptic tagline

in big type

Protecting homes from wildlife damage

using non-lethal technology.

Tested in 1500 homes, partnership with

5 major landscaping firms

How to build your title page:

Do not put a tagline on your title page or intro slide.

It’s confusing.

Raising $1.5M Series A

Huge

Image


Chapter Four Checklist:

Does your Team slide answer the question: “Why You?”

Have you included a summary statement about what’s

so special about this team?

Does your Traction slide show you have a running start?

Have you chosen relevant metrics or milestones that

clearly show your business is starting to work?

Is there anything on this slide, like logos, that look good

but don’t show “grip” with your customers and market?

If so, remove them.

Is your title page useful, or just pretty?

Can the investor understand what you do on the first

page?


Putting it all together.

You’ve built, or re-built, your pitch deck from the ground up. Your story is

detailed, compelling and coherent. You’ve given yourself the best chance at

capturing an investor’s attention and getting to yes.

You’re only a few steps away from first contact with real investors.

1. Take an honest look at your design. If you’re blessed with innate design skills or have

access to a designer on your team ,your deck is probably good enough. Don’t waste

time on aesthetics. But if your idea of design is sourced entirely from Powerpoint

templates, it’s time to get help. Get on Upwork or hire a freelancer. Don’t spend too

much, but don’t assume a smart investor can see through your ugly design. They can’t.

2. Write speaker notes. Most of this book has been about creating a pitch deck that can

stand alone without you being there. This is the best approach because you won’t be

there when they review the deck after you leave. But you can add life and colour to

your slides by emphasizing certain points or going deeper on a bullet. Get those ideas

down in your speaker notes. Then be prepared to improvise.

3. Practice in front of a hostile audience. You may think you are your own worst critic,

but nothing bulletproofs your pitch more than asking people to interrupt your flow,

question your assumptions and say they outright don’t believe you. You’ll probably

hear those words soon enough. Get a head start on how to respond.

This is the end of Pitching a Leap of Faith but just the beginning of

your fundraising journey. It’s a journey that doesn’t end with you

successfully raising money. Because as your business succeeds

and grows, you’ll soon be making another pitch, but for even higher

stakes. There are different strategies and tactics to raising larger

and larger amounts of funding. But at the core, the skill of pitching

is exactly the same. It will always be about convincing someone to

make a leap of faith.


About the Author

Raymond Luk has been a serial entrepreneur and investor for the last twenty-

five years, focusing on innovations in entrepreneurial finance. He is the founder

of Flow Ventures, a financial advisory firm for startups. He pioneered the

venture co-creation model as co-founder of Year One Labs. His latest venture,

Hockeystick, is disrupting how small businesses are financed using data and

matchmaking technology. He lives in Toronto with his wife Elle who is a fashion

entrepreneur.

About

Hockeystick helps startups and small businesses raise the funds they need to

grow their business. Hockeystick eliminates the pain and stress of fundraising

by connecting companies with the right funding at the right time.

www.hockeystick.co

http://www.hockeystick.co

pitching a leap of faith - go.hockeystick.co

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