For the second part of this, I’d like to focus a bit more on the content, as opposed to the look and feel of it as I described in my earlier post. So let’s start with market size and addressable market and we’ll go from there…
1. Market Size
So you’re in an accelerator; which means that the likely expectation is that you’ve got a highly scalable idea and business model in a billion dollar market. Great. But so do the 60 teams that just came out of Y-Combinator and every other accelerator around the country pitching IT startups. So how can you separate yourself from all the others? Show some focus.
Please don’t do this.
As I said above, it is assumed that you’re in a market that is >$1B. That’s just table stakes. So rather than stand up on stage and claim that if you can capture just 1% of the market that you’re a $10M revenue company… show some focus. Present your addressable market. If you’re a B2C play and starting your business in a region like Central Ohio, show us how big that market is. If you’re a B2B play and your target customer is mid-size retail businesses, show us what those numbers look like. The point is pretty simple. Stand out from everyone else by showing the audience that you’ve identified not only a target customer, but also an addressable market where that individual/company and others like it exist. You’ll be better off for it. People might even think you know what you’re talking about (cause you will).
I’ll continue the recurring theme of raining on your parade by breaking more bad news to you; it’s very tough to be truly disruptive (if you really are, let someone else label you that before you claim it by the way). There’s probably someone else out there working on something similar to what you’re doing. But there is hope. This is the section of the presentation where you get to tell us why they all suck and you’re going to win.
Like anything else, there are ways that you can do that, and ways that you can do more damage than good. Effective ‘Competition’ slides for me are ones that display choices. The people that swing and miss on these are the type of companies that give the signal that they are everything to everyone. They check every box in the chart to show that they do everything that the competition does, but have added the one magical feature that is going to tilt the scales.
This doesn’t help either.
Maybe it’s just a personal opinion, but I think that approach does more damage than good. As an investor, I like to understand and to see your choices. I think that it is great when a company doesn’t check a box because they feel that a competitior’s feature doesn’t add value and instead they’re placing focus on something else. The big takeaway here is that as a small startup, you can’t be everything to everyone. And maybe it’s just me, but I tend to be drawn to companies who realize that they can’t be, and have taken the time to understand and place emphasis only on the things that will help differentiate them and make them successful.
(One cool other suggestion: if you find yourself in a space where exits are coming fast and often… it doesn’t hurt to show some comparables and bring that up. Investors like to know that an exit opportunity exists in your future. See? Not everything about your competition has to be bad…)
3. Financials & the Revenue Model
Listen, we know you’re full of crap. You know you’re full of crap. So when approaching this part of the presentation list or state your assumptions so that we can at least follow along. Some disclaimers: A) It’s not necessary to put up a hockey stick growth chart on the screen. And B) If you put up a fully baked spreadsheet on a slide the numbers will be too small to read anyway. So try to display the basics of the business model. Answer the simple question of how you will make money. Give the audience an idea of when you think you’ll start generating revenue, and if you want to get ambitious maybe discuss at what point you think you can break even and start turning out a profit. Long story short, as long as the business model and revenue models makes sense and sound like you’ve given them some thought you’ll get by here. Just don’t present anything outlandish, and you’ll be fine. Save the heavy financial breakdown for an actual investor meeting.
4. The Ask
Aka, the end-all, be-all to every demo day slide deck. At 10-xelerator we tend to put the ask in our teams’ hands. I’d love to say that every company coming out of our accelerator is ready to go out and raise their seed round… but it’s just not always the case. Napkin-type companies only have 11 weeks and their goal was probably to have a beta ready by the end of the program, not fundraise. Even more, pivots are simply unpredictable and can flip any company and its business model on its head. Or maybe, just maybe, you’re one of the lucky few that have already received their seed funding and are grinding away already.
It is for this reason that I tend to advise teams to own and shape their ask. But before you do this, do your homework first. Take the time to know who is in the crowd. Go find the program coordinator in the days before. Find out who is on the guest list. How many investors are attending, who they are and go find out what they’ve invested in. Understand the size and type of investments that they do. On the other hand, find out if there are corporate executives in the crowd who can make connections for you. If you need introductions to customers, these are great people to ask for them, so be very clear who those customers are. Maybe you need an advisor with some very specific industry experience. So ask for an introduction from someone in the audience if they know anybody. If you’ve done everything well up until now, and sold them on your problem and innovative solution…they’ll likely be willing to do these things for you. Crazier things have happened.
But if you are ready to discuss fundraising, here are some of my thoughts. Investors like to see different things, so my comments here are mainly valuable for this region of the country (the Midwest). Here investors like me are interested in milestones. It is the answer to their questions of ‘How long will it take you to get there?’ and ‘How much will it cost you (or really them) to accomplish that?’ As I mentioned above, if you’ve done well up to this point, there is an inclination to believe you are capable of achieving these milestones. But be specific about your needs and what the results of the investment will be. If you’ve got a preliminary capital access plan, even better. We’ll know the timing is probably way off, but it’s nice you’ve thought about it. The simple final takeaway here is to list a few specifics of your intent with the round that you are raising. You don’t need to list all of the details, so just touch on a few high level things.
In the end, demo days are probably one of the most fun experiences that an entrepreneur can have in my mind. So if this blog finds you lucky enough to be preparing for one, try to take a few moments in the weeks preparing and especially during the demo day to reflect on what you’ve accomplished in such a small window of time. I wish you luck and success in the pursuit of your dreams.