Why You Can’t Fund a Pitch Deck

How do you do convince an investor you and your team are the ones that have a plan that you can execute?  One that not only makes sense but provides a reasonable return on their investment?

Mentoring in several programs and with my own clients provides me a unique opportunity to see hundreds of pitches from a variety of businesses.  From college student/professor groups to start-ups to small businesses seeking funding or validation I have seen a wide variety of pitches and reviewed even more pitch decks.  They vary in purpose from explaining a technology, to marketing a service/product, to obtaining funding from a grant program, to pitching for seed and later round funding.  Some have been good, some have been bad, and some have been really, well, Lean.  Today many entrepreneurial programs are built around the Lean Start-up methodology and, while it has a solid process in the Business Model Canvass, it relies heavily on the pitch and pitch deck.  Entrepreneur’s are ingrained into the pitching mindset while they move through the process of validating whether or not their concept has a good market fit. Whether going lean or just seeking funding all small businesses are told to prepare a pitch deck.  In the end they may have a great product and a well practiced, well developed, perfect pitch. They may even be able to obtain grant funding through various programs if they have properly tailored their pitch to the institutions requirements and needs.  Depending on their funding needs they may be able to build a prototype and/or pay for some intellectual property protection.  What they don’t have in the vast majority of cases is a business ready to be funded. A business ready to implement a plan to success. 

In pitch after pitch, application after application, I am able to tell whether or not the pitch has any real depth behind it.  Has there been research and consideration towards things like the actual market size during the first 12-36 months?  Are projections based on capturing a percentage of a well defined reasonable market size?  Is there any analysis of competition?  Not just what competition does poorly, but why they keep doing if it is so bad?  What does the competition do well and why?  Has there been any research and consideration into the use of funds and resources during the initial implementation and growth phases of the business?  How many people are going to what?  Where?  Why?  How about things like contract manufacturing and logistics?  Does the use of resources have a solid relationship to the market share capture rate?  Is there a thought out marketing plan that considers different channels.  The list goes on.  If you want someone to invest in your business, whether it be a loan, a guarantee, equity, or some other arrangement most are going to want to know that you understand these things in order to ensure you can protect their investment and provide them the return they expect..

So back to the original question.  How does an entrepreneur accomplish this and find the right investment partner?  You do it by developing a well thought out plan with reasonable detailed and modeled financial projections.  Something that can be defended when the questions start flying.  Only once you have such a document can you develop an effective Executive Summary and a pitch deck.  If you start with a pitch deck and work backwards, sophisticated investors will see right through your plan, no matter how well you can present it.  As soon as they start asking detailed questions, the real depth of your plan will be highlighted with every answer.  Remember, most potential investors do not have the in-depth understanding of your business nor your market.  They will ask questions you are not prepared for if you don’t have a detailed plan.

Without such a plan, convincing someone to write you a check big enough to implement your dream is mostly just that, a dream.

Mitchell Bolnick – The Excel Consulting Group