My criteria to invest are the founders. So I won’t check any business plans, any economic projections, spreadsheets; but (instead) I focus on the founder’s mindset (and) passion.Taizo Son, the brother of SoftBank CEO Masayoshi Son, is the founder of Mistletoe, a venture firm that also is partly an accelerator and incubator.
Let’s review what the investors know about your startup so far:
- They know the name of your startup and your vision statement (or tagline) – if you are lucky, the investors have probably heard of you, or you had an awesome introduction by someone that they respect.
- They also know about your media mentions, any awards you received or if you have been in any accelerator.
At this point, the investor is intrigued to know more. At the back of his/her head, they have made a semi-conclusion on the sector or industry and your startup’s promise based on their experience with other similar startups or previous investments.
Most startup will go from the cover slide to their market gap or problem statement slide.
When I first started consulting clients on their pitch decks, I used to do the same. Over time, I noticed that somehow through the problem slides, the conversation or pitch will always pivot to the team. When it happens, the startup will normally skip few slides to their team slide. It’s a messy process. If the founder is not good in being flexible in his/her presentation, this can cause the whole pitch go downhill real fast.
It took me a while to figure out why this kept happening. It became obvious when I looked at it from the investor’s perspective. He/she probably have seen similar ideas/products pitches before and they are more interested to know why you and your team is the best to execute the idea.
For most early stage investors, it’s important that the pitch starts with a team slide. That’s how they get a better sense of who’s sitting across the table from them. They want to know what’s your experience and expertise in the industry or sector you are pitch in. In other words, it helps them to contextualise the upcoming slides.
If you are a late stage startup (series B or above), it’s okay to move your slide to the last slide before your ask. You have already proven your ability to build a business. The investors are more interested if you have the right strategy to scale your startup and increase traction quick (i.e. the J curve growth).
Experienced investors make decision based on the jockey – not the horse.
In other words, the real unfair advantage that you have compared to other startups who are competing for the same investor’s money is your team. Investors call this execution risk. The lower the execution risk, the higher the likelihood of them investing in you. They know that a great idea with poor execution would not go anywhere. But an average idea with great execution could become successful.
When I started, I thought ideas were overrated and now I think ideas are irrelevant. It’s about execution and the personality of the people, rather than about the idea.Veteran Israeli entrepreneur Yossi Vardi, who has invested in 86 startups, of which 30 made exits.
What are the investors looking for?
Before we get into the design and content of the team slide, let’s dive deeper into the thought process of the investor while they are listening to you talk about your team.
Investors are looking at the past experience of your core team.
- Investors are trying to access if you and your team have experience in similar role before. If you are in a niche industry (say, medical tech startup), they are looking for any prior experience within the industry. Investors want you to put their money to work and make more money, they don’t want you to learn about the industry with their money.
- It’s actually good if you have worked with your direct competition before, or within a company with many products (eg. Google). This was something I realised after a year into helping startups to raise money. Just be prepared to answer how are you creating a product that is better than your ex-company as it will be the next question.
- If you have a patent or potential patent under your name for the proprietary technology that you are using, then you have a big advantage here. It’s hard to find anyone who will have more expertise on the technology compared to you.
- It’s also a bonus if you have been a top performer in your past jobs. Any past success stories such as working for a startup that got acquired, or being the #2 to a well known CEO are considered attractive for investors (as it shows that you can execute and make solid decisions that brings the startup to a good exit or grow faster).
The investors are looking at the ability of your team to work together.
- Even if you are a good executer of an idea by yourself with good past performance, a team that can’t work together still pose a big execution risk when it comes to investing. The investor is investing in your team – not just you.
- Some teams might have a composition that is heavy on the sales and business development (i.e. hustlers) skills but no product or finance person. Even if you have a team of ex-Google or ex-Facebook employees, it’s risky to invest in a startup with no diversity in talent. Investors are looking for teams with a good mix of product, sales and finance background.
- How well do you guys work together? This is a very subjective variable to measure. So, the closest proxy to measure this is to look for founders who have had past experience together, or worked under the same company before. If you have worked with each other in any previous venture or job for more than 2 years, it’s considered a safe bet. Some investors also appreciates the softer side of this where the founders were college roommates or grew up together, etc.
- Most investors have no problem if your cofounder is your spouse or someone in your family (eg. your brother or your sister, etc). What needs to be highlighted when this happens is who has the final word when it comes to decisions (and why).
They are also looking for the good advisors and past investors.
- If you have a line up of experienced investors and advisors, it increases your social proof immediately. You are pre-qualified by them.
- Your investors and advisors are your extended team members. In the case you need to get an introduction or some sound advice on a strategic decisions, a good collection of advisors shows that you have less possibility for a wrong execution (less execution risk).
If you are young, they are looking for good educational background or leadership experience.
- Generally, investors will consider the points mentioned above first. In the case if you are young founder (say, you are still in university), they will look at your past entrepreneurial experience (eg. started an online shop in Etsy, failed startup while in high school or even being an intern for a well known CEO) and your educational background (e.g. winner of multiple hackathons, or the best coder in your university).
- Be ready to tell a story about your background if you are still young. For instance, mentioning that you have online shop in Etsy is less attractive compared to telling a story of what you have learned and how did you overcome your challenges while running the online shop.
“We invest in people first, idea second, market size third. It’s our belief that the idea that we’re seeing is going to morph so much that we should not get wedded to the idea, we should get wed to the individuals”.Ron Conway, a ‘Super Angel’ in Silicone Valley
Bad examples of the team slide.
This is probably the worst way to present your team slide. I have seen a lot of traditional businesses (eg. wine shop, manufacturing factory) use this design to show their team. This is an organisation chart – not a team slide. Keep this within your HR department. It should not be anywhere close to your pitch deck.
This is better than the organisational chart example. But, it lacks the answers many of the 4 things that investors are looking for (mentioned above). The information provided to the investors here is so scarce that they are probably left with more questions than answers.
If your team slide looks like any of the above, you need to change it. Now.
Lets look at some venture funded startup’s team slides that worked.
LinkedIn’s Series B Deck
Reid Hoffman’s comment on it: “After myself is Sarah, who made sure our operations could run to scale. Next was Allen, who showed experience in the social space. Jean-Luc showed deep technology capabilities. Konstantin showed startup experience and an understanding of product-market fit. Eric also showed deep technology capabilities, proving our technical chops. And Matt was a talented generalist who worked closely on this deck and financing process with me. Additionally, Matt came to the majority of the pitches.”.
This was LinkedIn’s slide from 2004, and it not unusual to have slides with no visuals back then. If you put the design aside, the information covers most of the investors concerns. It also shows that this team have low execution risk (past experience, diverse group of people, exits and prominent ex-startups). Also, I love how Reid literally said in the title that the team has strong track record.
Note: This was slide #34 of his deck cause it’s a series B round where they have already established the ability to execute.
WeWork’s Series D Deck.
This slide was created in 2014, and of course it carries similar information the investors are looking for but with better design than Linkedin’s slide.
Dropbox’s Seed Deck.
Dropbox’s team slide is a good example for young founders. They have used their education and prior experience while growing up as a way to answer the investor’s concerns. It’s also a nice physical touch to show the picture of them moving into their first office.
Intercom’s Seed Deck
Intercom was started by people who have worked together in previous startups together that got acquired. This is a really good indicator for investors, especially if you are a seed startup.
Some finer details.
Before we get to the structure and design that worked for my clients, let’s go through some technical details that you have to know. These details will help you to answer questions from investors about your team and create the slide that works for your startup.
- The most important thing to keep in mind while deciding what goes into your team slide is to answer why your team is the best team to execute the idea. So, sometimes you will end up omitting certain achievements or certain qualifications cause it’s not relevant. You need to decide what story do you want to tell with your team slide, and make your decision based on that. Do remember that the slide is not a cv.
- Good war stories are awesome while you are pitching (See interviews by AirBnB’s founders – they have awesome stories about their early days). It helps the investors to get an idea about how do you guys work together. We normally create an outline of a good story to tell to the investors when it comes to the team. Investors tend to remember the story although they don’t remember the names of your team members. When they talk about you to other investors or their peers, it’s the story that will be discussed. So, choose the story carefully.
- If you are early in your startup journey (i.e. before series A), avoid mentioning anything about your board of directors. You shouldn’t have a board when you are that young – it might end up being a negative indicator. Some investors have expressed to me that it shows that the startup founders are more concerned with their corporate structure instead of figuring out how to grow faster.
- If the investors ever ask you about how much advisory shares you have given out, anything more than 1% per advisor is a negative indicator. The average is 0.2% to 0.5%. It’s also smarter to give a low percentage (<0.2%) to your advisors and giving them a discount to invest into your startups. It’s a big point if you have advisors who have become an investors or co-investing in the current round (shows confidence from the advisors on your growth potential).
- 1 out of 10 startups that we consult have the perfect team. It’s okay to have a team that have some talent missing and to be hired. As long as you address it through your ask slide by mentioning some amount of the money raised will be used to fill the holes in the team, you will be okay.
- Do know that you might not have the ability to present your slide to the analyst who will be working through your slides to create the investors memo. So, make sure that you also show the slide to someone who has no idea about your team and ask what they think. It will show you if your team appear strong or weak.
The Team Slide – Improved.
The team slide is the one of the slide, other than problem slide, that we spend a lot of time iterating and customising. The above slide design is our starting point, but we might end up with a slightly different based on the startup’s strength.
We normally force the startup to highlight 6 to 8 members of the core team if they have a big team. It’s impossible to show off all your team, so it’s important to be concise and be able to tell a story through your slide.
We also use a subheading to help with framing the slide. For example (based on the above example), you will start off by saying: “We have a strong team with a combined 12 years experience in XYZ industry with a total staff force of ##. I am the CEO, with experience in Company X as (your past job). I met my Co-founder 2 at conference X 3 years ago. He was working at company Y during that time as the (job role). He was on the best engineer there. During the conference we started talking about the idea of …”. So, the subheading allows you to frame your team before going into your story.
Sometimes, we also change the job title field with something with this format: Role, responsible for… (eg. Chief Growth Officer, Responsible to explore new acquisition funnels and ways to keep LTV at USDxxx). This works well for early stage startups.
We also have been linking the name text to the LinkedIn profile of the team member as it helps the analyst know you better. We use logos to indicate the past companies as it allows the investors to skim through fast. A word of caution: investors might know your ex-boss or the company that you have included in your past experience. It’s not unusual for them to reach out to get an opinion about you. So, if you are unsure about your work in that company, remove it from your slide.
We keep the advisors and current investors column to just single bullet points.