Transcription
Okay, today we are going to be looking at this pitch deck. This is part two. In part one, I already walked through the basic fundamentals of the deck, simplifying it down, problem, solution, market size, where we focus, we looked at other parts. We know that we want to raise $1.5 million and we want to figure out what is go to market strategy, getting customers, and then figuring out what type of traction, how do we communicate, and then also investors. And I'm going to present something that has worked fantastically for other companies that I've worked with that have questioned why are we going for VC when there is a plethora of investment that could be had in other places especially with customers.
So customers as investors and I have a lot of data a lot of receipts to be able to talk about this. If you are out there, you have your own pitch deck that you want critiqued and reviewed, send it on in. If you're watching this on the socials, leave a comment. If you're part of startups.com, email it to us and we're able to do it in this format. We also have analysis tools to be able to help you. We've helped hundreds of founders raise funding. I work with the team that has raised over $750 million for startups, other startups, and those startups have gone raised more by going public, billions of dollars. I personally raised over $100 million for my startups, other startups as well as startup funds. And here we talk about all the lessons and especially if you're looking for VC.
Let me give you some stories here of how I'm going to set this up. One recent company just came to me. They have been trying to fundraise for a real estate property tax solution and to no avail from VCs. Not enough traction. The idea is going through several iterations and pivots and the founder is still trying to figure things out. But to this founder's credit, he's been working hard getting VC meetings and genuinely because we've helped him get those meetings through proper communication and streamlining his pitch deck to be cohesive. But he's getting okay interest, nothing confirmed. But then he recently got the first $40,000 investment from a customer who is in the industry that is going to unlock more.
Another example, got two more. A dental tea dental health company that we were working with helped them with their pitch deck. They started going raising from VC and they actually potential unicorn. They hit a million dollars a ARR like a million dollars. Forgive me, not ARR. Actually, I think it might have been ARR because they had a monthly thing going on, but it was kind of a mixed business model where there's a big set of fee and then there's an ongoing. And dental health, you just keep doing it over repeat business. They hit a million ARR, million dollars in revenue in 90 days. They went out and started raising VC. Great story. We can put it out there. Then what ended up happening was their doctors in their network, their customers, providers were offended and said, "Why are you going out and raising VC? Aren't you bringing us this opportunity? We're the ones making it happen. Raised 11 checks at $55,000, $50,000 a piece. And then they didn't have to raise anymore. They used that money and technically it's bootstrapping. It's friends, family, and associates investors kind of in there. It might even be seedstrapping. And then they haven't raised again. They just said, "Well, you know, we aren't getting the best terms." And now they've hit multiple. Like I believe they've at least doubled their ARR or got to like 4 million, something ridiculous. I can't remember the last stats but very impressive. So another example of not having to go through VC channels because the expectations are different and the understanding is different.
Another dental equipment provider but more like enterprise resource management on the back end I spoke with or I advised a couple years ago did the same thing trying to provide dental equipment backend office sort of a software SAS layer to order supplies. Their customers became their initial investors. This is powerful because trying to get a VC to understand the potential of an industry like that's a to-do but trying to get customers, your providers, network partners to understand that's less of a lift and they believe they can participate in helping you become successful. And every VC asks four questions. Why now? What's different? And why you the secret question that most founders don't consider that they're asking is why me? What can I do? How can I get my hands dirty? Now, that is dirty money. The hands dirty. Roll up the sleeves. Get in there and just work the startup. People in the industry with money, especially if in your in an industry with high net worth individuals such as dentists, doctors, and in this case, financial advisors, it makes sense that they would want to invest because they've got FOMO just like everybody else. They're working in the industry and they're watching all the people who own the companies they're working for or all the suppliers, all the distributors, the people who run the software. They're watching these individuals get rich. So, why not me? And now I get a chance with something I know because they're not going to take their money and just dump it into a stranger startup and they're used to working inside. They're like operating partners in a private equity firm. And therefore, they get emotionally involved. And once you get an investor emotionally involved, they'll refer people. They'll be there for late night phone calls, everything. So, there's a bit of a lesson for you to really consider, especially if you're doing some type of SAS, how can I get other types of investors involved instead of doing the thankless insufferable journey of trying to get VCs interested? In this case, financial advisors as we're talking about.
Now, let's review from last time. This cover slide, we need to get a better one-sentence explanation. All we have to do and clear everything up, streamline it. Next, we need a better summary sentence right at the top that's not esoteric that if I didn't read any of this other stuff, I understood what the problem was from this one sentence. We talked about this and last time we boiled it down to saying, "Hey, let's just say that X number of advisors waste billions of dollars per year on generic digital marketing when emails, personalized emails and direct contact building relationships is what customers are looking for, then we're going to go to the solution slide. If the problem is that we're not sending customized personalized emails, instead wasting on digital marketing, generic stuff that doesn't get attention, the solution needs to say we have an email tool that makes it feel like people are getting individualized messages, therefore increasing revenue by 17%." This was supposed to go traction, but here I like this number. So, we just have to say we have a tool in one summary sentence, everyone. We don't need this in one summary sentence. Our AI powered engagement tool sends these emails that reflect one-on-one relationships and grow everything by 17%. It's all we have to say. So, we're setting this up. This is how simple it can be.
Now, let's stop for a moment. I'm going to set you up. We're going to keep going on this journey of not just customers, but also investors. When you hone your pain point down to one sentence, people can remember it and it lands. Customers will say, "I got that pain point. Sign me up." Because you don't have to convince them anymore. You can literally say how many billions of dollars being spent by your firm and it's not coming out customized. I work with a company and they've been negotiation or they already landed or at last they were talking to Morgan Stanley. Morgan Stanley said we have so many regulations terms of content that people can put out. Therefore, this is a Y Combinator company. They just got a YC. They're doing 44,000 MR I believe. They're saying to themselves, no 14,000 44,000. I can't remember. I keep misquoting. I should go look it up. Forgive me. Hey, you know who you are out there. Forgive me. The issue that Morgan Stanley said is we need people to market themselves, but it has to be personalized because sending out something from Morgan Stanley, that only gets us so far. But there's so many regulations and rules. So they built an AI that allows people to write LinkedIn posts and because of the lack of genuine individualized like the person is writing themselves, everyone's just looking at AI slop. Well, that's where these conversations start to occur. So we know this is an issue. Morgan Stanley knows it's an issue. Every financial advisor knows this an issue because they've been struggling with it. So once you sharpen the tip of the arrow and you explain problem solution and I keep hammering this over and over and over again, do yourself a favor, sharpen that first initial approach so people get it right away and say I got this problem. That's what leads to product market fit because they start running to you and saying thank God for you solving this problem we haven't been able to figure out. On top of which when you say the solution increases revenue by 17%. The investor starts to think well people are going to line up for this customers go, "Yeah, they know what 17% looks like for them. That's a significant amount of money." Let's say the average financial advisor, let's say, makes 100k. All right, I might be being aggressive with that. Even if it's 50k, but at 100k, 17% is $17,000 a year, that is significantly lifestyle changing money. Even making half of that, $8,500 per year, that's a car payment. All sorts of different good stuff to happen. That's why you have to get your first slides, problem, solution, market ready, and eliminate the fluff. Don't be cute and clever. Be clear and concise.
Now, we combine those forces and we say, "What about the customer who could be an investor?" That's when the pennies start to drop. Especially with this founder's background and pedigree, proof. Everyone, I see you in the audience and I know a lot of you are doing these types of solutions that end up with results. You have to come up with proof. Either social proof where you have qualitative data or quantitative data. Do yourself a favor, put the hardcore numbers down and make it real so that investors go, "We're not joking around here. This is not just an idea. It's actually been battle tested." Then we have TAM. We talked about how TAM needs to be all your advisors that could pay for this and then how you are going to charge them and you multiply two numbers. That's your TAM. Your SAM needs to be what is the segment of the market that we can focus on because of a business model insight, some type of hack. The laziest form of this is geography, by the way, which I'm glad we're not doing this. But let's say the SAM is 531,000 licensed CS advisors. Then you put the price, what you think you're going to spend on average with them, and then that equals your TAM, right? What you're making per year. The SAM, let's segment it and let's just say we're going to go for tier 2 adopting technology or something like that, right? Maybe you've identified a group that have adopted mass email technology, but it's not working. SOM is what you'll realistically do in 5 years. What your realistic market is in 5 years if everything goes to plan. So you want to basically boost this number up if you're going VC to over $100 million. But if you're doing, you know, friends, family, and associates investors, they might get intimidated by $100 million. Do um $10 million. 10X rule, everyone. Okay? So here's what you want to do. Let me explain the 10X rule. All investors want you to 10x their money. It's a psychological thing that happens. VCs want you to 100x their money. They need to believe that you can take 1 million and turn into $100 million of value. That means that if you do $10 million a year and you are growing super fast and you get a 10x multiple, that's $100 million. That's what VCs think. So, let's just go 10x on revenue. If you're raising 1 million, in this case, we're raising $1.5 million. Your SOM needs to be $15 million because that's the psychological baseline for friends, family, and associate investors. If you're raising $1 million or $1.5 million for a VC, you have to be at least $150 million. How the game works. Then you tell your friends, family, and associate investors that I'm going to take your $1 million, let's use this case, 1.5 million, and then in 5 years, which is where the businesses usually fail. Small businesses fail at the 5-year mark. 80% of them, 86, whatever it is. So you tell them, "If all goes well in five years, I'll 10x your money in annual revenue. I'll get to $15 million by year five." That means you will get a healthy multiple on your money. You can either get bought out or you're going to get these amazing dividend checks because that's how small businesses work in terms of returning to their investors. And that's how financial world works. This founder knows. And if you're in the financial markets, listen, I'm old. My days of investing in alpha like crypto and all those things, I did that a few years ago. Those are over on the back nine of my career, right? I want stable things and I invest in what are called ETFs, exchange traded funds and they basically give me a yield of whatever 4% 3%, some are aggressive, some are 12% and every year and every quarter I get a little statement and you know you made $15 from your holdings on this stock. Okay, great. Fantastic. That's what FFA investors know. And the lesson here for all of you out there is understand and learn about your investor. That's what we're here for.
Now, some of this stuff is not out there, but Chat GPT actually has all this information. Not all investors are created equal, and not all of them want the same type of returns or the same type of game. So, mixing them doesn't work. One set of investors wants to come in for equity. The other set of investors go, "No, you can't value that. Let's do a SAFE." Others want convertibles. They want to get out sooner than later. But if you go and you sell equity to one set of investors like your rich uncle who got in a Bitcoin at $300, yoloed some money in and you go to a VC, they're not going to want the same terms and they're going to look at your cap table and say, "You messed up a cap table. We're not going to invest." At the same time, let's say you got FFA investors involved and then VCs come in later. That VC is going to make you sign stuff like super pro rata liquidation rights, liquid uh preferences, liquidation preferences, meaning that they can force your buddies who invested, believed you in the beginning to sell the company or they get diluted while the VC doesn't get diluted. These are all the things that we help you here with at startups.com that I've learned the hard way working with different types of VCs, etc. Here's a great question. What is the most telling differentiation between hype AI programming, cover all, and real AI? That's a good question. It can be a surface level question. The question really boils down to business model. Is there use case? Are you solving a problem that's underserved, underrepresented, underestimated, or you just building something that another company is kind of good at, but you think you can be great at, but that company has got $3 billion in the war chest, all Apple, and they can come eat your lunch. OpenAI, they are going to dominate. OpenAI just watches the market and sees what other startups are doing in terms of what they're, you know, breaking through and they're either going to acquire or they're either going to copy. They're going to blow you out of the water. So AI hype is just AI for AI's sake doesn't actually solve a real problem. That's what I like about this startup. To repeat, this startup has a layer of domain expertise through the founder that can program on top of a general LLM how to be specific for the wealth management industry.
Let's continue, shall we? We got through the market. Then how it works. We needed a 1, 2, 3, 4 step thing instead of this. This is convoluted. This down at the bottom is actually closer to what we're looking for. Just walk us through the process and have bubbles 1, 2, 3, 4. Step 1, 2, 3, 4. And explain the journey depending on who is buying it. Now, here's what I want to talk about. When it comes to selling this stuff, you need to wonder or ask who is the one making the buying decision. So if you're trying to sell to the financial management firm themselves, then you need to make the customer journey about the customer, the one making it. So the customer journey, this is how you can sell and get your first customers as well. I don't know if the financial advisors, individuals themselves are going to spend money. I can't remember. I do believe that a lot of financial advisors, maybe part of the market you're going for is independent financial advisors who are in the game. You're trying to sell the big box, which in this case is what's happening. We'll talk about this for a moment because this founder has the ability to go into a big management firm and do it maybe as a prototype, but then you're going to go to independent financial advisors and your segment, your SAM, you find out that there are like, you know, a 100,000 of these independent advisors who can make their own decision and you explain to the investor why we're approaching them. But let's say you're selling to the institution. Let me give you an example. Teachers, I had an edtech program and it was great for schools and we wanted to sell to schools. So naturally, part of our team started talking to teachers and the teachers loved it. But getting them to convince their administration to spend money on us fools Aaron. So difficult. Therefore, we're like, forget trying to sell to schools. Then COVID hit the pandemic and we allowed teachers to come in for free. If you're teaching and you're having to teach a class, we're going to come in and allow you to use our product for free. And we got dozens of teachers all around the world. And then we started getting attention from schools, especially alternate private schools. But where we ended up landing were homeschool teachers, parents who homeschooled because they can spend their own budget. So we adapted everything to sell to those individuals. And then we let teachers in for free hoping to catch a lucky break. Now, in this case, say we're selling to the institution. You're selling to Morgan Stanley or Charles Schwab or whatever. I don't know if Charles Schwab was even around your customer journey, how it works, needs to say the firm installs this and adds all the compliance and the rules and the branding rules. Maybe that's it. Then deploys it out. So the firm installs it with their CRM, refers it out, basically deploys it to all the individual financial managers so that everybody has a cohesive strategy and then it gets customized. You see how we're doing it? But if you're talking to a financial advisor themselves and here's the pro tip, you're selling to them direct. Say this is the market. Use a lot of you language in sales, not not the investment deck. In the investor pitch deck, when founders say now you can save 15% more your car insurance. The investor is going I don't need to save 15% on my car insurance. So talking third party. But when you're talking to customers, what you do is you say you install this. So if it's a sales deck, you'd install this, use your CRM, and it can be independent. You can do it yourself if that's that's allowed. That's compliant. Remember, we're getting back problem solution. Who we solving it for? But who makes the buying decision? You have to focus and hone in. And that's why you have to understand and very clearly identify your TAM. So example, client prospect email. We eliminate that. Okay. Business model we talked about last time. I just want a summary sentence. We charge subscription fees plus a setup something like that. Right now who is buying it is going to be another factor. Annual subscription enterprise onboarding if you look. So it looks like we are selling to the enterprise. So we sell subscription per seat with an onboarding fee for the entire organization, right? So licensing fee you can put all this in into your this is how we make money. And then you can put in the bottom future revenue and then you have a bullet list. This is the future possible revenue stream. Some investors like to see that. If you have that thought through, just give them the goods right at the top and then continue along there. Moving along. Pricing model logic. Don't need to see this. If there's pertinent information opt $1,000 per unit, right? So that should have been calculated into your TAM, SAM, and you want to put that right in there. We sell we charge based on subscription fees which is $1,000 per month per unit.
Here's the team. This slide should have been later and we talked about we want a better headline explaining all the glorious details of the team in terms of summarizing them and then you want to have bullet points. By the way everyone as I just saw this nobody is going to click this ever. Why why are you giving investors more work to do creating more friction taking the chance? You are really taking things for granted and taking a huge chance. Just give them bullet points and also top the top wealth management firm. If you can make this social proof, I want to see a logo. Want to see a logo there. That's going to really help if you can get clear clearance to do it. I know these my financial management companies get really sticky. Team experience mega firm tool became a central capability at its onset. 50% cloud household no record of call email previous six months. 86% revenue associated with top. I don't understand this. All right, you got to make this plain English. Now, your customers might understand this, but I don't understand this. Advisor success. Why is this called team experience? I don't understand, right? I'm sure you got a good reason. You're trying to explain it, but this is now getting into sales territory deck. So, let's just get rid of this. So, over seven months sending one email a month, we saw this happen. Okay, hang on to your hats for this one. All right, hang on to your hats because we need to put this into your traction slide. Traction slide. And that's also going to sell because if you can explain this and then now we've automated it and I'll show you how to do it. For those of you who got previous numbers in doing things line activity okay same thing just way too many slides on this you can get into one slide initial focus go to market strategy. So here we need to talk about the headline as I explained last video. This is the main channel that you are working with. You want to summarize this. You want to say something and you add some traction numbers. We have been booking meetings through our personal contacts based on our past experience with these firms logos etc. So explain to the investor, we're already doing something. We don't need your money to actually go out and talk to the market. I do not care everyone how many founders tell me, "But Ed, I need the money to go get traction and you're telling me traction is required to go get money from investors." It's like, and I get comments like this, it's like saying investors want us to create a chicken without an egg, an egg without a chicken. And the answer is yes. You have to be an exceptional founder. The lowest hanging fruit that every founder can do is go talk to a customer in real life. Founder-led sales. If you're in the beginning stages, early stage, that should be in your headline. Here's how we're doing founder sales and here's why I'm a really great fit. That's what we're looking for as investors. And it's just a really great way to start there. And then you can say, I'm on the front line. An investor then believes in the social proof in your activity, your execution, and doesn't think to themselves, you're just going to waste my money buying Google ads because you don't know even if that's going to work yet. It's one thing to say, you tested Google Ads and here's here are the results that we are starting to get. If you haven't battle-tested your initial traction and you can't because you don't have the revenue or you don't have the investment dollars to do it, go do founder-led sales and explain to the investor what you're learning and then they will believe that you will go and figure it out because you can talk to investor you know what channel they're in. If you know what channel you're in, you can experiment and you can automate that next phase. So this would be the bullets in the future. So below after you have your initial headline sentence here below are the future, right? So you can even break this down, you know, phase one former colleagues 30 years now lead smaller firms, okay? So you can get all this up in here, right? One sentence, we're speaking with former colleagues which includes 15 CEOs and speaking at conferences representing $3 million in near-term revenue opportunity. That's great. Put it up in the headline and then future get that going. Your go-to-market strategy everyone cannot be a laundry list of tactics that you're thinking of doing. Anybody can say that.
Now, let's look at traction. This is where all that data should have been in the first place. You should have put it top here. Traction. Our initial manual pilot yielded 17% revenue increase over 6 months for every financial advisor. Let's break down what we want to traction slide. So, outside of the headline sentence, your theme here, headline sentence. Everyone go look at your pitch deck. I'm talking to you in the audience, talking to you listening on social media. Go look at your pitch deck and read the first headline sentence in bold and say ask yourself does it say is the biggest bold thing your logo such as here or is it traction our problem that should not be the biggest boldest stark summary sentence it need to be up here if you just read it by yourself does the investor understand everything in this slide without looking at the rest of the slide does it compel them to look at the rest of the slide sure but it has to stand alone has to be naked without images without all the bullets without your voice over in ahead. Does it work? That's how you test. Then every traction slide needs to have state of the product. State of the product like we've actually built it. What is going on here? Then you need to understand customers in terms of validation. Is it validated with customers in some form? And then the last thing that we're looking for is growth metrics. That's what we need. And if you don't have those growth metrics, well then you're focusing on the other ones in terms of customers. Is your list growing 10% week over week? That's what you do. You literally should have a summary headline sentence that covers all three of these things. And then basically say MVP built launched three months ago. We have 100 beta customers and we are adding them 10% week over week, week over week, month over month. That's what you have to figure out right there. And explain to them that's your traction. Make it very simple because they're going to dive in to those traction numbers later on, everyone. And let me explain this. As I've said over and over again, the investor is not going to make an investment decision based on this deck. They're not reading your pitch deck with their checkbook out going. They write your name at the top and they say, "Ah, just give me the right slide and know the one kernel of knowledge and then I'll sign the check and send it off." Doesn't happen. It either goes into a no or maybe pile. Believe me, investors are going to do their due diligence. You have to let them get there. If you're dumping all the due diligence that they need to know right up front, you're going to lose them. They're going to disengage and they're not going to get to the socialization and the due diligence phase. So, as I say over and over again, I can't beat this metaphor to death anymore. Sharpen the tip of that arrow. That's the screener introductory pitch deck. So, just give us the goods. Just tell me you're growing 10% week over week. And I'll say, "Well, let me see those numbers." I'll ask, "What are the churn numbers to that? What's your customer acquisition cost, etc." But just give me the the little sample. Take me through Costco before I have to walk through every shelf and decide, look at all the prices. Be the person standing at the front of the aisle with the sample, the little cup with a little toothpick. Hand it over to me and go, "Wow, this is really good. I can't believe this is real cheese or fake cheese or whatever it is. What's the cost?" You ask questions and then they say, "Hey, go look down the lane. You can see all the deals there. Welcome to Costco." Do that with your pitch deck. Please make it as easy as possible, enjoyable as possible for the investor.
Competition. This should have been earlier as I talked about the order competition. Now, you're going to have to explain what customers want and you either put it into a quadrant or a matrix or an XY graph, but always headline statement. And then this stark headline is what customers care about that separates you from the competition. Customers care. What do they care about that's different? This is what you're trying to write in the headline. And then like I said, you've either got a features and benefits matrix. So you've got all your benefits down here. You got your your competitors here, right? And this is how it works. And then you have your check marks and your X's and all this stuff. And this is you. And then you've got all your check marks right there. But over on this side is what needs to be here. Because if you're telling me, which I really appreciate, that customers are saying about solutions, they don't get it. Providers lack advisor perspective and experience. So here you write down built on advisor perspective and experience. You see how easy it is? Check. There's the check. That's how you organize it so that the investor knows that you know what customers care about over here. Now, same thing happens with a magic quadrant. You don't make your magic quadrant. Let's say you're going to use a four quadrant like a four-stage quadrant. That's what a quadrant means. Or you're using an XY graph like this, right? And you got this going on. These dimensions here cannot be we're this is bad and this is good and here's here we are. Yay. That's not competitive analysis. Nobody cares about that. Anybody can make their quadrant even their feature benefits matrix look good for them. You want to clearly show in a quadrant how you are different. In this case, I'm thinking you're going to use a features and benefits matrix. Sometimes I use both when I can explain market positioning. Let's go back and retool this slide.
Here's your ask everyone. Remember I always said I touched on this last time. You basically want to say we are raising X amount of dollars for Y milestone for Z time frame. So I'm sure there are clues in this. So we're raising $1.5 million. Do not say this. I can't stress this enough. Do not say this. Let me get back to this in just a moment. But let's say we're raising $1.5 million to launch phase 2 of the product and generate, let's say, $3 million in 18 months. That could be the easiest thing. Let's talk about why you don't talk about your runway. I know the prevailing advice is to raise for 18 months runway. Let's break down the logic. Why do you do that? It gives you 6 months to focus and burn rubber on your traction so you don't have to raise again is really how you should be acting. But you have to start raising again when you are 12 months runway. If you are less than that it gets harder and harder exponentially. Every month there's an order of magnitude difficulty that gets stacked on. If you have 3 months runway then it's an automatic no. It's an automatic pass. This is a little secret from the world of VC. You see three months runway not interested. Either you're going to become an acquisition target and we're gonna say, "Okay, we're going to wait for you to run out of money and then we'll take a look." We're going to say you're going to do dumb things with our capital. If you're that desperate, you're desperate, we're going to get rushed through due diligence. We don't have to move. And it's kind of a stress test on the founder. You should start raising with 12 months runway. That gives you ample time to work it because it'll take 6 to 9 months before you hit the D-day at 3 months to get a check in the bank. That's the reality. Nobody's in a hurry to put money in your startup. You're in a hurry to get money for your startup, but nobody's in a hurry. That's why fundraising should be plan B. And if you start fundraising because you just ran out of money, that's the worst situation that you put yourself in. So you raise for 18 months so you can just focus for 6 months, get the results so you can put in your next pitch deck, and then start raising and show the new inflection points. Investors don't want to hear that because they just think you're raising just to stay alive. We're just raising so we can pay ourselves for 18 months. You also have to put in a use of funds so that you can say that you understand your capital and you don't put in I know some founders say raising between $2 to $3 million. Which one is it? The investor going to say you don't know your numbers. You don't know 2 to 3 million like what does that actually mean? That's a really loosey goosey. Someone who hasn't been thoughtful is clear on their plan execution. So they want to see inflection points. They want to know where their money is going to go and what's going to happen by that time. And if you say we're going to do this in the next 12 months. If it's a VC investor, they go, "Okay, that's perfect. Let's say 18 months. We're going to watch you for six months and then we're going to help you sell up to the next round because that's what investors have to do. VCs, they need to sell you next round so they can show the portfolio is growing so they can raise another fund and make their 2% management fees." That's another dirty secret on how VC works. Everyone that founders don't understand. They do not care about how much money you've made, how profitable you are. You make $10 million. And they're like, "You need to become a unicorn and go $100 million for our fund so we can go get that glorious exit. But in the meantime, we stay alive by raising other funds." So, they don't care about your $10 million. You care about your $10 million. That's life-changing money. If you didn't have that VC investor, you wouldn't have that pressure on you. Let's go get some other investors or let's bootstrap find other ways. Seedstrap. But they will literally shut you down for $10 million because you're not growing fast enough. They'll force you to sell. They'll push you super hard. And many founders end up not making enough money. If they would have done it themselves, they would have been very very happy. So don't raise for runway. Raise for inflection points. Because when you raise for inflection point, you make everybody happy. Your startup is happy, customers are happy, investors are especially happy.
I just realized what is an inflection point other than a milestone. Let's talk about this for a moment. The mindset that you need to have as a founder is not milestone because that was old school. So milestone used to be, oh, we're raising to build our MVP. You see, we've got milestones here. Inflection points are when your startup suddenly dramatically increases in value. Now, milestones will get you there. Maybe the milestone happens, but inflection points represent value of the startup and that you are going towards that hypergrowth path, proper path to profitability. The almighty product market fit. Every stage is an inflection. Once you have problem solution fit, that's an inflection point. That's actually a milestone. But once you get to product market fit, so many things are happening in terms of inflection points for this hair on fire scenario. So the milestone represents the inflection point. Figure out what is going to be the key thing that gets you. What's the milestone that suddenly increases the value of your company. That's what how you need to be thinking. So, you need to raise enough money to get you to the next inflection point. And these are scenarios. For example, let's say you've already got customers. You need to raise enough money to get it so that you can actually start charging money and make it to default alive. Ramen profitability as they say. Well, that's an inflection point. That's your milestone, but that's an inflection point in the mind of an investor. That's how you have to be thinking. So, bake that in and plan it. And I understand everyone. Listen, I understand. I get it. This is hard. There's so many things that founders expected to think about. So many things founders are expected to know. Once again, plug, plug, plug. That's why we're here at startups.com for you, so you can ask these questions. Let me digress for a moment. We're having this conversation with the CEO, Will Schroerstarts.com, and we're talking about talking about how it's hard for founders to really value advisory. Like, what are they getting? Like, when you pay my advisory fee or you give me your equity or you pay for a membership of startups.com, what are you actually getting? When really, it's hard to analyze this because it's preventative. I will save you tens of thousands of dollars. I will save you 10x whatever you invest in our relationship. I'll save you 10x in headaches. But a lot of founders don't understand the value of this. We're here to educate you on all these things. Save you time. I'll 10x your time. And it's not just a plug for me. It's a plug for any advisor. Go talk to founders who've been through there before. If you're trying to raise VC, go talk to other founders on what it was like to raise VC. What mistakes should I avoid? Where did you waste all your time? Because there's so much to think about how to calculate out a business model. By the way, I have an advisor for that as well. I found an advisor who specialized in business models to financial models and we'll battle test it for you. have all the experts in there. By the way, if you're at Startups.com, you want to talk to this person, let me know. He used to run the regional SBA, had to make decisions on loans, and now he helps founders raise money with proper financial models. That's something we don't get trained in. We're too busy trying to solve the problem, too busy trying to get traction. Financial model, are you kidding me? Many investors say, "You know what? Financial model is it. That's what I decide on based on business model." Talked to founder just the other day here. Startups.com said, "I have two VCs ready to go." In fact, you might be in the audience. I can't really remember. Maybe that's you. I don't think so. I have two VCs ready to go, but I need to show them a financial model. Founders don't know how to do that. We're here to help you. We'll save you all the time. In just one email introduction, I've saved you a week of not knowing who to talk to, who to trust, maybe kicking the tires. I've got battle-tested advisors to help you. That's the benefit. So, it's not just me. Listen, I'm not the only game in town. Go get a team of advisors out there and they're going to help you.
Now, I want to point out a few other things and we're going to end off with investors. We have an appendix. This shouldn't go on your screen or deck. These are all the little things. You know why? Now, this all could have been baked in. As I read through all this, I'm like, there's some really good golden nuggets in here. If I were this founder, I would feed the entire deck into a chat GPT and saying, I just want 12 slides. Problem, cover, problem, solution, market size, everything. I want one sentence up at the top. Take all the information across all these slides and put it into one sentence each and summarize the best parts that investor wants to hear. This is what I'd be doing because this all this is gold. This is really hard work. Like we've got we actually have what this solution looks like. Absolutely fantastic. By the way, this is perfect to train an LLM. So, you put it all out there and you create your pitch deck, right? Maybe this is in your traction slide. You don't want to put that in your traction slide. Maybe. But look at all this stuff. Screenshots and traction pricing, financial timelines. This is all due diligence. This will is a uh example of a master socialization deck. So what happens is in the beginning when they say they contact you, they say, "All right, we just want you to go over your pitch one more time." Then what happens is this founder is going to streamline and have like a live presentation version of cover, problem, solution, and just clearly walk them through. You've planned it out. You've asked the investor, "What do you want to see? What do you want to go through?" And then we do all this here, right? And then you get rid of all these extraneous slides. And then when the investor says, "Okay, so how does it actually work? Give me an example of the email. And then you go to your appendix or your master deck which is waiting in the wings. Oh, we happen to have a slide for that. Let me show you. Here's an example. Let me get to this of what an email looks like. Or let's say they ask for your financials, right? What do you think? What's your business model? What's your model there? You say, "Oh, I happen to have a slide for that, etc." Right? So, example. Oh, here's an example of my email. And tell them like it's a story. You want to show the magic moments of where things work. So, you have your screener deck that gets you the meeting. Then you have your live presentation deck. And then you've got the rest of this appendix as your master socialization deck waiting in the wings. Or they may say, "Send it to us. Send us your tech stack, everything." Or it goes in your due diligence, your data room. So that's what you have to do. You don't overload them unless you've got a sizzling hot story and a personal referral. Let me digress for a moment. The only time that you send your 30-page everything deck is when you have a referral and the investor is already convinced based on let's say just a one-sheet, a summary sheet or the email. They're super interested and you have an endorsement, you get an introduction and they're ready and they just send the whole thing. But then you organize it in a way where you got a summary at the top, especially a lot of traction and then you make it like a book that they want to keep reading. So you still have a very light sharp tip of the arrow at the beginning of your pitch deck. But most founders don't have that opportunity. An investor sees a 30-page slide deck come through, they're like, "No thanks. I'm not interested." But there is a world where I've sent longer, more extended decks, always exception to every rule.
Let's end it right here. Circling all the way back. I think that this pitch deck is well positioned to go get customers who can become investors. That's the power move here. You get customers and then you know what you do is you say to potential customers, just try it. Just try it. I know you're interested in becoming an investor. Let's do a pilot for you. And then if you're interested, you can either pay for it or you can pay for it by investing and get a lifetime membership. That's how you get investors to be your advocate. That's the power maneuver. It's as simple as that. Think about it for a second. Your clients who become your poster children, your gold standard who are using it or giving you feedback, they're engaged or your investors, they're going to either evangelize you on two fronts. Maybe both to other customers because they make money or to other investors. Maybe not because they're like, "No, I want to make all the money." or they've got their friends who are not in the financial management industry. They're not in the same industry and they say, "I've been using this tool. I became an investor." It's the whole Hair Club thing. I'm not just a member. I'm an owner. I'm not just a CEO. I'm the member. Something like that. I'm not just an investor. I'm a user. That's the endorsement. As an investor, that's, you know, no investor wants to be first, but they definitely don't want to be last. But customers are willing to go first if they're going to get a get deal, get a good deal. Therefore, make them an investor. It just makes sense. So, here's the hook that you do. This is what I do. I run this by all the potential customers first without asking for investment, but I have a slide that says not seeking investment at this time. Unsolicited slide, but then I say contact us if you would like investor updates. Simple as that. And I show the potential customers and if they bite off on the solution and they go, "This would change my life. This is going to make me a million dollars." And then they see the slide not seeking investment at this time, then they start thinking you planted that seed. They go, "Wait a sec. Why can't I be an investor?" And you want them to say, well, do you need money? I know so many founders who have just presented properly and thrown in that like a pitch deck and people have just said, do you need money for this? I've experienced it. This is why I came up with the technique because I lived it myself. That's the power move that many of you might want to consider your customers as your investor. That's it for today. Thanks everyone. Appreciate the comments. I saw some other comments. Let's keep it focused on this particular pitch deck. Appreciate the founder. Always courageous. Scott, I'm going to send you these recordings and we'll keep working on this. Everyone have a fantastic day and tune in next time. Mondays and Fridays, I do pitch decks for startups.com. Tuesday is a show with Will Schroeder and then I do a smattering of pitch deck reviews for my channel as well. Everyone have a great day. Thanks so much.