Startup founders are product managers. They are mostly product driven, too much to my taste, and the product occupies 80% of their brain power. So when comes time to raising money, creating all of the documents necessary for raising money is often perceived as a distraction time taken away from the product.
The reality is that the product matters a lot, but being product centric has a lot of downfalls.
Is there a market?
First, by obsessing on building a product, it’s easy to forget that there needs to to be a market for it. You think I’m crazy because entrepreneurs are better than that, right? Not according to CB Insights. Their latest survey pointed out that the number one reason why startup fail is because there is no market need. It’s the main cause of death for 42% of the startups!
The feature frenzy
Building a good product takes time. I could argue that you need at least 3 years to have something decent. Prior to that, you are struggling between awful and almost there. If you have product tunnel vision, you are going to race as fast as you can to deliver what you perceive to be the next feature to turn around adoption. The truth is, people don’t buy features! You will end up selling your future roadmap and will get stuck… I’ve been there!
Frustration will mount
It’s important to be super confident about your startup, but don’t be blind. A product driven startup will think that everyone will discover and acknowledge the value based upon seeing and testing the product. Things are much more complicated, and it almost never works. This thought process will corner the founders into thinking that customers are not smart, that marketing is what’s lacking (let’s tell the world and the light will come) or that it’s just a matter of time before things starts to roll.
Raising money is the one time that forces founders to set aside the product and think about the global picture. Time to slowdown, and it is a good thing! Raising money will trigger fundamental questions such as “what’s the company vision?”, and it cannot be the product. Better, you will dig into personal convictions meaning why you are doing it.
You’d be surprised how many founders underestimate these questions. For an investor understanding your personal drive is essential. Indeed building a startup comprises a lot of downs where the only thing that keeps the team going is the personal connection to your project. We often talk about MVP (Minimum Viable Product), but how about we assess the FPC (Founder Purpose Compatibility)?
Building materials for investors is a sane exercise, and the cornerstone of all documents is the pitch deck. The pitch deck is not a marketing tool to make you shine and turn you into a “communicator”, it’s a strategic exercise! Building a pitch deck will reveal everything about your startup. I won’t go into what’s a good pitch deck but rather why you need one.
It will force the founders to address the key questions
There are often too many slides in most founder decks because 70% of it is product related. Some big topics are often forgotten such as competition, go-to-market, timing, or risk factors.
It will make you think strategically
The pitch deck won’t address your product’s roadmap, but bigger questions such as your purpose, market size and how to access it, path to monetization, and key metrics to follow.
It will make you crisp
How often do you start a conversation with a founder and you end up getting a boring “demo conversation” of the product? If you have a clear understanding of the path you’re on, everything flows better with minimal words and clarity.
It will spotlight holes
I’ve never seen investors make decisions based on a product demo. By thinking about what investors need to hear, you’ll develop a certain awareness of your weak points. Some of them will need to be addressed before starting the fundraising process.
Building a pitch deck is never an end to itself. A pitch deck is a living organism that will evolve with your startup, however, some elements of the pitch deck are your North Star — the things that keep you in line.
Everyone knows that a product can change and that most products can be replicated with resources (aka time and money). A team with the right vision and strong FPC and proof of execution will carry much further.
Keep your pitch deck to 10 to 15 slides with no more than one or two slides on the product! Demonstrating the product should always come last as a proof of execution and benchmark of progress. Your product is never your startup.