With the attention that pitch decks have received (and the more than 80 articles that have been written on the subject), one would assume that startups would never be able to secure institutional or angel funding without one. That’s not really accurate. This is why.
In the early days of investing, obtaining capital from institutional investors required a thorough business plan. To make one, check out this excellent tutorial from the Harvard Business Review. The precise contents of a business plan can vary, but they frequently include a history, market analyses, strategy, description of the product or service, organisational charts, competitive analyses, management team, financial plans and projections, as well as all the supporting data from the research for each section.
Need a deck to raise from VCs
That’s all well and well, but by the time you’ve finished, your business plan will have grown to be the equivalent of a novel in pages, and that’s before you include in all the visuals and charts. Business plans are excellent tools for learning the fundamentals and dynamics of the industry, and errors in business plans are a wonderful method to teach aspiring entrepreneurs how to head off issues in the bud.
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The issue is that before the ink has even dried, it will be outdated, and the financial information will be incorrect. Startups don’t function differently from other firms in terms of dynamism; rather, they are the more nimble versions of the dinosaurs of old. Create, test, and iterate.
Nowadays, startups are essentially the same as how software is developed: Rather than spending six months creating a detailed product specification that will be incorrect before a single line of code is written, you publish a lean MVP version of the product and make adjustments from there.
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There were a few proponents of other approaches to business plans, such as Guy Kawasaki, whose “you only need 10 slides” claim may have gone a bit too far in the direction of profound minimalism, but at least it was more useful for structuring a pitch narrative than a 90-page business plan. Briefly stated: Agile software development was to waterfall software development what the pitch deck was to the business strategy.
After then, the market continued to change, and other entrepreneurs decided against using a deck at all. The CEO of webhooks-as-a-service firm Svix, Tom Hacohen, who recently acquired a round of funding from Andreessen Horowitz without using a deck, declared that “the story is really crucial.”
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Investors must comprehend the tale since they are not webhook experts. We needed to convey a compelling tale in order to do that, and once we did, they became really interested in the company. They became familiar with our analytics and began conversing with a sizable portion of our clients. At that time, the deck will only serve to assist me in explaining to them what they already know.