Investors spend 24% less time looking at pitch decks in 2022 than in 2021. On average, you have just under three minutes to convince them to meet with you. In fact, for decks that fail to raise funds, investors quit in just 2 minutes and 13 seconds. It’s not a long time to make a first impression, so you have to make it count.
It’s pretty rare that I can talk to someone who is as tall as me, but when I finally got to talk with the head of research at DocSend, how could I not? We dig into what the data tells us about what makes a pitch deck successful and the indicators of what works less well.
The biggest trend shift in how investors look at pitch decks is that investors are spending a lot less time on slides overall, but where that time is past is changing.
“This year, we know that investors are spending less and less time on pitch decks. This is not necessarily surprising: the number of links to the pitch decks sent has increased and the time spent on the decks remains very low”, explains Justin Izzo, head of research for DocSend. “What surprises me is that we know that the product and business model sections of decks are really where investors like to look, especially for early-stage companies. But investors have almost halved the time they spend on these sections at the pre-seed level. Investors are still reviewing these sections carefully, but they are doing so much faster than ever. So founders really need to think deeply about their business, but communicate briefly.
One of the biggest changes is that investors are spending a lot more time on what DocSend describes as the purpose of a starter slide – the “why are you doing this” part of the story.
“Founders really need to think deeply about their business, but communicate briefly,” laughs Izzo, “I like to call it ‘compelling brevity.’ It’s not easy to do, but it’s what founders should strive for.
The third longest section is the Business Objective section (after the Product and Business Model sections), but Izzo points out that this section is usually only a very small part of the slide deck, often just a line or two of text on slides one or two of the deck.
“Usually it’s one sentence, a pointed, well-rounded statement of what the company is about. We usually see this at the very beginning of the game, often on the intro slide. What shocked me when I started looking at our latest dataset is that over the last couple of years it’s been pretty poor in terms of watch time,” says Izzo. “This year it really exploded and investors tend to use this section as a kind of gatekeeper. They want to know at a glance if this business has a reason to exist before they even go through the rest of the game.”
It makes sense; a business purpose statement is often phrased as “Venmo for fundraising” or “Transforming customer experiences with human-centric AI” or “Issue tracking SaaS for physical product developers”. By the way, these are all real examples from our Pitch Deck Teardown series. The benefit is that investors can use these statements to see if the investment could potentially fit their investment thesis. If you don’t invest in SaaS, or if you don’t care about fintech, or if you don’t care about customer support – this becomes a very quick filter to give a startup team a “no”, without needing to delve into product, team or market size.
“It’s about whether founders can communicate a vision and specificity but what their company does, in a compelling way. Because if you can do that, you know, you hook investors, you show that thesis fits, and it prepares investors, you know, to read the rest of their story,” says Izzo. “And you know, doing that in a sentence or a sentence and a half or something like that is hard to do. But we find that it becomes so much more important for early career founders.”
Slides in successful or failed decks
The DocSend team analyzed 320 games and reviewed the slides present in each one. The only slide available in 100% of decks, both successful and unsuccessful, was the team, but from there things start to vary a bit.
The most interesting difference between successful and unsuccessful decks is the missing slides; I was surprised that only about a quarter of starter decks had finances (trust me on this one, you really need an exploitation plan), but I wasn’t surprised that none of the failed decks have finances.
The other big difference is in the competition slides; all decks should have an overview covering the competitive landscape.
“The first thing missing is often a competition slide. Often founders don’t think to include it, or when they do, they use it as a not-so-subtle indicator that there’s no competition,” laughs Izzo. “I always tell them to include some sort of analysis of other players on the ground, however you define that area.”
The DocSend team have created something of a fundraising playbook and a ‘state of the union’ report for fundraising, comparing the changes from 2021 to 2022, which makes for fascinating in-depth reading. to inform how you envision your fundraising process.