Ask an Angel: Michelle Vu, Alice Anderson Fund

We come across a lot of pitch decks. I once timed myself and noted I spend, on average, 3.5 minutes per deck. A good pitch ideally should be able to, within less than 4 minutes, pre-empt these questions for investors: “Why this startup, why now, and what are the asks?” or generate enough interest for an in-person conversation.

I think there are two main elements of a good pitch: content and presentation.

Organising the content in a standard structure makes it easy to extract the information. A typical structure covers the problem, solution, market opportunity, business model, competitive advantage, traction, and team. You’d also want to use credible data to back up for your content.

Keep slides concise and use visuals & graphs instead of lengthy text. Remember that a pitch deck is a tool to spark interest and conversation, not a detailed report of every bit of research you have done.

Trust: What’s the interaction/communication been like? Do you want to work with them for the next 5-10 years?

Alignment: Do they make investments in your stage of business? Do they have the investment focus/ vertical/ values that align with your business?

Support: Do they have a brand or network to provide ongoing support? Do they provide opportunities to connect with other founders across their portfolio?

Investors Only Care About Returns: While investors are certainly interested in a return on their investment, this doesn’t mean they only care about making money. Many investors, especially those with experience in entrepreneurship, also want to see the startup succeed for reasons beyond financial gain, such as a passion for the industry or a desire to support innovation. For example, the Alice Anderson Fund is  interested in supporting  startups to create more jobs and growth for the  Victorian economy.

Investors Just Provide Money: One common misconception is that investors only provide capital. While funding is a significant part of their role, experienced investors often bring valuable expertise, connections, and guidance to startups. They can offer strategic advice, mentorship, and introductions to potential partners or customers.

Investors Always Want to Control: It’s a common misconception that investors always seek to have significant control over a startup’s decisions. While some investors may request board seats or certain rights, many are comfortable with a more hands-off approach, especially if they trust the founder’s vision and abilities. For example, the Alice Anderson Fund takes a passive investor approach and does not take Board seat.

Investors Are Always Hands-On: Not all investors want to be deeply involved in the day-to-day operations of a startup. Some prefer a more hands-off approach, while others are more actively engaged. It’s important for founders to communicate their expectations and find investors whose level of involvement aligns with their needs

Regular written investor updates: This can be in the form of monthly, quarterly, or biannual reports. Example of investor update here

Transparency: Be open and honest in your communications. Share both good news and bad news. If there are challenges or setbacks, don’t try to sugarcoat them. Investors appreciate transparency and want to know the reality of the situation

One-on-One Meetings: In addition to written updates, schedule periodic one-on-one meetings with your investors. These meetings can provide an opportunity for more in-depth discussions, questions, and feedback.

Ask for Input: Investors like to be helpful, especially given they have a vested interest in seeing you succeed. Actively seek their input on strategic decisions or challenges you’re facing. This shows that you value their expertise while strengthen the sense of partnership and collaboration.

Not getting proper legal advice: the nature of startup is being capital efficient. However, legal assistance is something you should not skim on. Don’t use a template and frankenstein it. Don’t get your corporate lawyer friends/partners who don’t have exposure to startups and whip something homemade. It’s dangerous, expensive to correct the mistakes, and unnecessarily drags out the raise. Having messy terms/ Shareholder Agreements is also a turn-off for further investors and potentially could cost you these deals.

Issuing shares in a priced round before the round closes can be problematic: Fundraising can take some time but it does need to be time boxed so that valuations remain consistent during a round and all investors are signing on to th esame set of shareholder/subscription agreements.

 Not understanding the difference between an advisory board and Board Director: it is not uncommon to appoint an investor as a Board Director. However, we sometimes see that startups, especially in early stages, inviting 3-4 investors to the Board in one round thinking they are forming an advisory board. A Board of Directors has a lot more control and voting rights and should not be taken lightly.