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There are two kinds of investor pitches when it comes to raising funds. And a founder must know what kind of pitch their deck is going to be about before building it. This will give them clarity about what points the pitch has to cover and which points have to be given more importance.
The two kinds of pitches are metrics pitch and vision pitch.
Before I get into the difference between the two, I want to talk about what is common between them. Both will contain the fundamental blocks of a good pitch. That is, they will talk about
- the problem being solved
- opportunity size
- how your solution/approach is different from your competitors
- revenue model
- moats and other business strengths
- the team
- execution till date
- financials & unit economics
- projections and plans for the future
Note: This is not an exhaustive list. Nor is it a template for a deck. I will write a detailed post about how to build a good deck later.
Any pitch you build, whether metrics or vision, will cover the basic things I listed above. The difference lies in how much time you spend on certain parts of your pitch. So let’s jump into the difference between the two.
1. The Metrics Pitch
In this type of pitch, the larger part of your deck will be focused on your numbers (“metrics”).
You will cover the usual business-level metrics like scale, growth, profitability, unit economics (not just current status but trajectory as well). But within these, you will also show how each segment/vertical is growing (maybe to point out which is your fastest-growing segment). What is the city-level data? What is your profitability across all levels (GM, CM-1, CM-2, net profit)?
You will also cover the product-level metrics. The usual ones are engagement and ratings. But you will also go into cohort-level retention and revenue earned. What your marketing funnel looks like and what are the conversion numbers at each level.
In the projections, apart from the usual revenue projections, you will also show margin expansion (and obviously talk about the drivers as well). But you may also cover how margin will increase at the unit level. The break of the projected revenue – how much will come from which product or new business segment or new geography.
These all will obviously be in addition to your narrative at the beginning about the problem you are solving and the opportunity size. But the bulk of your deck will be graphs and numbers.
For whom is the metrics pitch best suited?
The pitches of growth-stage companies (Series B or later) are typically a metrics pitch. At this stage, the product has been usually validated and the company’s focus is more on scaling – the purpose for which they would be fundraising. So the pitch is less to do with explaining the hypothesis for their product (it is still part of the deck though) and more about showing the numbers – to show proof that your solution is working, your business is growing (fast) and that you and your team are doing a good job. Obviously, they also have more data to show since they have been around for a while.
In some cases, even an early-stage company, whose product is still at an MVP or slightly beyond MVP stage, can also raise money through a metrics pitch. This happens when you are the red hot startup that suddenly sprung up on the scene and is seeing some crazy growth in users. The crazy growth itself is proof of your solution working and being adopted – so you don’t need to spend too much time explaining the problem you are solving and why it better than other solutions in the space. The interesting thing about such cases is, sometimes, there doesn’t even need to be a detailed deck. Just sharing a dashboard/excel sheet/summary showing strong numbers is enough. That alone should get many conversations with VCs going and deals close pretty fast since there are many VCs vying for that startup/founder (have seen this happen).
But the above scenario is rare. Not every early-stage founder can have that luxury. For most, it is a grind for a few years till you have eye-popping numbers that will make VCs throw money at you. Till then, you will have to raise money by selling the vision. This gets us to the second type.
2. The Vision Pitch
In this type of pitch, the larger part of your deck will be focused on laying out the hypothesis for your product and business.
You will spend time convincing the investor of the problem/opportunity you are chasing – that it is a problem worth solving. You will include context to the problem, deep-dive into what the problem is, who the target customer is, and how big the opportunity is (preferably from a bottom-up perspective).
You will then convince the investor about your solution. How it solves the problem, how it is different (and better) than existing solutions, and some proof that your solution is working – usually via some monthly growth metric combined with a few testimonials and rating.
You will also have to convince them about the business model you have built around the product. Here you talk about the revenue model and go-to-market plan. You can include what could be potential moats. Any other strengths in your business like pricing power, partner lock-ins, patents, data etc. If there will be any network effects that will kick in later. One difference I want to call out here vs metrics pitch is – in a vision pitch, most of these points will be at a conceptual level. They haven’t happened yet but you are explaining how you have started building the pieces in place for things like moats or network effects to develop. In a metrics pitch, you will actually prove that your network effects have kicked in through your numbers. You will show a kink in your graph where growth in users started speeding up or CAC started falling or ETAs started falling (whatever is the relevant metric for your business).
Lastly and most importantly, you will have to convince investors of your team’s credibility to build this going forward. That can either come out through showing your team’s past experience if it is relevant (they worked in the same sector or at a competitor). In case that isn’t there, you can prove executions capability through current metrics like traction and capital efficiency. This might be a bit tough since you won’t have a lot of numbers to show but does work at times.
For whom is the vision pitch best suited?
As already mentioned, early stage pitches (seed, Series A) are usually vision pitches. With very less proven execution and the product still undergoing work to reach PMF, the founder has to bank on selling the vision to raise funds. So you talk about hypothesis more than metrics but also balance it out by showing glimpses of evidence wherever possible to support your claims. And best to avoid too tall a claim in a vision pitch. It’s a very thin line between a vision pitch and a faf pitch (or ‘gas pitch’).
A disclaimer before I close. I glossed over what goes into a deck at many places in the post. Wherever I have listed down things you could cover in the pitch – it might not be the exhaustive list or in the right order. I wanted to keep this essay around the kinds of pitches (at a high level) without getting too much into the details of how to build them out. I cover that in an essay I am working on where I deep-dive into building the narrative for an early-stage company.