How have pitch deck presentations evolved? How has the way investors read them changed? What new presentation trends are we observing? We have some new and interesting insights from the latest DocSend Startup Index report.
Pitch decks are an integral part of startup fundraising. A successful fundraising pitch deck guides investors through their decision-making process and provides a brief but convincing summary of the business idea and its planned growth. Startups need pitch decks to convince investors of the value of their product or service at every stage of growth to get the funding they need.
But crafting effective pitch decks for startup fundraising is far from presenting financial projections and business plans. Aside from the actual presentation design, creating successful pitch decks requires a deeper understanding of the art and science of persuasion, storytelling, and visual communication.
A report by Dropbox’s DocSend sheds light on how the way investors read pitch decks has changed between 2021 and 2022. It also provides valuable insights into the key elements that make startup pitch decks successful at every stage of fundraising.
Let’s take a look at the psychology behind pitch decks and the specific insights from this report.
Key Trends in The Way Investors View Pitch Decks: Comparison Between 2021 and 2022
The world of venture capital is evolving, and the way investors view pitch decks is changing along with it. The Dropbox DocSend report has identified four trends that show how investors viewed pitch decks in 2022:
VCs spent 52% less time on the product sections of successful pitch decks than in 2021.
Investors spent 42% less time on the business model section of successful decks than they did in 2021.
The company purpose section was the third-most viewed pitch deck section in 2022 as compared to the years before when it received average attention from the VCs.
Investors spent 41% more time on the traction section of unsuccessful decks than in 2021.
The emerging trends in how investors evaluate pitch decks suggest that founders now have less time to make their case. They need to effectively communicate the value proposition of their product or service and demonstrate how they plan to monetize it in half the time they used to have.
These trends also show that investors want to see whether the founder has a clear vision for the company, and they’re placing more emphasis on whether the business is gaining traction and if there's evidence of customer demand.
The role of gender & race in pitch decks
A well-crafted pitch deck can make a massive difference in how investors perceive a business idea. It can be the key to getting funding or getting rejected. But not only factors related to the business itself influence the funding decisions of the investors.
The report by DocSend found that investors spend more time scrutinizing certain parts of pitch decks based on the racial and gender demographics of the founding team.
They spend 105% more time analyzing the product sections of the all-male decks than all-female decks. Aside from that, they spend 43% more time on the team and business model sections for all-female teams. This indicates their biased concern about the all-female teams’ ability to monetize a product.
But that’s not all. In the report, the decks from teams with minority members received 20% more attention on the product sections and 67% more attention on the market size sections. On the other hand, all-white teams had their business model sections scrutinized almost 50% more.
This data means that unconscious gender and race biases may be at play during the pitch deck evaluation process.
Human attention span and its implications for pitch decks
Several studies have found that our attention span has significantly decreased over the past few years.
It’s no surprise that teenagers and young adults can’t keep their attention on the screen for more than a minute. But the shrinking attention span plague seems to be affecting everyone - from our kids to our investors.
The Dropbox DocSend report on startup fundraising pitch decks identified that in 2022, VCs were spending less time reviewing pitch decks as compared to 2021. This is true for successful and unsuccessful pitch decks on both pre-seed and seed stages of startup fundraising. The pitch decks in the pre-seed stage suffered the most, as VCs were 42% quicker to reject the decks they didn’t find appealing than in previous years.
This proves that founders now have less time to make the right first impression on the investors. The pitch decks need to be more direct, concise, and fluff-free than ever.
If the deck is too long or the slides are too crowded, the investor will skim through it. If it’s too short or isn’t well-structured, the investor won’t have enough information to make the decision.
The role of storytelling in pitch decks
DocSend found that investors are more likely to fund startups whose pitch decks tell a clear and compelling story.
The report shows that, even though VCs spent less time reviewing pitch decks in 2022 than they did in 2021, they had chosen to give 28% more attention to the traction sections and 56% less attention to the solution sections of successful decks than in the year before.
This proves that investors want to see a long-term plan with a sound business model, and clear and concise storytelling is essential to convince them that the startup can go the distance and make a dent in the market.
Best Practices for Investor-Friendly Pitch Deck Creation (According to Research)
Having a unique startup idea that fits a market gap and optimistic financial projections is key, but it's not always enough to secure funding from investors. Even the best ideas can fall short if they are not presented in the right way. That is why it's essential to create a pitch deck that is tailored to the needs of investors and presents the information in a clear, concise, and visually appealing way.
Let’s go over the best practices for creating investor-optimized pitch decks based on the report from Dropbox DocSend.
This report shows that, ultimately, putting together a successful pitch deck comes down to finding the right combination between storytelling, slide structure, and length.
Find the right length
There is no one-size-fits-all pitch deck that will appeal to investors at every stage of startup fundraising. The ideal length will depend on the fundraising stage as well as the complexity of the business.
The Dropbox DocSend report found that in 2022 successful pre-seed decks were typically around 19 slides, while seed decks were closer to 15 slides, and Series A stage decks were even longer, with 25 slides on average.
This data suggest that early-stage investors prefer decks that tell the story behind the startup in a direct and concise way. In contrast, later-stage investors need longer decks that contain more information since, at the later stages, the stakes are higher.
Place the product slide at the front
Knowing that investors are now spending less time viewing pitch decks than in previous years, it makes sense to place the product section at the front of the deck to grab their attention right off the bat.
In fact, the Dropbox DocSend report highlights that in 2022, VC investors spent 52% less time viewing the product sections of successful decks than in previous years. It also goes on to explain that the decks that were successful at receiving the funding highlighted the product section at the front of the deck, while those that weren’t put it at the middle or end of the deck.
Founders now need to make sure that the product section of their deck is more clear and more concise than ever while effectively showcasing the unique value proposition of their product.
Pay attention to the business model slide
The report highlights that in 2022 investors spent 42% less time on the business model slide in pre-seed pitch decks than in the previous year. It also says that companies that were successful at getting funding tended to place this slide more toward the end of the deck.
This suggests that startups in pre-seed rounds should focus on other parts of the pitch deck that may be more important to investors, such as the team and product sections.
On the other hand, for startups in seed rounds, VCs gave the business model sections of decks that didn't receive funding a whopping 233% more scrutiny than in 2021.
This means that startups in this fundraising round should pay close attention to the business model slide. They should make sure that it clearly and concisely outlines their revenue streams, pricing model, and cost structure and demonstrates how they will generate sustainable revenue.
Investors Are Spending Less Time on Pitch Decks
The overall trend for startup fundraising pitch decks in 2022 seemed to be less time dedicated to reviewing them, which means that they are becoming more direct, concise, and straightforward.
The amount of time investors spent reviewing pitch decks in 2021 and 2022 can be summarized as follows:
> 2021: 3:32
> 2022: 2:42
> 2021: 3:16
> 2022: 2:59
This trend may lead to pitch decks being more focused on key elements and metrics critical for investors. It also means that startups must capture investors' attention quicker than before, as investors are becoming more impatient and quicker to say no.
It looks like investors are becoming more discerning and careful in this era of economic uncertainty. So, founders need to bring their A-game to their fundraising pitch decks and start creating decks that focus on telling a clear and compelling story while highlighting critical traction metrics.