CapitalPitch Blog

Beware Corporate Advisor Good Intentions

[fa icon="calendar"] 28/04/2016 2:57:00 AM / by Emlyn Scott

Emlyn Scott

The pitch deck is an extremely important investor communications document as it succinctly and thoroughly summaries a startup business so an investor can review it in less than 5 minutes. It’s a complete, stand alone document (meaning an entrepreneur doesn’t need to explain each slide) that covers every important component of a startup’s business.

Beware Corporate Advisor Good Intentions

Beware Corporate Advisor Good Intentions

Note that a Pitch Deck and a Pitch Presentation (11 Slide) are different documents and serve different purposes. The Pitch Presentation is shorter (both in length and content on each slide) and is used in meetings and when doing presentations to investors. It requires the entrepreneur to talk to the slides to properly explain each slide. Each slide acts as a support for their speech, not as a stand alone slide.

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You pitch your Pitch Presentation. You give your Pitch Deck to an investor to take away.

But I digress.

Today I had the pleasure to sit down with one of CapitalPitch’s investors and ran him through our 21 slide Pitch Deck template.

He shook his head and told me about a pre-revenue startup he had recently invested in that he’d wished had understood the right way to prepare for investors.

They had retained a well respected corporate advisor and spent nearly $100,000 in fees. The corporate advisor had produced a beautiful looking 60 page Information Memorandum (I can’t vouch for the quality of the content as like every investor I didn’t have time to read it).

I was shocked.

They had then convinced the pre-revenue startup that they were worth $15m pre-money. I knew where this story was headed now.

6 weeks later and the startup has wasted $100,000 on a document no one will look at, raised no capital, burnt potential investors and lost productive months.

Now the startup has fired the corporate advisor and an experienced investor has stepped in as non-Executive Chairman. They are doing an investor friendly Pitch Deck and revalued to a more realistic $3m. But a great deal of damage has been done.

I hope they can recover from this and the corporate advisor will move onto their next trusting startup to ruin their business.

Key takeaways:

  • Don’t hand over responsibility for your capital raise to a corporate advisor. It’s your business!
  • Don’t ever agree to a monthly retainer for capital raising services (without at least speaking to one of your advisors that understands the fund raising space).
  • Don’t produce an IM (Information Memorandum) if you are a pre-seed or seed stage business. You probably don’t need it at Series A either.
  • Don’t trust an advisor to raise your capital. What incentive do they have to work quickly if you are paying them a nice monthly retainer? Ask to speak to previous clients.

Download Free Pitch Deck Template

Topics: Startup

Emlyn Scott

Written by Emlyn Scott

Founder & Managing Director at CapitalPitch. Co-Founder & Director OpenMarkets (www.openmarkets.com.au) – Australia’s second largest and fastest growing online broker. Former CEO of the National Stock Exchange of Australia (www.nsxa.com.au) – Australia’s second largest listing stock exchange