On to the fieldnotes...

Should you pass on using a deck in fundraising?

Some people might be able to…

So you heard some people out there aren’t using decks to raise money. And now, you want to do the same?

Is that possible? Yes. But only if you’ve earned the right to do so…

Let me explain.

Decks vs. non-Decks

I’ve recently seen a number of people I follow online promote alternatives to using decks during fundraising. Some push the idea of no deck being superior while others talk about memos and Notion docs being the superior format.

On the other hand, I'm an outspoken proponent of decks. Decks add value in various ways during different stages of a company.

The logical slide-by-slide chunking of a deck helps outline a punchy story. The open real estate for visual elements alongside the written word lets founders add the equivalent of 1000 words worth of ideas into a small space.

Versatility over Memos

The format is versatile. It lets busy investors skim slide titles for a general idea of the company and enables the VC who does want to learn to engage in deeper reads of content in the same document.

It has more personality than a memo and thus stands alone more effectively in an interaction where human connection is paramount. You’d always rather look an investor in the eye and deliver your own talk track to the story of your company, but if forced to choose an alternative, 10 soulful slides is a superior stand-in to a lengthy 10,000 word memo.

And if you do get an audience with an investor, the ability to reference slides that complement your conversation is unique to a deck. You don’t get much value out of pointing to paragraph 6 of a memo during a meeting 👉🤷‍♂️

But what about these successful memos??

When people argue with this point of view, they often reference examples that prove me wrong. They mention entrepreneurs like Brian Requarth, who was able to raise millions from A16Z for his startup Latitud using a memo instead of a deck. They think these founders prove that everyone should move away from decks.

I believe these are exceptions that prove the rule.

Are you an exception like them? It’s OK to avoid using a deck, but have you earned the right to present your ideas in a format that VCs aren’t used to?

Earning the right to go no deck

What do I mean by earning the right?

Venture capitalists have grooved a process of analyzing deals. That’s the only way you can review thousands of deals a year on the way to making all of 5-10 investments. With numbers like that, everything has to be optimized for efficiency.

Everything from weighing signals, to relying on a trust-based system, to pattern matching are all part of a set of imprecise tools that help VCs get to a deal or no deal decision as quickly as possible.

One part of that process is reviewing decks. DocSend famously publishes data that places the average amount of time reviewing decks at around 3 minutes (this has varied depending on the market). Getting a read on whether a company is worth more time based on their materials is a key skill a VC develops. There are many situations where a hard-to-read deck for a fantastic company leads to a VC pass. It’s an unfortunate result of the process, but a reality nonetheless.

So if VCs only spend 3 minutes on decks which can easily be flipped through with images and diagrams, how will they approach consuming a dense memo? All else being equal, they will spend time on an equally interesting company whose materials are easier to consume.

The key part of that is “all else being equal” and where the idea of earning the right comes into play.

Demanding additional time

Things change if you are a founder that demands to be at the top of the stack. Someone where spending 2 or 3x the normal amount of time on initial materials is a worthwhile investment. So what are things that earn you the right to skip using a deck? Here are 3 that come to mind:

1. A wildly positive and weighty introduction - If Patrick Collison reaches out on my behalf and says “You have to meet Jason Yeh. I LOVE what he’s building in fintech and I just committed a sizable personal check. He doesn’t have a deck but check out this 5-page memo he wrote…” there’s a good chance a number of VCs are going to read that memo even if they don’t know who I am. This works but even if you can get it done a couple times… it’s not scalable. I don’t recommend relying on this approach.

2. Exciting traction / data - If you’re number one in the app store. If your revenue graph looks like a hockey stick. If your K-factor indicates viral spread. You likely have data that demands a deeper look. At that point a ten-page memo or zero materials will still likely get you an audience.

3. Reputation / Gravitas - If you’re a founder that has… let’s say… sold his company for $640M*, you might command a certain amount of gravitas that compels an investor to spend their time reading a 5 page memo. There’s a bit of risk taken off the table for a founder who has seen the movie before and has a playbook to follow. Those founders can use whatever format they want. *Coincidentally, my friend Brian Requarth had a monster sale of his company for just about $640M prior to raising capital for Latitud ;)

In conclusion… build a deck

If these three categories don't fit your situation, build a deck. TBH, even if they do… I still think you should build a deck. The effort to do so itself is not time wasted. It's a focusing effort. It's a microscope and a magnifying glass. It's a spotlight on your business showing what you need to focus on.

Many people out there are anti-deck… some are even friends of mine and experts I greatly respect. That said, decks as an integral part of great fundraising is a hill that I will die on.

Build a deck. You won't regret it.

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Signals… it’s all an investor can go off of with an early stage investment!

This is also the same reason a great deck is important. One partner will need to share info about you as efficiently as possible!

P.S. VCs standing on the sideline waiting for someone to lead... ⏳😂 Happy Valentine's Day!