For someone who has been building the VC industry and ecosystems in LATAM since 1999, what is happening right now in the region feels very rewarding. The resilience shown during the pandemic is finally paying off, as the astounding numbers of H1 2021 begin to come out: a report from LAVCA (Association for Private Capital Investment in Latin America) shows that companies in the region raised approximately $6.2 billion in venture capital investments in the first half of the year, a 51% increase over the total invested in 2020. Compared to the last half-year, meanwhile, the increase was 138%. The need for more local VC funds providing a continuum of financing rounds is clear, but are these funds finding it hard to attract sizable investment?
When I began my venture capital career in the late 1990s at a development finance institution focused on Latin America and the Caribbean (LAC), the VC world was all about internet exuberance and presenting million-dollar-deals written on napkins that closed in a few days. As we all know, that didn’t last. Those of us who are still working in venture capital learned several lessons from the dot-com bubble and its crash by October 2002.
I’ve analyzed thousands of pitches throughout my career and invested in close to 100 different VC funds. While most of my work and investments are in LAC, since 2020, I’ve begun work in other global regions, including Africa, India, and Southeast Asia. Managing a venture capital fund requires ongoing fundraising. Whether pitching limited partners or informally meeting potential investors, it’s crucial to have a killer pitch deck.
When courting investors, your deck needs to sell not only the fund but also the market. So putting together the right deck takes time and constant revisions. After every conversation with a potential investor, revise your pitch deck to add clarity and address points of confusion. Consider developing multiple decks for initial conversations and in-depth presentations of the fund. However, regardless of the type of deck, clearly convey your message from the very first slide and remain laser-focused on your objective.
Creating the Perfect Pitch Deck
Everyone loves a good story. So focus on creating a deck that tells your story succinctly and effectively. For this, every deck needs three sections. How you implement these three sections depends on your investment strategy, team, and market.
The Introduction
Every story begins by introducing its main characters. Similarly, the first section of your deck needs to introduce the main components of your team. Help LPs understand what your fund does, the team’s background, and how these two are related.
What You Do
The first thing in your deck needs to be a crystal clear definition of what you do. Next, distill your entire pitch deck into one perfect sentence. Avoid business jargon and focus on clarity.
For example, “We invest in emerging education technology startups.”
After providing a single-sentence pitch, offer a high-level look at your firm. Include your investment thesis in a clear and compelling narrative. Then, begin hooking the investor with a compelling story where they see themselves as an essential component.
Who You Are
Selling your fund requires establishing trust and credibility with potential investors. They must trust both the firm and you individually. Therefore, your deck should highlight your history and differentiators.
What makes your fund different from others? What is unique about you today, and what will be unique about your firm in the future? Do you have an exceptional thesis in your space? Do you have access to a specific network? How do you define success for the fund? Answering these questions with clarity and focus ensures your deck stands out from the pack.
Next, share your personal history and that of your co-founders. What is your background? What makes you uniquely qualified to manage these investments?
Highlighting your differentiators is a chance for you to establish credibility and interest. As mentioned earlier, after every conversation, consider the investors’ questions and address them in the next version of your deck. Ultimately, this section should focus on building curiosity so the investor wants to continue moving through the deck.
Turnings points and the way forward
The second central section of a high-quality deck explains what your firm does and why you are confident the fund will see great wins in your specific market.
This section should be data, logo, and detail heavy. Remember that whitespace is also essential. You want to provide the right amount of information without overwhelming the potential investor. The facts and information density should change in this section depending on the type of deck (introductory or in-depth).
Track Record and Metrics
Show the investor you are qualified and have a history of success. Only include data from funds you are directly accountable for – don’t include deals where you were just an advisor, didn’t take part in the final decisions, or didn’t lead the transaction from beginning to end.
When conveying metrics, keep it simple and provide an infographic where appropriate. Drill down to the critical numbers using minimal words and multiple visuals. For example, if your fund has a high internal rate of return (IRR), then let that number stand by itself.
Target Sectors
When investors are considering emerging markets, you may need to educate them on the market. Help them understand where you are providing capital and why that market is essential. Show them that you know the market’s specific challenges and opportunities. These details not only help them better understand why they should invest, but it provides additional credibility for your team.
Sample Investments
Show investors where their money goes. Highlight a few companies from past funds, or show them a robust pipeline that speaks to your investment strategy. Share what they do and how they fit into your investment theses. Again, this builds credibility and shows the investor that their investment will be worthwhile.
Investment Criteria
Make it very clear what you’re looking to invest in and the growth potential. If you’re looking to reach $1 billion+ in the next few years, let them know. If your fund is looking to secure deals that can get a 10x, be clear. If you invest in several verticals, show them why you chose those and not others. Highlight if you only invest in tech companies, the stages you’ll invest in, the instruments you’ll use: are you an equity-only fund, a venture-debt fund, or a mezzanine fund with a blended approach? Show the investor your fund’s strategy and how it plays into the investment thesis.
Target Raise
To end this section, specify exactly what you’re looking for from the investor. Be clear and identify the jurisdiction, currency, and goals involved. Potential investors are sometimes cautious about investing in emerging markets, so provide them with content and assurance. Is your fund a local regulated fund? What are the implications for foreign investors? Show the investor you can anticipate and answer their questions. If an investor asks a question you don’t already address, consider adding that in your next deck revision.
The Bells & Whistles
The final section of your deck is a chance to provide additional details and context that otherwise didn’t fit earlier. For example, share how your fund’s investments will impact the world.
Convey Macro Opportunity
Show how the investment will make a difference in providing access to services and products needed by millions. Explain how the companies your fund invests in delivers these elements. Again, ensure any information or data stands on its own with little explanation necessary.
Educate the Investor
Provide context for investment and opportunity. They may not be fully aware of all the intricacies in an emerging market. Share valuable and credible third-party sources to create awareness about the market and opportunity.
Create FOMO
Engaging a potential investor throughout your deck with a compelling story should provoke “fear of missing out” on a great investment opportunity. Once you’ve established credibility and opportunity, hook the potential investor by highlighting their peers who are already moving into the market. Show the richness of activity in the region with logos of existing investors.
A high-quality pitch deck tells an engaging story. Providing a captivating and engaging pitch provides the best opportunity to close investors in your fund. According to the level of engagement with the potential investor, you’ll need to have several versions of your deck. Ultimately, you want to show potential investors you’re listening to the market (and to them) when building your next fund.
