Olena Petrosyuk and Igor Shaversky are co-founders of Waveup, an advisory firm for startups
The second quarter of 2023 was probably the worst quarter in years in terms of venture funding volume and the overall number of closed deals, especially for startups depending on Western cash inflow. Amidst the global economic turmoil and a 13 per cent quarter-on-quarter drop in venture funding worldwide, Tom Loverro, a general partner at IVP, even forecasted a “mass startup extinction” that seems to unfold.
However grim, this situation might have a silver lining for the Mena startup scene. Considering the overcrowded US market and the recent Western valuation bubble, VCs are turning their gaze overseas, looking for fresh ideas, more sustainable, cost-efficient businesses, and ultimately higher returns. Local startups who can seize this opportunity will be rewarded with the dry powder stored for the best players.
There is just one problem - Middle Eastern businesses have historically been exceptionally bad in telling their story to foreign investors. We are witnessing even the most promising businesses with great products and traction failing to attract the interest of the VC community. Why? All goes down to the lack of a compelling investment narrative in the pitch and the inability to tell a truly attractive story to the investors.
The game of pitching has been perfected by US startups - and, in a way, spoiled the overseas investors who rely on founders’ ability to clearly and succinctly articulate their solution, competitive moat, market, and team. And it goes beyond simply raising funding. A great elevator pitch and investment deck help not only to secure funding but also instil confidence in founders’ ability to sell the vision of their business to future clients, partners, and team members.
Over the years, at Waveup, we have helped over 600 startups supercharge their approach to telling the investment story and ultimately secure funding. Leveraging our knowledge, we have decided to compile the list of the most common mistakes we see in most Mena pitches - and unconventional advice on how to fix them, presenting investors with an amazing story of the business and opportunity.
Open your pitch with a bold, attention-grabbing mission
The fight for dwindling investor attention has peaked. Over the past year, we have seen a 20%+ drop in investor engagement rates - and that just means the game to win investors’ attention got exponentially harder.
We’re seeing the traditional approaches - like starting the deck with Problem-Solution slides - losing their efficacy as investors grow numb to overused, templated frameworks. What we suggest instead: start your pitch with an ambitious, bold company purpose. Explain why your company exists - and what is the latest massive shift that has enabled your solution to come to play. Do that before you start diving into a problem to clearly establish your purpose, set the stage, and evoke the feeling of strong market momentum.
Make your slide headings tell a story
For over a decade, slide headings have been done in a templated, YCombinator-style manner: Our team, The problem, The Market, etc. Just like opening with a Problem-Solution narrative, this approach to headings is increasingly losing its efficacy.
To win investor attention, we recommend you replace the dusty, robotic-sounding slide headlights with descriptive and self-explanatory ones. Make sure your headings tell a story, saving investors the time to digest the information.
Keep your product/solution information snappy
One thing that unites the majority of Middle Eastern pitch decks we review is the overarching mission to stretch product information across 5-10 slides, with detailed descriptions of how the product works, what it does, a full list of the existing and future features and endless account of the value proposition points. Unfortunately, while this approach is surely exhaustive, it’s also one of the most secure ways to lose investor interest.
Remember, each slide in your deck must sell an idea. If you drag one idea through 10 slides, it looks like a bad idea. This fact holds true even for the cutting-edge solutions that rely on proprietary technology as their moat.
Your product information should comfortably fit into one, at most, two slides. That could include one slide explaining how your solution works and what sets it apart and another to demonstrate your unique value proposition (UVP). When describing your UVP, always add measurable results it has generated and add positive user testimonials to substantiate your claims.
Try to avoid having endless lists of features and benefits in your slides. We also see that one-stop-shop solutions are massively popular with startup founders. About half of the Mena startups we worked with pitch their offering as a one-stop solution, often targeting multiple personas and use cases. And while in rare cases, that might be a valid strategy, investors generally believe that a company that tries to be everything for everyone often ends up being the opposite. This belief is rooted in facts: historically, most companies that eventually became hegemons started by zeroing in on a single product and a single customer profile.
Begin with a single, powerful feature that addresses the key pain point for one specific target group. Hold off on branching out to various audiences and features until you've successfully launched and established one. Demonstrate that you have an "anchor" use case that people are ready to pay for, and then expand functionality from that point.
Kick SWOT and Porter’s five forces frameworks to the curb
Investors no longer care about models like SWOT and Porter’s five forces, yet we still find them crowding the decks of Middle Eastern startups. For investors, this sticks out like a sore thumb. They rarely add any value and are mostly done in a completely wrong way.
Forget the old-school frameworks and instead focus on building a strong “Why now” argument and outlining your strategy to dominate the category. Your pitch should evoke a FOMO frenzy and urge investors to write you a cheque.
One approach is to align your solution with current trends in the sector. Riding the generative AI wave? Talk about it. Promoting sustainability and contributing to a better world? Spin this into your narrative to attract investors with ESG mandates.
Also, forgo those nondescript comparison tables filled with checks and crosses, where you pit your features against competitors. Features can be copied, and investors know that, so solely leaning on them for differentiation is a losing strategy. Instead, talk about your category and how you’re planning to lead it long-term. What is your industry positioning? What’s your competitive moat? Demonstrate your strategy on how to dominate your niche in the most compelling way.
Put traction front and centre
A strong traction slide can be your golden ticket to an investor's shortlist. It solidifies investor confidence that your team can execute your promises and deliver results.
Sadly, Mena founders waste this opportunity all too often. They either put this slide at the backburner of their pitch or whip up a basic “Journey to date” slide with lengthy descriptions of milestones that don’t really matter (think: ‘registered the company” or “hired two people,” etc.).
You must put your best foot forward with this slide. Dive into the KPIs you’ve achieved and analyse your operational data to display all your progress. It can be month-on-month growth, successful use of previous funding, an uptick in average order value or repeat clients, or new spots on the map you’ve marked — the more you show, the merrier.
If you are just starting, highlight every win, no matter how small: flash your partner’s logos, mention your growing social media community or a surge in SEO traffic, and gather user testimonials to show you validated the concept. Let investors know things are happening.
Ditch generic market sizing
Here’s what we see many of our Mena clients do with their market size slide:
1) Google the generic size of their market (tourism, SaaS solutions, e-commerce, etc.)
2) Slap the number on the slide with a bunch of other relevant and irrelevant market stats
3) Make off-the-cuff guesses like “We only need to win 1% of the market…”
This approach comes across as lazy and indicates you know little about the real market potential and your ideal customer persona. If that’s the case, how can you grasp the scale of the problem you’re trying to solve or correctly predict your future revenues?
To fix this, zoom in on your ideal persona, how many of them are out there, and how much they are willing to spend on similar solutions. Conduct a comprehensive bottom-up analysis of your market with a specific breakdown of your total addressable market (TAM), serviceable addressable market (SAM), and serviceable obtainable market (SOM). And make sure that your target audience is big enough to meet investor expectations for returns (a ballpark of $1B+ for the initial SOM is always a safe bet).
Get serious about your team slide
By itself, your idea is a dime-a-dozen—unless it’s supported by undisputed traction or/and a top-notch team of executors. Typically, the earlier the stage (and the less traction you’ve gained), the more essential it is to have a cogent, compelling story around your team.
Your team slide must attain one task: convince investors you have the right people to execute the idea. Unfortunately, local founders rarely give this slide the attention it deserves. We see people listing years of their experience, universities attended, or past positions - without highlighting the experiences and achievements that actually matter.
Our recommendation around how to build an awesome team slide:
Focus on what you have done vs. positions held. Your traction is the most important element of your bio - and to evoke trust, you need to show you have the capacity and experience to execute.
Show off your previous achievements: successful ventures you launched or were a part of, the growth you achieved, or well-known brands you worked with (think: ‘founded and exited x companies’, ‘grew the company from 0 to $xM in revenue; ‘managed expansion for brand Y’, etc.)
Demonstrate deep domain expertise and technical knowledge - and when possible, quantify the impact you’ve delivered across your career.
Turn your go-to-market and business model slides into a competitive advantage
The go-to-market slide is massively important for the investors, and yet in the majority of Mena decks we review, it’s often confused with the marketing strategy. Startups tend to cover extensively planned marketing tactics (SEO, influencers, google ads, and so on) and yet completely miss the point of the go-to-market slide: demonstrate a well-thought-through execution strategy on how you plan to deliver your solution to the market and reach, capture, and retain your users.
Similar mishaps happen with the business model slide. Companies tend to cover in detail the pricing but completely miss the point of what investors actually care about - the unit economics of your business.
How to fix the above? Don’t just tell what you plan to do - show the thinking and uniqueness behind your strategy and support it with metrics if available. Talk about specific strategies that will make sure you win the category (think: community-led growth strategy, great expertise in the outbound channel, viral inbound growth, etc). Highlight the information that de-risks the business for investors (things like existing customer base, distribution network, partnerships, strong business margins, existing contract pipeline, etc.). Prove your business model is capital efficient by including unit economics metrics on your slide (CAC payback, burn multiple, rule of 40, LTV: CAC, etc.).
Don’t rush sending your financial forecast (yet)
In numerous cases, we had to stop our clients from including detailed financial forecasts in their pitch decks during their initial investor outreach. Why? Because doing so can actually reduce your chances of receiving a response from potential investors.
The primary objective of your pitch deck is to pique investors' interest, maximise response rates, and foster connections. A detailed financial forecast—even a solid one—won't necessarily aid in achieving this goal, as other factors come into play at this early stage.
A bad forecast (or a random valuation number, for that matter), however, can very much deter investors from following up with you. Some investors might consider your numbers overly inflated; others might find them too conservative to deliver the expected ROI.
Our advice? Unless you are a revenue-generating business, withhold your financial forecast until investors request them. By that point, you’ll have established some interest from investors, which makes it easier to rectify any potential issues with your model without losing a valuable connection.
Less theory, more practice
Finally, the last one might seem counterintuitive in an article about pitch decks but might just be the most critical piece of all. One propensity most Mena founders share—and absolutely should forgo—is wasting precious time on business plans and other fancy documents for investors while overlooking what actually matters.
Remember that most investors would be willing to invest off a decent pitch deck. Many are ok to invest off a basic financial forecast. Very few would ever read the business plan (or invest afterward). A good idea that has early traction and validation will always generate interest. Unfortunately, instead of focusing on generating that interest and talking to users, founders end up spending months polishing unneeded business plans that are completely disconnected from reality and future strategy.
Instead of sweating on documents that rarely move the needle, do the following:
Talk to prospective users. Revisit your ideal customer persona and ask them about their pains and impressions of your solution. Collect their feedback and incorporate it into your pitch deck to demonstrate to investors that you've validated the concept and found initial users interested in your product or service. It's this real-world testing that captivates investors—not lengthy business plans.
Move fast. Don’t burn up your valuable time polishing up various documents before you start conversing with investors. Get your feet wet first: craft a powerful story and a sleek pitch deck, and start knocking on investor doors. You can always prepare and follow up upon request for any extra paperwork.
Increase the funnel and talk to as many people as you can, and don’t get discouraged after a few ‘no’s’. One unicorn client we worked with reached out to over 150! funds for their Series A. 148 declined, and 2 ended up investing. Some clients we work with contact hundreds of investors before securing funds. And while the process might be time-consuming, these early conversations are extremely valuable. Not only do they provide you with the relevant first feedback on your idea and business from people who’ve seen it all, but they also help to identify early any potential red flags, improvements needed, or specific metrics these investors expect to see before they will fund you.
Even if you get a no from one investor, having these early conversations means you can establish a connection, do your homework, and come back to the table six months down the road. The investor then will be much more comfortable writing a check now that they know the team and see you are willing to listen, learn and execute your plan. After all, one thing we do know for sure is that investor interest in the Middle East will continue to grow - and local startups need to make sure they are prepared.