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You pitch VCs or investors to ask for funding in return for equity in your startup. The Ask slide is the climax of your pitch. Without it, your presentation is a waste of time for you and potential investors. While this slide is straightforward and relatively simple, it tells much about you and your startup.
How VCs Use the Ask Slide to Evaluate The Opportunity
The Ask slide demonstrates a few important qualities of your business sense. Investors usually ask themselves the below questions as you go through the Ask slide.
Do You Have Clear And Measurable Goals?
Did you think about what matters for your business by setting clear goals for the next 12 to 18 months? For example, pre-seed startups will use the fund to build the product and get the first ten customers. Are they focused on the right investments in such an early stage to achieve these goals? Are they asking for the right amount of money?
Are You Setting The Right Expectations?
It also shows if you have the right expectations for what is achievable in the next stage of your startup. First-time entrepreneurs tend to overestimate what they can achieve. You should avoid that unless you have an unfair advantage, such as an effective overseas team you have already worked with.
Is Your Startup An Outlier?
The Ask slide also reflects if your startup is an outlier or follows the typical stages of any startup. Outliers can be both good and bad. For example, a startup raising for series B or C is considered way behind if they are still fundraising to find PMF (Product Market Fit) or PLG (Product Led Growth). At these stages, founders should be fundraising to scale and fix their operational issues as they tackle new segments in their markets. On the other hand, some startups might be growing very fast and raise seed funds to grow an already paying customer base. The funds asked for and how they will be allocated can tell the stage of your startup. Watch this video for more details about startup stages and how they should allocate their funds at each stage.
Do Your Numbers Match Their Risk Appetite and Models?
The ask slide also tells investors if you are the right fit for their funds and investment thesis. In addition to the investment thesis any VCs must have, they depend on sophisticated models to project their returns and risks that they can take. The amount you are asking for, the stage, and the valuation will tell if you are the right startup and stage for them. Those basic numbers will tell you immediately whether they should continue the discussion with you.
Questions you should answer in the Ask slide
The previous questions are implicit questions that any savvy investor will have in mind as they work the numbers and reflect on how they are going to allocate the funds. However, the ask slide still needs to answer the below basic questions.
What Size and Type of Investment Are You Looking For?
Be straightforward and state the following:
The total amount you are asking for
Your company valuation
Investment terms, i.e., SAFE with CAP, discount, MFN, etc.
How Will You Spend The Money?
Jump immediately to how you will spend this money by stating your top three areas that you will spend the money on. The best format is to state the business function and what you will do in that function. For example, we will invest in engineering to build a mobile version of our website to allow users to access our services and add pictures anytime. My advice here is to be careful about your money allocation. Although in the early stages of your startup, you will spend most of your money building the product, you must still show some balance and allocate some money to building your business, specifically the execution of your Go-To-Market (GTM) strategy
What Will You Accomplish With It?
I can’t stress the importance of this part of your ask slide enough. Investors want to see measurable goals you have in mind, such as revenue, number of customers, etc. Savvy entrepreneurs add clear goals. This section reflects if you did your homework thinking about how you are going to get your first few customers and the value of these customers.
The Best Way To Build The Ask Slide
Building the Ask slide is an iterative process requiring much planning and internal discussions. But start with these steps and iterate as you gain a better understanding of your business.
Identify the key metrics or milestones you want to hit in 12 to 18 months.
Work backward from these metrics & identify the gaps you currently have in a startup, i.e., product features, sales, team, etc.
Build a back-of-the-napkin model on how you are going to fill those gaps and what resources you will need to do so.
Identify the amount of money (and other kinds of help) you need to reach these milestones or KPIs.
Common Mistakes You must avoid in the Ask slide
Discuss the Ask Slide In The Last 5 Minutes Of The Meeting
This is the most common mistake. Many entrepreneurs get excited about the problem and their solution and talk too much about them in the first meeting with their investors, which leaves little or no time to discuss funding and terms of a possible deal. Make sure that you reach the ask slide as quickly as possible.
Avoid Adding Measurable Goals
While you may get away with this, ask if you are in the pre-seed stage, but I recommend adding some measurable business goals. The best way to validate if you are solving a real problem is to figure out if you can get paying customers in the early days of your startup. Think about your sales even before building your MVP.
Adding Too Many Details
Some entrepreneurs consider the ask slide a detailed business plan and sales projections. Don’t do that! Savvy investors know these numbers don’t matter and will probably change each week. You want to state your allocation strategy and a rough estimate of your goals.
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