Write Memos, Not Decks (2024)

I should start this piece by covering my tracks.

I do not believe that putting together investor presentation decks is a waste of time. Rather, I believe that the practice of pitching VCs is outdated, and I believe that founders’ time is better spent operating than pitching.

Decks showcase a company, the market it operates in, how it plans to position itself within the given market, and summarizes why the opportunity should be appealing to the investor being pitched. They give investors a glimpse of the business, and investors are left to make a decision after going through 15–20 slides and hearing a 5–10 minute pitch. More often than not, the decision is disappointing for the presenter.

Decks don’t work because of information asymmetries that exist between founders and investors.

Investors have the benefit of reviewing hundreds if not thousands of decks per year. Information consumed from reviewing decks compounds over time, and as more deals are reviewed, investors begin to anchor their beliefs based on what has been successful in the past.

Founders, on the other hand, typically do not have the luxury of having reviewed large amounts investor presentations, and the feedback from their presentation is typically only gathered internally. Founders must rely on pitch presentation advice shared others, however, this advice is usually standardized and recycled.

The problem with decks is that they are urged to all look the same.

Presentations are taught to start with the problem, then cover the solution. Next they go into detail on the potential use cases and value proposition to customers. The next few slides discuss competition and differentiation. The back half of the presentation is saved for traction, market size, team composition, product roadmap, and funding needs.

This is the structure of 99% of decks. VCs and founders are both comfortable with this format, yet it benefits one side more than the other.

If decks are all urged to look the same, it becomes increasingly difficult to stand out from the pack. VCs review thousands of opportunities a year, and very few make it past first review. After all, VCs cannot invest in every company that they come in contact with, and on average only 1–2% of decks reviewed end up receiving investment.

If this is the case, it makes sense for founders to reevaluate how they are pitching the other side of the table.

When investors evaluate deals, they do not do so in Powerpoint. Instead they draft Word doc memos summarizing the deal. Memos are created to lay out a pitch in prose; they take out the showmanship of a pitch and tell the full story whereas decks only focus on the positives.

There are a number of arguments supporting why founders should draft memos instead of decks, but the strongest argument for doing so is that it provides a chance for companies to differentiate themselves from other opportunities. 99% of decks companies will share their deck with VCs, and 99% of these companies will not be invested in.

Decks are the default format, but they lose most of their edge when you are not there to present the material. Decks are meant to be light on wording, and most of the context comes from the person doing the pitch. The problem with this is that the most-junior members of a fund are typically the ones that handle the first phase of screening, and their notes do not always give the full context. Associates and analysts take most of the initial meetings, but often the intended message gets lost in translation, and ultimately the partners and decision makers of a given fund are not given enough information to move a company forward.

In contrast, a memo provides entrepreneurs a chance to fix some of these issues.

Memos are meant to be distributed internally, and they do not require the showmanship of a pitch. Investors can fully digest an opportunity, and entrepreneurs do not have to worry about messages being lost in translation. Instead, the intended message is typed out in plain English — no deciphering necessary from analysts and associates.

Memos also require less upfront face time.

Decks require entrepreneurs to pitch them, and this forces a founder to face a tradeoff between allocating time between fundraising and operating. Fundraising rarely goes as smoothly as planned, and VCs are notoriously bad at following up with firms if there is no mutual interest. As a result, founders end up spending good portions of their days pitching rather than building. This is not a recipe for success, and it forces entrepreneurs to make tough choices with their time.

Memos simplify this process again by painting the full picture for investors. By drafting a memo rather than a deck, founders are able to benefit both themselves and the investors they are dealing with. Investors can quickly scan through the opportunity, and if there is interest, they can either make your company a priority; if there is not interest, it lets the entrepreneur focus their efforts on firms with which they are a priority.

Startups and VCs alike pride themselves on spotting opportunities for positive change. Ironically, there has been little conversation about how analog and archaic the process is for startups and VCs to engage with one another.

Relying on a standard pitch is a recipe for being forgotten by investors. Unless your company strikes a nerve with a specific solution, you are likely competing on charisma, and your chances of being brought to the investment committee are slim-to-none.

I believe that there is little downside for startup founders to draft a memo to tell their story. Memos are the standard method of communication for the other side of the table, so why would companies default to a deck instead?

Fundraising is ultimately about the business being built and the problems being solved, but every loves good storytelling. Drafting a memo automates the work for VCs and makes an opportunity worth discussing. After all, the main purpose for putting together materials for investors is to get a second meeting. I believe that doing the grunt work of putting together a memo increases a startup’s odds of doing so.