Founders, Don’t Wait for Your Next Fundraise To Build Your Pitch
A “working equity story” is a critical tool for fundraising success. Here’s a step-by-step guide to creating the powerful, one-slide resource.
As a startup founder, it’s easy to get caught up in the day-to-day hustle of building a business and lose sight of the big picture. But a founder’s capacity to raise subsequent rounds of capital on the path to scale and profitability will ultimately determine her company’s survival.
One best practice I recommend when coaching founders on strategic leadership and governance: begin every board presentation and business update with a one-slide recap of your company’s working equity story.
What is a working equity story?
The first time I saw a working equity story in action was in the board meeting of a high-growth PE-backed digital commerce company. The CEO kicked off every board presentation with a one-slide snapshot of the story he envisioned pitching to prospective investors at the company’s eventual liquidity event, which was at least two years away. He used this one tight slide to paint a clear picture of the company's vision, strategy, and traction—and more importantly, to reinforce for every stakeholder the end goal, and how the team was planning to get there.
For startups, your working equity story is the narrative you aim to tell to prospective investors during your next fundraising round.
Elements of a working equity story
Big Picture. A good working equity story begins and ends with a meaty vision statement—a powerful one-liner that explains your ambition for the company and sets up the rest of your story. It should speak to the market you’re playing in, your strategy, and significant traction achieved so far, all in one attention-grabbing headline.
Market. This is where you'll describe the size, health, growth rate, and general direction of your total addressable market (TAM), as well as the differentiated solution and value proposition you’re delivering. Be sure to highlight any growth drivers and expansion opportunities, as well as any significant trends or changes in the market that could impact your company.
Right to Win. Here you'll describe why your solution and company are differentiated and defensible, and where your sources of unfair competitive advantage lie. Examples can include patents, partnerships, unique pricing power, uncommon data insights, proprietary technology, or protectable intellectual property, to name a few.
Economics. In this section, you'll highlight the growth drivers and unit economics that will get investors excited about your company: the milestones, key indicators, and quantifiable proof points investors can use to assess your company's progress toward achieving your Big Picture vision. Examples of economic drivers include revenue growth, gross margin, churn, customer acquisition costs (CAC), customer retention, customer lifetime value, average order value, annual contract value, and so on.
Once you have all of the elements on paper, be sure to highlight any changes to the story since the last board meeting or business update. This will demonstrate to investors that you are constantly refining and improving your strategy based on new information and market feedback, and help stakeholders track the major and minor changes happening in the business over time.
The benefits of a working equity story
Routinely updating and pitching your working equity story will help you and your team become more skilled at presenting your case and answering challenge questions, giving you a competitive edge when it comes time to fundraise. It’s an efficient way to bring investors up to speed on your progress and priorities at the top of the meeting, which will save time, ensure alignment, and lead to higher quality discussions and feedback. And it will keep your team focused on the metrics that matter for your company's growth and fundraising capacity, leading to better decision-making and resource allocation.
Incorporating your working equity story into board meetings, business updates, and leadership team planning cycles is good CEO practice. You’ll concentrate energy in the right places, hone your storytelling skills, and invite valuable feedback so your story gets stronger and more compelling over time.