Latest / The Series A Show with Fexingo: Early-Stage Funding, Pitch Decks, and Startup Milestones / Why Series A Decks Now Include a Red Team Slide
Transcript
- Lucas: So last week I saw a Series A deck that opened with a slide titled 'What Could Kill Us,' and honestly, it was the most refreshing thing I've seen in months. Luna: A slide dedicated to failure modes? That's bold. Most founders are still trying to hide their weaknesses, not headline them. Lucas: Exactly. And it's becoming a real trend. I've now seen three decks in the past two weeks with some version of a 'red team slide' — a section where the founders lay out their biggest risks and, more importantly, how they're actively stress-testing their own assumptions. Luna: What does that actually look like in practice? Is it just a list of risks, or is there more to it? Lucas: It's more than a list. The good ones show a structured process — like a quarterly red team review where a small group inside the company plays devil's advocate against the business plan. They pressure-test pricing, go to market, even the core technology assumptions. And then they report back on what they found and what they changed. Luna: So it's not just about admitting problems, it's about showing you have a system for finding them. Lucas: Right. And that's what investors are responding to. In this environment — where AI infrastructure costs are eating margins and competitive dynamics shift overnight — a founder who can say 'here's what could kill us, and here's how we're preemptively addressing it' is incredibly compelling. Luna: I've seen that play out. Stability AI just raised seventy-six million dollars, and I bet their pitch included some candid conversation about compute costs and open-source competition. Lucas: Yeah, no doubt. The companies that are raising successfully right now are the ones that acknowledge the elephants in the room. Investors are doing deeper due diligence than ever, so if you don't flag a risk, they're going to find it anyway. Better to show you already know and have a plan. Luna: What are the most common risks that show up on these slides? Lucas: The usual suspects: dependency on a single large customer, concentration in one vertical, regulatory shifts — especially relevant if you're in fintech or health — and of course, technical debt or key-person risk. But the interesting ones go deeper. I saw one deck that had a slide on 'model collapse' for an AI startup — the risk that their training data becomes contaminated by ai generated content over time. Luna: That's a real concern. But how do you actually red team something like that? It's not like you can run an experiment and get instant results. Lucas: You're right, it's not a controlled experiment. But you can do tabletop exercises — walk through a scenario where a major input changes and map out your response. Or you can build internal tools that detect synthetic data. The point is to show that you've thought about it and you have a monitoring mechanism in place. Luna: So it's about process, not prediction. Lucas: Exactly. And that's something we're seeing more of in general. The days of the ten-slide deck that only shows upside are fading. Investors want to see that you've stress-tested your plan, not just pitch it. Luna: It reminds me of how the best product teams do pre-mortems before a launch. You assume it failed, then work backwards to figure out why. Lucas: That's a perfect analogy. And I'd argue the red team slide is the pre-mortem for your entire business. It forces you to confront the uncomfortable questions before an investor does. And that's a good thing, because it often leads to better decisions even before you step into the pitch. Luna: It's a bit like that coffee we're always sipping during these recordings — it keeps us sharp, but it's also a reason our listeners might want to support the show. Lucas: Yeah, a couple of dollars a month is genuinely what keeps these going. If you've gotten something out of our conversations, you can buy me a coffee at buy me a coffee dot com slash fexingo. Luna: And it makes a real difference, honestly. Every little bit helps us keep the episodes free and ad-free. Lucas: So, back to the red team slide — what's the right way to actually build one without scaring investors off? You don't want to look like your business is falling apart. Luna: I guess there's a fine line between being honest and being a downer. Lucas: It's about framing. You're not just listing risks; you're showing countermeasures. For each risk, you have a mitigation strategy and a trigger that signals you need to activate it. That transforms it from a confession into a demonstration of resilience. Luna: Can you give me a concrete example of how a founder might frame that? Lucas: Sure. Say you're a SaaS company with high customer concentration. Instead of saying 'we rely on one big client,' you say 'our largest customer is forty percent of revenue, which is a risk we monitor closely. We've implemented a customer diversification plan with a target to reduce that to under twenty-five percent within twelve months, and we have a dedicated retention team for our top accounts.' Luna: That's much more reassuring. You're not pretending the problem doesn't exist, but you're showing you've done the math and you have a plan. Lucas: And that's exactly what investors want to see. In a market where trust is at a premium, a red team slide is a signal of intellectual honesty. It tells the investor, 'We're not going to surprise you, and we're thinking about the things that keep you up at night.' Luna: I've also noticed that some founders are now including a slide on 'what we got wrong' — like a retrospective of past mistakes. Is that part of the same trend? Lucas: Related, but I'd say the red team slide is more forward-looking. The 'what we got wrong' slide shows humility and learning, which is great, but the red team slide is about active risk management. It's a living document. Some of the best founders I've seen update it every quarter and share it with their board. Luna: That's a good practice, actually. It turns the red team from a pitch prop into an ongoing governance tool. Lucas: Right. And it's not just for startups. Even public companies are adopting similar frameworks. I was reading about a large tech firm that does a quarterly 'kill the company' exercise, where the leadership team spends a day trying to come up with ways to destroy the business. They take it seriously because it surfaces blind spots. Luna: I love that. It's like a fire drill for your business model. Lucas: Exactly. And for a Series A company, you don't need a full day, but you do need a structured approach. Maybe it's a monthly two-hour session where you rotate who plays the role of the contrarian. The key is to institutionalize the practice so it doesn't feel personal. Luna: How are investors actually reacting to these slides in practice? Are they seeing them as a positive, or do they still prefer the pure growth story? Lucas: From the partners I've talked to, it's overwhelmingly positive. They see it as a sign of maturity. One investor told me that a red team slide often shortens their due diligence time because it answers the questions they would have asked anyway. And it reduces the chances of a deal falling apart later. Luna: So it's actually a time-saver for both sides. Lucas: Exactly. And in a world where everyone is pitching AI agents and vertical solutions, a red team slide can make you stand out for the right reasons. It's a differentiator because it's rare. Most founders still default to the highlight reel. Luna: What about the risk that it gets used against you? Like, an investor takes your red team slide and decides the risks are too big. Lucas: That can happen, but if the risks are too big, they would have found out anyway. And if you've mitigated them well, you've already de-risked the narrative. The downside of hiding a risk is much worse: an investor discovers it post-term sheet and either kills the deal or re-trades the valuation. I'd rather be upfront from day one. Luna: It's about building trust, and trust is the currency of early-stage investing. Lucas: Well said. And it's a trend I think we'll only see more of. As the market keeps rewarding transparency, the red team slide is going to become a standard part of the Series A playbook. The startups that adopt it early are going to have a leg up. Luna: It's almost like the 'we're aware' slide is becoming the new 'we're awesome' slide. Lucas: Ha, exactly. And that's a good thing for everyone. Founders make better decisions, investors sleep better, and the conversations are just more honest. If you're preparing a Series A pitch, think about what your red team would say, and put it on a slide. It might be the most valuable slide in your deck.