A pitch deck is a presentation put together by an entrepreneur or a business seeking funding from investors. The average pitch has 19 slides or less on the deck.
As explained by the author of “The Art of Start-up Fundraising”, a founder ultimately needs two different pitches. One version contains a lot of text and information shared with people via email. Another version would be a pitch deck, where the entrepreneur personally presents to investors with more visuals. More visuals help investors keep their eye on you.
Pitch decks that get funded have three key pointers in common:
- Clarity and simplicity
- Compelling
- Easy to act on
You will need to add the following slides to your pitch deck presentation:
- Problem
- Solution
- Market
- Product
- Traction
- Team
- Competition
- Financials
- Seed Money (Funding)
According to the research conducted by DocSend on 200 pitch decks, investors on average spent only 3 min 44 seconds on a pitch deck. Most time that they spent was spent on financials, the team and the competitors.
1. Problem
The slide covering the issue should be a way to explain specifically the gaps your company is going to cover in the market. This is an extremely important and very hard problem to clearly identify, in other words, ‘Why does your company even exist and why should we invest in you,’ investors also understand the importance of this issue because they prefer their money will be used in a unique idea that can have extensive reach.
Besides, you only need to identify and solve one problem. You should act like someone who is working tirelessly, focusing on solving known problems. We generally recommend that start-ups create separate slides for the problem and the solution, as you don’t want to persuade investors with a single slide.
If you have an investor willing to acquire stock in your company, this is probably due to any of the following:
- Have experienced the same problem in the past.
- For them, the ROI from your company makes sense to them.
- They understand your business plan because they have technical expertise in it.
If your investor is someone that falls in all scenarios mentioned above, they are your primary and most relevant investors. You will be able to secure a minimum of 20% funding either way from this investor.
2. Solution
The solution should be concise and very clear. Especially for tech start-ups, the solution needs to be scalable as well. Scalability is the ability of a system to improve overall performance and output when resources are added and load increases. That’s basically what investors want to see. A company you can invest in to make your wheels spin faster. Additionally, it makes sense to outline why the solution makes sense now. As you may know, timing is everything in business and being at the right place in history at the right time is what matters. Getting to market too early or too late can be a major cause of start-up failure.
Avoid making statements that suggest that you are the only one behind the idea and the effort or that you are the clear leader of this business plan. Make sure that you are a team player and that is shown clearly to the investor. As Mark Cuban says, there are at least 100 people who came up with the idea before you and other companies. It’s just that you have used a different approach to deal with this issue.
For example, PayPro as a company can identify a problem of multiple payment channels unavailable to customers holistically. PayPro knows that PayPal does not operate in Pakistan and hence international payments are a hassle for merchants willing to export internationally. So PayPro has identified this issue and offers merchant accounts for merchants to keep a track of all their payments with a state-of-the-art dashboard. PayPro also identified the need for multiple payment channels not limited to just Debit & Credit Card payments in order to help merchants and business scale their business by removing payment bottlenecks in the country. Here PayPro identified a problem and provided multiple solutions by introducing Payment Gateway services that many giants like EasyPaisa cannot provide.
3. Market
The market determines an investor’s potential exit. If you’re in a smaller market, your margins and your returns can suffer as well.
Note that the sub-$1 billion markets may not be very attractive to investors in high-growth companies. The main reason for this is that these investors are looking for investment opportunities where an idea can offer ten times the returns over a period of 5-7 years.
Investors, especially institutional investors, hunt for start-ups that have the potential not only to transform or disrupt industries but to fundamentally change the way consumers interact with markets. We recommend that this slide include a chart outlining past market growth and potential future growth. This allows the investor to quantify the investment’s benefits and potential ROI. Make sure that you cite research sources.
4. Product
This slide is meant to show screenshots of the actual product. For even more impact, we recommend adding a description of the product itself and a quote from an existing customer talking about how much they love the product.
5. Traction
This slide should show the month-over-month growth of the business (e.g. revenue, metrics, etc.). This is the slide where you would include hopefully the famous hockey stick that investors want to see on every pitch deck they review. Getting to this type of “promised land” for start-ups is not easy.
In the event, you are very early stage, or your growth is not that interesting you should avoid including it. To give you an idea, accelerator programs like Y Combiner expect at least 15% month-over-month growth.
This slide should show the company’s monthly growth (revenue, metrics, long-run roadmap, etc.). This is the slide where an investor reviews every pitch, he inserts the famous hockey stick he wants to see on the deck. For such start-ups, the road to the “promised land” is not easy.
If you’re in the very early stages of your growth isn’t that exciting, you should avoid including these metrics.
6. Team
The team members’ slide is one of the most important slides in any pitch deck. Investors want to know who is driving the bus and what makes the bus so unique to fulfil this mission and vision. Note that there are at least 100 others who would have thought of the same idea on the slide. Hence, you will need to work on the idea for 10% and 90% of your executions.
Ultimately, if you can put the right people in the right seats on the bus, your journey will find its way to success. Unfortunately, when you invest in a first-time founder, you also invest in his education and all the mistakes he makes early on. This is always part of the journey and there is no way around it.
The best way to present team slides is to cover only the leadership (ideally the co-founders). Each member must be listed in bullet points with their specific roles and achievements. Ideally, that is more or less related to the specific company seeking capital.
7. Competition
Charts or diagrams are great ideas to show investors what your competitors have done in your field—how you compare to them and where you land on your value proposition.
It should be clearly differentiated from others so that people reviewing your slides understand what makes your business unique.
You can also include a separate slide explaining the capital raised and valuations each competitor has so far. This helps provide an overview of what the market is paying. This can also work to your advantage when negotiating the terms of a deal or advancing a potential investment.
8. Financials
Generally, you should set forecasts for at least three years. Some investors ask for five-year projections, but looking at past experiences, these investors tend to be the least sophisticated.
Predictions are a shot in the dark when dealing with start-ups, but they give you a good idea of where the company is going and what kind of results it can bring. You need to show how healthy your company is.
This slide is more important than entrepreneurs usually think. When you first contact an institutional investor, you will be asked to submit a pitch deck. At the next meeting, they ask where things are and decide. With that in mind, it’s always a good idea to be more conservative and over-deliver.
Additionally, you should have your financial data ready in Excel format, as investors may want to see this after reviewing your pitch deck. Conclusively you won’t need to go into too much detail in the deck. All you need is a summary of your projections.
9. Seed Money (Funding)
Be strategic with question slides. Do not specify a precise amount you would like to raise. For example, if you want to raise $5 million, we recommend setting a range of $3 million to $5 million. Companies have investment limits. So, if they invest $5 million in a pitch deck and the company is obligated to bar him from investing more than $3 million, the company will probably pass. By including the $3 million to $5 million range in the collected amount, we are including investors who may have smaller investment capital. For this reason, use ranges rather than specific amounts, as they should be attractive to as many investors as possible.
Most founders forget to include contact information in their pitch deck. If you have a large following on social media, consider including a link on your title slide. Interested investors will likely look you up and contact the public for references. If you’re serious about your pitching materials, it’s a good idea to have them looked at by someone who understands sales psychology well. Small tweaks to imagery, placement, and language can make a million-dollar difference.
Ref: https://www.youtube.com/watch?v=dtf61YDCXDY
Visualizing Your Business Model: https://youtu.be/ReM1uqmVfP0
