There is lots of advice on how to prepare a pitch deck for investors. And yet, being a startup judge, mentor and investor, I still see investment decks and speeches provided by even very experienced founders that are far away from what investors are actually expecting to see or hear. Though there are no strict guidelines that would secure an investment for your startup, there are some tips that would definitely help you to structure your fundraising deck and attract investors.
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Investor Pitch Deck
Investment deck is by far the most important fundraising material you will use in mailings presentations in front of investors or just as an attachment to your online profile on online matching platforms like Vestbee. An average investment deck contains about 15-25 slides and lasts 10-20 minutes if spoken or just a few minutes if read.
Below you will find some tips on how to organize your pitch and fundraising deck. Keep in mind, this is just a general structure, so you can moderate it whenever you find it suitable.
Introduction
The pitch deck introduction aims to hook the audience so if you already have achievements worth showing, it would be the right time to present them to investors. It might be a well-known customer acquisition, a strategic partnership or performance metrics that would help you to gain credibility. You can also start with a rhetoric question e.g. about the problem your customer faces, which then would be answered in the main part of your fundraising presentation. Alternatively, try give some interesting facts about your product or service or, in a basic version as a coverage slide use your company logo and your Elevator Pitch or One Sentence Pitch.
Problem
What is the real problem your customer is facing? The more painful it is, the higher will be the demand for the solution and the bigger investors’ interest in funding your startup. This part is a deal-breaker for investors so having a clear user case is of key importance here. Make the story maximally relatable to let investors feel the pain.
Solution
After the problem is explained, it is time to introduce the solution. Demonstrate your product’s benefits and uniqueness and explain how it solves customer’s problem. An important point here is not only to explain your solution but to show how it outperforms other solutions available on the market.
Product
In this section explain how your product or service works. Describe the technology and secret sauce behind it. Remember, don’t focus on too technical features and instead show the main value behind the product. You can use a picture, a demo or show a prototype to reinforce the benefits of your solution.
Market
The main purpose here is to show investors that the potential market for the product is huge (at least big enough). The bigger the market, the greater the potential payback on investment, so investors want to make sure that your company pursues a significant market and has all the chances to become a scalable business.
Focus on determining the following:
- Who is your customer?
- Does your market already exist or do you plan to create a new one?
- Do you go global or concentrate on some specific region?
- What is the Total Addressable Market? TAM includes everyone you think you can reach with your product.
- What part of TAM can you specifically target? What kind of customer segments? What is your Segmented Addressable Market (SAM)?
- What part of the market do you think you own/ can own? What is your Share Of the Market (SOM)?
Competition
One of the most popular mistakes startups make in pitch decks is saying that they don’t have any competition. If you think so, you need to conduct a more holistic market research. Even if you provide a brand new product or service, it is likely that your potential clients had already solved the problem somehow. Their solution might be ineffective and complicated but still, the consumers don’t sit and wait until somebody will satisfy all their needs. It would be much better to give as an example several companies that at least to a certain extent address the same problem and then highlight your competitive advantages.
The easiest way to do so is by using tables or graphs. List your biggest competitors, put together their key features and stress out in which areas your solution outsmarts the others and what are your other key advantages. Don't hide imperfections, telling the truth you prove your credibility and a good knowledge of market.
Example of commpetition chart for startups
Market Opportunity
After portraying the market size and your competitors you need to describe the market opportunity. In simple words: why now?
The main questions you need to answer:
- If the market exists- isn’t it already too mature and crowded to break in?
- How do you plan to enter it then?
- If you create a new market, why nobody hasn’t done it before?
- Why competitors can’t do the same?
- What are the main barriers in the market and how are you going to overcome them?
- How fast is the market growing?
- What are the trends and how can they change the future?
- What are the chances to scale up (reach new regional markets or go abroad) in the future?
The bottom line is to convince investors that it is the right time and you are the right person to do it.
Go-To-Market
The next step would be to show the investors that you know how to attract customers and promote your solution. Modern markets are overcrowded and just having a good idea is not enough. You need to find the way to reach out to your potential customers and then “sell” this idea to the investors.
Your go-to-market slide should include the information about the distribution channels you plan to use (direct sales force, partner networks, sales through the internet etc.) and marketing tools you are going to use (advertisements, sales promotions, direct marketing, PR). You will need to outline the main steps involved in acquiring customers and describe the costs (fixed and variable) you have to bear.
Business Model
Your business model slide should give the answer on how you are going to make money. It’s not only about revenue streams and pricing, but your overall business strategy. Many early-stage companies don’t have a well-defined model while pitching to investors for the first time. That is absolutely normal and investors understand that. All you need is to show that you have a general strategy and understanding how to generate money.
Traction & Milestones
Show investors your already accomplished milestones to prove that your business is well-balanced, viable and able to monetize acquired customers.
Among the milestones you mention you can use:
- MRR (Monthly Recurring Revenue)
- Average Revenue Per User (ARPU)
- Customer Acquisition Cost (CAC)
- Life-time Value of a customer (LTV)
- Registered and active users
- Conversion and retention rate
Apart from that, you can mention press coverages, strategic partnerships, and customer success stories. If you have already overcome some challenges and obstacles, this is a good place to talk about them to show your capability of handling things.
If your company is at a very early, pre-revenue or product development stage, you still have some milestones to present. It can be product development, interviews with clients, letters of intent, number of beta testers, downloads or newsletter subscription, taking part in acceleration program or even winning a contest- whatever shows the previous successes you’ve had.
After the past achievements are presented, explain what you plan to accomplish in the future. It might be product development, hiring staff, securing IP, closing fundraising or strategic partnerships, generating the targeted level of revenue or traction.
Financial Projections
Specific financial projections are hard to prepare for a very early stage startup. However, they are considered to be a very good indicator to understand where the business is actually heading so make sure to include them in your deck. Despite the fact that the typical forecast normally covers a time span of 3 to 5 years, for a startup, 3-year projections are fine. If the business you are pitching has already been operating for a while, it would be beneficial to include historical performance as well.
A more specific financial projection would also include:
- Revenue
- Cost of goods sold
- Gross margin
- Expenses
- EBITDA
- Net income
Introduce a simple chart to illustrate your financial performance and projections. Keep in mind that you need the explanation behind your numbers. In other words, you would need to clarify the assumptions you present. It is not necessary to explain every single number which you have on the slide, focus on the main metrics while speaking. The details for all the other projections should be included in a file with full financial projections which you will keep prepared for a potential follow up.
Fundraising
The main questions you will need to address in this pitch deck section are:
- How much money do you need?
- What will you accomplish with that money?
- Would you prefer equity or convertible note?
- How much have you raised so far and from whom?
If you are at a very early stage, your investment need can be calculated using a simple strategy. Consider your future milestones and the costs associated with their achievement then add up buffer quota for a particular period and you are done! This example of fundraising slide might be of great use:
We are raising [ EUR X ] as equity/debt which will give us [ Y months ] of runway and help us achieve: [ milestone 1 ], [ milestone 2 ], [ milestone 3 ].
It is important to explain why you are looking for investment and where you are going to use the money. Don’t go too deep with that but give the investors enough information to answer those questions.
Fundraising slide is also a good place to explain how much capital you’ve already put in the venture, how much you have raised so far, from whom and for what. Previous investments in your company would be additional proof of your credibility in the eyes of investors. If you’ve put some money in the business yourself, it is also a very good sign, because it means that you are determined and truly believe in the project.
Team
According to the general belief, the team slide should come at the very beginning of the presentation, but you can also place it at the very end. Doing so you will ensure that by the time investors see the team slide they already have a general understanding of the company. Thus they will be able to evaluate the actual potential the team has with regard to the given industry. However, if you are a well-known entrepreneur that successfully exited previous startups, feel free to put team section at the beginning of your pitch deck. That will help to attract more attention right from the start.
The impression investors have from the team plays a huge role, especially for an early-stage company. At this point, the level of risk is that high that it is often said that they invest in the team rather than in the idea. So if you are not the right people on board, the odds on a successful venture are low.
Summary
Summary slide is meant to provide a general summary, highlight the most important facts and show your business in a good light. It is your final chance to prove that your startup provides a great investment opportunity. You can also use summary slide at the begining of your pitch deck.
Contact
In the contact slide, leave details about your company, its legal form, location and website as well as team members' contact info. This way investors can find more about your project and reach out to you easily.
Final Remarks
As you see, successful startup fundraising is not all about pitching skills so don’t worry if public speeches are not your strongest side. You can still tempt investors with a well-prepared written presentation and explain specifics of your business during a face-to-face meeting. Just keep in mind that a good business idea itself is not enough and you still need to raise some attention around it to set the stage for the meeting with investors. At least to some degree, the art of startup fundraising requires marketing and sales skills, just as your business. In order to learn more about the pitching process follow our overview of tips on pitching your startup to investors that will help you figure out your own way to successful public pitching and boost your self-confidence.
Looking for investors? Download PERFECT PITCH E-BOOK and learn how to prepare Investor Deck, Elevator Pitch & Competition Pitch that will get your startup funded!
Related Posts:
How To Write Elevator Pitch For Investors (by Ewa Chronowska, Partner, Next Road Ventures)
Types Of Startup Funding Rounds (by Marcin Laczynski, Partner, Next Road Ventures)
VC Tips For Successful Startup Fundraising (by Magdalena Balcerzak, Manager, Vestbee)
