How to create a winning investor pitch deck for startup fundraising
Designing a good startup pitch deck
What is a pitch deck?
Entrepreneurs often prepare a presentation to pitch their business idea or startup to prospective venture capital or angel investors. Known as a “pitch deck”, this presentation usually comprises about 10 slides that highlight the products, business model, team and more importantly, the investment opportunity being offered to potential early stage investors.
There are many examples of pitch decks available online, such as Sequoia Capital, Airbnb or Guy Kawasaki. It is important NOT to get too caught up in the presentation templates and forget who your target audience is, or how to tell a story when creating your presentation. At this point, your deck does not need to list down every fact and be the complete guide to your business. Your objective is to generate sufficient interest amongst your potential investors so that you will move on to the next stage.
What Are the Key Slides to Create A Successful Pitch Deck?
1. Problem
Start with the problem faced by your target market, which is creating the need for your product or service
- How big is the issue?
- Why is it important to solve the problem?
- Who are you solving the problem for?
- Who are your target customers?
2. Solution
Keep it simple, and clearly articulate your proposed solution to the problem. Without diving too deep into technical details, describe the benefits. Explain why it is better than other alternatives in the market (if any).
Tell the story of how your customers use your solution to solve their problems, and how your business idea will make your customers’ lives better. The more relatable your story is, the more interesting it will be to the investor.
3. Why Now?
Investors often question the timing for your proposal, i.e. why is now the right time to capitalize on the problem?
Discuss any market validation the solution has gained so far. Any early traction (e.g. sales, website traffic, app downloads) will be viewed favourably. Other topics can include:
- What strategic partnerships or alliances have been formed?
- How to accelerate the early traction?
- Press, accolades, testimonials
4. Market Opportunity
What is the potential market share once funds are raised? How scalable is the opportunity? Investors want to invest in bigger opportunities with larger markets. So, you need to:
- Define your market, and the market size (value in dollars)
- Show the potential for growth with additional fundraising
5. Competition
Can your company create its own niche given what competitors currently exist in the market? How is your solution a better fit for consumers? Investors will always ask:
- Who are your competitors?
- What gives your company the competitive advantage?
- What are your key differentiating features versus your competitors?
Investors will also be interested to learn about your underlying technology (whether existing or under development). Be prepared to answer questions about your basic technology infrastructure, key intellectual property rights (e.g. patents, patents pending, copyrights, trademarks, domain names), why is your technology superior, and what barriers of entry exist so competitors cannot replicate your technology.
6. Product
Why is your product or service unique? Why is it the solution to the problem? Explain this clearly. Investors will need to know before they decide to invest in your startup:
- What are the key differentiating product features?
- What are additional product features being planned?
- What are the major milestones in the product’s lifecycle?
- How is the user engagement? Why would users want or care about your product?
7. Business Model
Show a solid business model that will generate returns for the investors. If they are going to invest in your startup, they need to understand the potential return on investment and the payback that will occur when your startup succeeds. Be ready to address key issues like:
- What is your business plan?
- How will your business make money?
- What is your pricing model?
- What is the projected lifetime value of a customer?
- What is your marketing plan to acquire customers or users?
- What are your customer acquisition channels? Examples include paid searches, social media, email marketing. Describe any early successes, e.g. in leveraging social networks. What are your preliminary customer acquisition costs?
- What funds has your company raised so far?
Include a quick overview of your business if this has not been addressed earlier in the slide deck.
8. Team
What do the founding team members bring to the business? How will they help move the startup forward? If there is a board of advisors, discuss how they play an essential role in the organization and the potential for growth.
9. Financial
Summarize the company’s financials in a way that explains clearly why an investor is needed and why the investment will help move the business forward to the next stage. The slide also enables the investor to understand the current financial situation and future burn rate as you develop or market your product(s).
It is helpful to include in the financial slide:
- A high level 3-to-5-year financial projection
- Key metrics such as total revenue and expenses, EBITDA, annual recurring revenue, long term commitments
- Key assumptions used in the forecasts and projections
Ensure projections are realistic. Do not say that revenues will grow by 10x annually, but costs will only double year on year.
10. Fundraising
This is your ASK. Breakdown the initial investment needed, the impact to the business as a result of the investment, and what at the terms being asked for from the investors.
- How much seed funding or financing are you asking for? For example, we are seeking $1 to $2 million in financing.
- How long is the financing expected to last and how will it be used?
- What major milestones will the financing enable the business to achieve?
- List any current existing investors, especially if well-known
Other slides to include in the pitch deck
Executive Summary
Time is money, and even though you will try your best to maximise your time with the potential investors, sometimes things happen that are beyond your control. Do not waste the opportunity! Have an Executive Summary ready in case you need to run through your value proposition in less than ten minutes. It should be a one pager that summarizes your business, what problem your startup solves, any key traction so far, the team, and the ask.
Demo and prototypes
If there is an opportunity to showcase the product or service, include a placeholder slide in the deck to demonstrate the capabilities of the solution.
Exit Strategy
Outline possible exit strategies for your startup or small business. Depending on your industry and/or growth rate, your company could have an IPO and go public, or it could likely be bought out by larger market players
Partnerships
If the success of your startup is dependent on key strategic partnerships, such as intellectual property licenses, or distribution contracts, this needs to be covered as well.
Tips for a successful startup pitch
1. Keep the pitch simple
The pitch is not supposed to be as short as an elevator pitch, but do not spend too many hours delving into every detail about the business. To successfully pitch your startup, less is best. The slide should be succinct, high-level. Be prepared to answer detailed questions. Follow the 10/20/30 rule of Powerpoint and keep it simple and straightforward. Avoid wordy presentations filled with long paragraphs.
2. Visualization
Use images, diagrams or animations to communicate your message and tell your story. Slides filled with long paragraphs and bullet points are not as effective as infographics. Use large fonts and limit the number of words on each slide.
3. Keep it short
Ensure you have sufficient time for questions, demos and discussions about your business idea. If you have been allocated one hour, aim to present for only 20 minutes.
4. Keep it current
Startups are constantly evolving and raising money does not happen overnight. It takes time. It is highly likely you will pitch your startup to many investors before you get any expression of interest. So, ensure that your presentation pitch decks are current, and kept up to date with your latest progress, financials, and asks. Do not go before a potential investor with outdated information.
5. Can your deck stand alone?
Ideally, your presentation should be able to tell your story on its own even though it is always better if you are there face to face for the presentation. Sometimes, potential investors might ask for a pre-read or want to run through the deck again after your meeting is over. Your startup pitch deck needs to have sufficient content and be able to tell the main story behind your business idea (and ask!)
Other documents to have ready after an investor pitch
Be prepared to send follow up information immediately after your pitch. Delays in sending on materials after the potential investors have requested for them could imply a lack of preparation or knowledge about your business:
1. Technical documentation
Investors in tech startups often want to run through your technical claims with an expert, and will oftentimes require detailed technical documentation, specifications, diagrams and workflows.
2. Detailed financial models
Detailed financial forecasts for at least the next three years, together with underlying assumptions, need to be readily available. This includes growth metrics, sales projections, profit and loss, balance sheet and cash flow forecasts. Potential investors want to understand the plans for hiring, research and development, sales and marketing. They need to know what is committed and what is not.
Instead of sending over only detailed financial statements, consider using visualization to help investors digest the information.
3. Detailed market research
Be prepared to provide further details on your target market and market research you have conducted so far.
Ready to create a pitch deck? Download my free pitch deck template and start working on your presentation. You will also find links to The Best Pitch Deck Examples from Successful Startups here. A great investor pitch deck will help you obtain financing for your startup. Remember to keep your story compelling and interesting, and address topics that investors expect to see.