Posted by Early Growth
September 18, 2014 | 5-minute read (1006 words)
How do you put together a pitch deck that impresses investors? What goes in one anyway? And how can you make maximum impact when you’re giving the pitch? Marc Phillips, Managing Director at Arafura Ventures, Jim Fulton, Partner at Cooley LLP, and EGFS COO Sirk Roh, covered all that and more in our recent webinar: Startup Pitch Decks That Work. If you missed the webinar, here’s my slide-by-slide take of the highlights.
At the outset
- Select investors who can re-up on their investment and who can help you beyond just giving money.
Putting together your deck
Slide 1: Logo/Mission/Positioning Line.Founders
- This slide is your elevator pitch. In 15-20 seconds or less, you should convey a sense of excitement, while getting across to investors that you are “investment ready.” For best results, make this emotive, using images and logos where you can. Use your positioning line to convey your mission and vision.
- If you’re an unknown quantity to these investors, describe your management team upfront, being honest about skill gaps (Keep in mind that it’s a lot riskier for investors to invest in a solo founder versus in a team of at least 2).
Slide 2: The Problem We Solve
- Keep this one simple: zero in on the core problem and clearly state it.
Slide 3: The Solution
- You want to “show rather than tell,” by focusing on how users interact with your solution and offering examples. Again, using images (for instance a screenshot of your software) or logos to take investors through a process flow will make you more effective and convey necessary information in the most efficient way.
Slide 4: The Market Size
- This is the first slide where VCs can assess whether your team members are product people only or whether they also demonstrate business experience and savvy. You need to demonstrate an understanding/analysis of the true market size and not just paint a picture of a huge total addressable market. Hit it out of the park by helping investors quantify the investment potential of the market niche you plan to hone in on.
Slide 5: The Product/Technology Architecture
- Show how your solution works from the user perspective and how everything (API, algorithms, etc.) ties together.
Slide 6: IP/Defensibility/Scalability Chart
- Describe this as concisely as you can, but be sure to answer: Where’s the differentiator? What makes your IP defensible? What’s your strategy for protecting it (patents, trademarks, other)? How will it scale?
Slide 7: Go To Market/Distribution
- Cover basic blocking and tackling here by explaining how you’ll go to market/distribute your product. You need to have a handle on cost and be prepared to answer questions re strategies for each stage as well as the relative cost-intensity of different options.
Slide 8: Competitor Matrix
- Don’t dismiss competitors. The good thing about having them is that it validates the market for your product/solution!
- The key thing to convey is that you’re informed and in touch with the market. Use a matrix to show competitors’ weaknesses and strengths and your distinctive advantage.
Slide 9: Revenue Projections
- The best way to get behind the numbers is by creating a bottom-up forecast so that you clearly understand the operating expenses, customer acquisition costs, and people resources required to execute your plan.
- Then, be sure you know your assumptions cold (these can go in an appendix) and are able to speak to them.
Slide 10: The Advisors
- Advisors are important, especially if you don’t have much of a management team in place yet. Why? They give you confidence and, when the going gets tough, a supportive shoulder.
- Look for advisors you personally like and can professionally benefit from. Give them a little equity (up to ¼ of 1%), lock them in for 12-24 months, and set clear objectives (for example, ½ day a month of their time or x number of introductions) and demonstrable quantitative results for their involvement.
Slide 11: Use of Funds
- Have a realistic sense of the right amount of money to raise: enough to get you to the next critical inflection point. In other words, milestone funding. That means aiming for an amount that will give you 12-18 months of runway, including a cushion for pivots and delays. If you’re struggling with this, your advisors, including accountant or CFO, can help you size a round.
- Put your ask upfront. Know that for A or B rounds with VCs, you will be giving up at least 20% of your equity. This could rise to 35-40% if you’re looking to get a meaningful round done.
Slide 12: Exit Strategy
At the pitch
- Not every deck includes this, but presenting your strategy shows investors you’re thinking ahead to eventually monetizing the business and returning their money with a premium.
- Keep wording simple and deliver your pitch in short sentences, using non technical language, and connecting with analogies and anecdotes.
- Where you can, use graphics.
- Let the best pitcher pitch.
- Keep consistent momentum/pace in presentation.
- While your deck should answer the most common investor questions, be ready to give thoughtful answers to others that come up during the Q&A.
As you prepare, also keep in mind that while investors don’t expect you to know everything, they are looking to establish your basic trustworthiness. Tell the truth. Honesty and integrity are paramount.
Questions about pitching? Tell us about it in the comments section below or contact Early Growth Financial Services for pitching advice.
Deborah Adeyanju is Content Strategist & Social Media Manager at Early Growth Financial Services, an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. Deborah is a Chartered Financial Analyst (CFA) charterholder with more than a decade of experience as an investment analyst and portfolio manager in New York, London, and Paris.