When it comes to startup fundraising one of the things you want to have buttoned up the most is your pitch deck. This is the story that you are selling to investors, your identity, and the first impression that someone will have of the brand that you have created. I cover this extensively over the Fundraising Certification, which is a 3 week comprehensive course on fundraising for entrepreneurs.
Given the importance of the pitch deck in the journey of startup fundraising, I thought it would be helpful to describe what goes into it in detail by explaining one by one the slides that I have made available for everyone to download below.
There are several chapters dedicated to this point and to how to build your story on the book The Art of Startup Fundraising but I thought this detailed post would be helpful in providing some guidance during the fundraising process.
SLIDE 1 – THE COVER
The cover slide is where you want to make a splash with the branding. It needs to show clearly what is the company and perhaps insert some of the contact details of the CEO like email or telephone number. This way potential investors know where to reach you in the event there is further interest.
Having a nice image as the cover of the pitch deck definitely helps. You may use a plain logo or include as well an image on the background. Note that people tend to associate memories to images and for that reason you want to have the investor remembering your pitch deck easily by including an image.
SLIDE 2 – THE PROBLEM
The problem needs to be very clear and to the point. This is your chance to connect with the investor and to have them relate in certain way with what you are doing.
When an investor gets involve with your venture is either because one of the following things:
- They have experienced the same problem in the past
- There is a clear sense of ROI down the line for them
- Given their professional expertise they understand it (e.g. doctors with healthcare)
If an investor falls inside the three buckets of interest cited above at the same time, that means you got your lead investor. This may result in you securing at least 20% of the financing of the entire round that you are looking to raise.
SLIDE 3 – THE SOLUTION
The solution needs to be just one. Not three or four, especially if you are an early stage startup. The last thing you want is the investor thinking that you are all over the place without focus.
On this slide you want to come across as clear and as concise as possible. Perhaps a good image of the product in action is a good combination with some text in order to make a good impression.
Avoid statements referencing you being the only one doing this, you being the clear leader, etc. There are at least 100 people that have come up with that idea before you and other companies that may be tackling that same problem with a different approach.
SLIDE 4- COMPETITION
A diagram like the one showing above is a good idea to show the investor the competitors that you have executing in your space. How you compare to them and where you land with your value proposition.
As shown on this slide you want to clearly differentiate yourself from the rest so that the person that is reviewing the slide gets what makes your company so unique.
Perhaps another slide that you want to include is one that describes how much capital each competitors have already raised in the past and at what valuation. This could help in providing some perspective of how much the market is paying. This could also play in your favor when the time comes to negotiate the terms of the deal or proceeding with a potential investment.
SLIDE 5 – THE PRODUCT
This slide is all about showing screenshots of your product in action. To make it even more powerful you may want to add some description about the product itself and some quotes of some of your existing clients talking about how much they love your product.
SLIDE 6 – COMPETITIVE ADVANTAGES
On this slide you want to talk about the advantages of your business and product. Some of the things you can include may include patents and other defensive IP, distribution channels that you have, partners, etc.
Basically what you want to communicate is why you have such a unique position within your industry that sets you as one of the leaders.
The best way to present this is with bullet points. You can also display some of the logos of your partners in the event your advantage is on distribution channels via business development deals.
SLIDE 7 – TRACTION
This slide is probably the most important of the entire pitch deck. When it comes to traction it can be presented in different ways. Depending on the business traction could be in the form of registered users, acquisition strategy, user retention, or revenue growth month over month.
From my perspective, the most powerful way to show traction is by showing a slide that displays how great you have been performing month over month in terms of revenue. If you can show at least over 10% growth each month that is a good data point to share. Accelerator like YC require 15% growth week over week but that may be a bit aggressive.
If you are still pre-revenue then you want to explore another metric that shows progress and that would get prospect investors excited.
SLIDE 8 – BUSINESS MODEL
On the business model you want to explain how you are making money from your operational structure. Depending on the industry in which you are operating you may want to go in detail into what are your margins and how much it costs you to acquire your customers.
SLIDE 9 – REVENUE FORECAST
Normally you want to shoot for at least 3 years of projections. There are some institutional investors that even ask for 5 years of projections but in my experience these investors tend to be the least sophisticated ones.
Even though projections are a shot in the dark when you are dealing with startups, they do provide a good idea of where the business is heading and potential outcomes. It also give a good idea to the investor as to how grounded the management of the the company is.
This slide is more important than entrepreneurs normally think. When you first connect with an institutional investor they will ask for your pitch deck. 3 months later they will ask you on your next meeting where things are at and then they will make a decision. With this in mind, it is always a good idea to be more on the conservative side and to over deliver. Worst thing that can happen is for you to completely miss the mark and under promise.
Additionally you will need to have ready your financials in Excel format as investors may want to see that after reviewing your pitch deck. For that reason you do not need to go into much detail on the deck. All you need is to provide a summary.
SLIDE 10 – AMOUNT RAISED AND CURRENT ROUND
Here you want to add existing investors in your cap table that could serve as social proof for prospects. Some of the people reviewing the presentation may already know one of your existing investors. For that reason it is good to have them included as it ultimately increases your chances of getting funded. You‘d be surprised with how small the world is. Everyone knows each other.
Moreover, it is key that you do not place one specific amount on the slide. As shown on this specific slide you will be able to find a range.
For example, if you place just $5M then funds that invest up to $3M will not look at your deal. The same would happen if you were to leave just the number $3M. By saying that you are only raising $3M then all the funds that are only investing up north of $4 or $5M will not look at your opportunity.
For the reason stated above by adding a range you get to include everyone and as a result you will increase your chances of receiving an investment as your funnel of prospects is much wider.
SLIDE 11 – USE OF FUNDS
You definitely want to get this slide right. Before having this slide created put together an outline of your 18 to 24 month plan so that you have a clear understanding of how much money you will need to have in order to execute the strategy.
In the event you are not clear, or miss the mark on certain things where you should be investing company resources, you will end up giving a really bad signal to prospects. Investors could have a negative interpretation thinking that you do not have a good grasp of the space. Also investors will be left with an impression that you don‘t know why you are raising money.
Ultimately a company without true north is very dangerous.
SLIDE 12 – THE TEAM
Instead of putting the entire team, by including your most junior people, I would only have on this slide the key people in the company. This could be the founders and other senior people that are running the company with you within the management team.
The reason for the point stated above is because startups move very fast and the junior people tend to switch working places too fast. Especially millennials. It is not a good idea to have people review your presentation and then three months later have them see people changing in your organization. People could view this as a sign stating things are not working for the business.
Also, do not put the entire bios of the management team. I would recommend you putting a few important bullets on each member. This could be companies they worked at before your startup and perhaps some impressive accomplishments (e.g. NYT Bestselling Author, serial entrepreneur, 3 major exits, etc).
SLIDE 13 – ADVISORS
Your advisors will be changing as the company matures. At the beginning the type of advisors you want is the celebrity type, the very successful people that would make you look good, etc. However, when you are a little bit more mature in the lifecycle of the company you want people that would be very much involved with your strategy providing guidance.
Advisors are also a great way to receive introductions to other investors. They serve as well as a social proof to show others that you have respected and accomplished individuals helping you out to push things forward. Essentially you are communicating you are not just a random person with a random idea.
SLIDE 14 – THANK YOU OR CONTACT US
This will be your last slide in the pitch deck. Leave a very clear way to reach you via email and phone for those investors that want to reach out to you. Remember that investors may distribute your presentation to other people in their network. Perhaps someone that had access to your slides may want to reach out directly.
Other information that would definitely help to beef up this section is press mentions. Some quotes from articles in which you were mention could be a nice to have here. Have such quotes included with the logo of the media publication in which you were featured.