Many of us dream of being our own boss and having our own company. In 2020, it’s theoretically easier than ever, with a plethora of no-code tools, seemingly unlimited online marketing reach and affordable labor accessible from anywhere on the globe.
However, taking a company from zero to 100 is often difficult without the right capital investment. To hire a great team, scale quickly and get a foothold on competitors, money is usually a requirement.That means turning to outside investors is typically necessary.
So how do you go about raising capital from those with deep pockets? Well, a lot certainly goes into it, but one of the first and most important components is the pitch deck (or slide deck). The infamous pitch deck is what has replaced the 30+ page written business plan and is what investors typically want to see at the first point of contact.
As the Barcelona Managing Director of Demium, a European-wide incubator program that has helped startups raise over €30M, I have seen my share of slide decks. I work closely with startups to make sure they are “pitch ready” and that investors will like what they see when they are pitched to by a startup.
Here I will share with you the secrets to an amazing pitch deck, to wow your investors and hopefully secure financing. The rest, though—thinking of a great problem to solve, building an awesome product, finding product/market fit, growing your customers, etc.—is up to you.
The Structure
The first thing to take into consideration is the structure of the pitch. At Demium Barcelona, we like to use the following:
- Problem/Opportunity
- Solution/Product
- Business Model
- Market Size
- Go-to-Market Strategy
- Competition
- Milestones
- Ask/Funding Needs
- Use of Funds
- Economic Forecasts
- Team
It’s not necessary to use this order (it all depends on how you want to tell your story), but generally all of these points should be covered in any pitch, whether it be a five-minute pitch, a three-minute pitch, or even a one-minute elevator pitch. Now, let’s briefly cover each of these (note that for the sake of this article, I won’t go too into detail on every section, but there is an abundance of info online about these items if you’re curious to dive deeper).
1. Problem/Opportunity
I would say this is probably the most important part of your pitch deck because if you’ve lost your audience here, you’ve lost them for the rest of the presentation. You need to state your problem and/or opportunity in a compelling way that easily coveys the pain you are trying to solve. Does this pain happen to a lot of people frequently? Does not solving it cost them a lot of money? Is this a problem that is urgent to solve due to regulatory changes? Show this kind of stuff off!
2. Solution/Product
This should also be very clear—what are you? Are you an app, a marketplace, a SaaS (Software-as-a-Service)? What value do you bring to your customers? Being able to come up with a clear value proposition here is very important, not just for your pitch deck, but for your business. This is also the place to show off your product with mockups, screenshots, pictures, etc.
3. Business Model
Easy—how do you make money and whom do you charge? A good example here is, “We charge businesses a subscription fee of €99, €149 or €199 depending on their level of needs.”
4. Market Size
This is usually the slide that trips up entrepreneurs the most, but it’s also one of the most important slides for investors.
Here the investor not only wants to understand how big this opportunity could be (what is the potential of your market), but also your thought process. An investor wants to know the industry size and growth trends, but also how you plan on enlarging your market by tackling different geographies, increasing your product offering and expanding your customer segments.
Ultimately, this is conveyed in terms of your serviceable obtainable market (SOM), serviceable available market (SAM), and total addressable market (TAM), oftentimes depicted in three circles.
I also like to think of these as your “3 Horizons”. Horizon 1 (SOM) is the market you’re playing in now and the 3rd Horizon (your TAM) should be your ultimate vision for the company, where you believe you can eventually get to.
Market sizing is definitely not the easiest to grasp and putting together a quality market sizing will oftentimes consume a few days of work. That said, a good market sizing will show an investor you have a strong vision and ambition for your company, and doing the exercise will also force you to think about these important things for yourself and for your team.
5. Go-to-Market Strategy
Who are your customers (get specific!) and how are you planning on reaching them? Think outside the box here—are there interesting (cheap) ways you’ve managed to reach (lots of) clients? Tell the investor!
6. Competition
The worst thing you can do here is say you don’t have any competitors—the investor will either think you haven’t done proper research or that there is something wrong with your business. It’s okay to say you have competitors—it’s just important to demonstrate how you fit in with those competitors. What is the gap you’ve identified in the market that you are going to fill? Here, a simple quadrant usually works to show the competitor landscape, but anything visual is good too.
7. Milestones
What have you achieved so far? What do you plan on achieving? Here you should focus on big things such as important product launches, customer targets (“reach 10,000 customers”), revenue targets and so on. Showing these on some sort of timeline works best.
8. Ask/Funding Needs
What would be the point of a pitch presentation without some sort of ask (when you’re pitching to investors and for the purposes of this presentation, this is money, but other “asks” could be feedback or contacts, for example). This slide is simply where you ask for what you’re looking for from your audience. For example, you could be looking for €500,000 to scale to your first 50,000 customers.
9. Use of Funds
Here you need to explain in what areas you will use the money. Will you spend half of it on marketing, a quarter on developing your product and the rest on operations? Illustrate this on a pie chart, for example.
10. Economics
Depending on the stage of your startup, investors may take this slide with a grain of salt, but it is nonetheless important, if at the very least to demonstrate that you are capable of putting a good plan and projections in place. Not too much detail is needed on the slide itself. (Investors will ask to see financial projections and models in the due diligence stage if they are interested in next steps after the pitch.) However, some important metrics to put on this slide could be revenues, profit, customer acquisition cost (CAC) and lifetime value (LTV).
11. Team
For many investors, the team slide is one they pay a lot of attention to. They want to know who they would be potentially entrusting their money to, so needless to say, this slide is a big part of gaining their trust. The most important thing here is to demonstrate who you are (names, roles) why you are the team to make this happen (what expertise you have, how many years you have worked in the sector, what credentials you have). Build your case by showing these things off!
Bonus Advice
Last but not least, I’ll leave you with a bonus piece of advice, but one that must be said: you can concoct a perfect slide deck and present it impeccably, but if your business is not ready for funding, you’re probably out of luck. What does this mean? Well, I’ve thought long and hard about how to put this perfectly into one sentence, and here it is:
Investors want to fund strong teams who have had good traction working on real problems in attractive markets that are not saturated with competitors.
If your project ticks all (or at least most) of these boxes, you’re probably ready for investment. If not, my suggestion would be to work on these points until you’re at a better stage to ultimately get a better response, and a better deal.