I was scrolling through my timeline on Twitter and came across a tweet about how a pitch deck should look like as well as visual presentations for prospective investors. The conversation continued on how a product might have incredible features coupled with a huge market need but probably lacks the substance it needs to excite an investor. There have been beautiful and visually appealing pitch decks, but the real business could not see the light of the day. Inversely, some have gained market traction and continued to gain global recognition. The point here is that the focus should be on the market need, profitability and other indicators, but efforts must be made to improve on the presentation and communication. In the next few subsections, I will try to expound on the dynamics of pitch decks and raising funds with them.
You’re a new start-up founder poised to build the next great thing, but after some few months into your journey, you need to raise some cash to proceed. Truth be told, raising money for your start-up can be a Herculean task, but it is always essential to get the basics right so that you do not get stuck in your quest to grow. The primary motive of the pitch deck is to persuade an investor to be a part of your business, funding its growth (including providing technical support).
It is worth noting that, there is a huge competition for these funders’ money and as Reid Hoffman puts it, “The classic partner in a VC firm is exposed to 5,000 pitches in a single year” which means your deck is competing with a thousand others. So the question here is what will make you stand out? I will definitely get to that in one of the paragraphs. After extensive research on this topic and as a start-up founder myself, I have realised the ideal pitch deck is hinged on three key things; which are simplicity, brevity and honesty.
It is essential to keep your presentation simple and straight to the point. This makes it easier for the investor to understand your message. Mind you, there are a lot of similar decks so this is important. In addition, try to reduce a lot of explanation and include images and infographics. This makes your pitch deck very easy to understand. One mistake you should avoid is trying to bend the figures to make your business seem it has got all figured out. Put in realistic and real figures about your business and make it clearer on why such figures are there. For instance, if you project an annual profit of $100,000.00, this should reflect the size of the market you are serving.
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Also, if you made $25,000 in a month, do not try to inflate the figure. This is because, if you get your term sheet and the due diligence is done on your start-up, you will lose your funding. In some jurisdictions, this is a criminal offence.
Now let us get to the major elements of the pitch deck. There are different stages of every business. There is the idea, which involves the conception and research, then you get to the piloting, launch, growth and scaling. These stages have different elements of the deck. However, there are the basic ones that must be adhered to in the quest to convince the investors for funding or technical support. These are listed below:
This part of the slide in your deck gives a general idea of what your start-up is about. More often than not, founders put their taglines and one sentence summary of what their venture is about. This is very important in most cases. The ability to summarise your whole venture in a single sentence makes it easy for people to remember you for that statement or tagline. In some instances, it helps in elevator pitches.
From introducing your venture, you state their problem you are trying to solve. This is one of the cores of entrepreneurship. Every idea came as a result of the need to solve a problem. Try as much as possible to be clear in communicating the problem to the investor including the why and how it occurs. It helps in the sense that, it provides a clear picture of what the solutions must look like and what innovative actions must be employed.
This portion is also an essential part of the deck. There should be a market opportunity for what product you are trying to come up with. The size of the market indicates the measurement of the total volume of a given market. Think of this in terms of a circle. The entirety of the circle represents the market size. Market share represents a company’s allocation in the total market size. To come up with the size of the market, you either do your own deep research or leverage on credible researches from recognised development or global institutions
Now, this is one of the most interesting part of the pitch deck. With the problem you stated above, this section determines how you will solve it and the unique thing about the product you are trying to build or have already built. Describe how customers use your product and how it addresses the problems that you have stated. If customers have used your product or service before, try to use a classic storytelling case to indicate the usage of your product. Investors will get the connection between the problem and solution when you use the storytelling strategy.
Every business in a way or another has a competitor, be it big or small. Define how you fit into the competitive industry and how you are unlike the competitors and alternatives that are on the market today. What significant merits do you have over the competition or is there some “secret ingredient” that you have and others don’t? Try to state them.
At every stage of your business, you need to have a revenue model. This describes how you intend to make money using your product. This section also indicates the pricing models and how prospective product users will be charged; daily or weekly.
Traction (Potential Growth):
Traction shows how far the company has come in terms of customer base; profit made, revenue achieved and other notable indicators. In essence, the traction indicates that the problems are real, and the solution you came up with had people buying into it. This, therefore, means that there are figures to prove and must be inserted in the slide. For a business in its idea or seed stage, since you do not have your proof of concept yet, this does not apply to you.
How do you plan on getting your customers? Which media are you using to showcase your product or service? Answers to the aforementioned questions are stated here.
Some investors are driven by the kind of people who ran the business. There is a popular saying among investors and some founders about the people who are behind a venture. Most say they need to be strong in skills and experienced such that should their first product fail or if any setback befall them, they can still pivot and create something using their collective capabilities. The team section shows the names, titles and roles within the venture and if possible advisory board.
Most investors look out for the above elements when dishing out money. This is because they want to have their money’s worth so founders have a lot of work to do get to the top. Other additional documents that founders should prepare are the financial projections, legal documents and other relevant venture paperwork.