What Belongs in a Startup’s Pitch Deck?

It's that time you've read about in all your favorite autobiographies, YouTube videos, social media post outtakes, and stories of friends or those friends of friends have accomplished. You've taken the time to develop a game-changing product or service,?found some key players to create a killer team, given your boss the pink slip and quit your job, and have rolled the product out to market - now what?

In your gut, you believe your business is the next unicorn and VC darling. You can hear the music in the air - success is not a probability, but an eventual certainty in your mind........THERE IS JUST ONE PROBLEM: you have no money.

To that, you say, "Thanks for the salt in the wound Chris. I know that already." I invite you to have the patience to read for the next 8 minutes. This will let you know what needs to be inside your deck to hook those elusive investors in.

Many founders of high-growth startups come to find out that bootstrapping has limits and there is an obstacle that needs tackling. Profit before growth is a right of passage. Much like 'stagnant growth' and 'trough of sorrow' stages to scalability are for companies searching for their product market fit footing. Through initial self-funding and the F&F (family and friends) round you can establish your startup's place in the market, but significant scaling and growth - will more often than not -require outside capital.

Luckily we live in an age of cohorts, programs, courses, lists, blogs, social profiles, and endless content to find and engage with investors. However, it’s up to you to sell them on that unicorn product and vision. The best tool for communicating this is your pitch deck.

Understanding how to structure a pitch deck and deliver a strong?pitch to investors?is important bringing your fundraising to a successful conclusion, and I frequently have founders ask me what investors want to see and what matters to close the deal. Before breaking down the contents of a world-class pitch deck, you should understand the distinction between?styles of presentations that are needed. It is split into two parts.

1. The “info-rich” deck, demonstrates the startup’s value only through the content provided in the slides.
2. The “in-person” deck, used when you’re making a pitch, should be visually appealing but textually sparse.

The goal of these formats is to draw Investors to?you. Both decks follow the same general arc:

Overview

We all know first impressions last a lifetime. The initial moments of your pitch are critical to catching and holding investors’ attention—this can often make or break the deal. Begin by introducing yourself and providing an overview of the business: Who are you? What problem does your product solve?

The overview is about establishing a context and connecting investors immediately to where your business sits in relation to familiar market sectors, businesses, etc. This is the starting point that provides a starting point to reference once your pitch gets more detailed.

This can even be broken out into three slides: problem, impact, and solution. Regardless of how you show viability and the concept overview.

This is essential to hook the investors in and why the problem you are is even worth solving - and just as important - why your company is uniquely positioned to do it.

Your Expert Team

Now, to introduce your team.

• Who are you as a collective?
• What are your experiences relevant to this company?
• Does this team have a history of working together effectively?
• How do your talents mesh together toward your goal?

Investors need to see that you know the ins and outs and that your team is capable of executing your startup's business plan. Everyone has amazing ideas that have died in the cradle of entrepreneurship - can you execute your vision with their money?

This tried and true sang holds true here. People buy you. And your startup is no different.

At the heart of the pitch, you’re really selling?yourself. Investors won’t give millions of dollars to a company lacking great leadership. You have to make them believe you’ve assembled the right people to make an idea a reality and that you are coachable/easy to work with.?This slide is simple in form, but it’s necessary to show that you’re qualified for the job. This is a major trust signal for investors.

Market

The next pillar of importance you must establish is to detail the market you’re entering. How big is the market? How much of it will you target?

TAM is the number of dollars spent in a particular market per year, and it shows the potential scale of your operation. This is done wrong by many founders and is vitally important to investors - you will be judged on your knowledge of this as a trust signal. If the 'TAM' is only $20-30 million, it’s very improbable that your 'service addressable market' (SAM) — the segment of the TAM that your product can actually reach — will deliver the investor(s) a worthwhile return on investment (ROI). Investors, for viability reasons, prefer market segments with hundreds of millions - if not billions - in annual revenue. With that said, On the other hand, you can also invoke suspicion of a market that is so generic that it lacks real definition. Niches make riches. So definite that TAM and SAM are well. As a rule of thumb the market should have narrow parameters, but large potential.

Next, identify your SAM and the target market of consumers most likely to use your product. Within your Service Addressable Market, how large is your service obtainable market (SOM)? This is the portion of the SAM that you can realistically capture.

• Do you have market traction? Check out this book by Gino Wickman for more info on this.
• How does your product fit in the market? Always a fan of these roadmaps frameworks to find PMF.
• How much of the market can you realistically retain?

Don't be lofty - that will discredit you. Temper expectations with reality. This is where?validating data is extremely important. If you fail to support projections with evidence of legitimate traction, investors will lose interest.

Product

You've proved the point there is a market for your solution and you potentially can make this grand vision happen. Now, what about your solution? Does it wow the customer?

Demo the Product / Service

Investors need to see what your product looks like and how it works. If you are in tech, a live demo is risky early on potentially, but providing screenshots of the product or doing a short canned demo may not cut it in this environment. It's not 2012 and there are plenty of no-code options to get you 80% to MVP on most tech products. An effective demo helps to legitimize your financial projections by quickly and clearly differentiating your product from competitors. It becomes more real.

Overview the Business Model

Once you’ve demonstrated how your product works to solve your customers’ problems or fulfill their desire, investors also need to understand how it reaches customers and is monetized. KNOW THY NUMBERS.

• What’s the business model?
• How do you acquire customers?
• How does it work on a per-unit basis?

Investors want to see your sales channels and how they have performed. You can’t expect to smoothly scale your operation—or get funding to do so—without knowing exactly how your company acquires and interacts with individual consumers.

In order to prove your product’s viability to investors, you need to clearly communicate why and how your specific business model is rightly positioned to turn a solution to a specific customer desire or problem into revenue. Investors prefer businesses that solve a problem to those that simply improve upon an existing solution. The change of 10% and strike gold isn't for this type of funding. You bootstrap and scale that. Market validation - meaning you have money in your pocket from real customers - is the best determinant of your product’s ability to deliver and its further potential. Patronage from customers is the easiest path to draw the attention of investors.

Competition

You can't claim you have a unique product if you don't know what you are going up against. Many startup founders and teams believe they are inventing a new category of something, or even more so disrupting an industry that requires a new way of thinking. Claiming that you “don’t have any competitors” is a huge red flag for investors. While they may be true you have different types of competitors. You have direct and indirect. Even if you’re going to compete against the “old way” of doing something, you need to know what you’re up against. Describe who or what you’re competing against.

• How do customers solve the problem today?
• What differentiates your product from the existing solutions?
• How does your business fit within the marketplace?

Be realistic about your product’s advantages over competitors. For an example of how to represent this visually, check out this reproduction of?AirBnB’s original pitch deck . This has become a simple staple in the Venture Capital and Silicon Valley pitch deck benchmarking.

Investors will also be skeptical of a product that’s easily replicated.

• What is your barrier to entry that cannot be bought by a competitor? Explain what prevents a competitor from launching tomorrow and eating into your market share. There are plenty of big fish out there with monopoly money if there is an opportunity.
• Does your company?hold intellectual property rights? Be sure to describe any proprietary technologies and how they give your company a competitive edge.

Financial Overview

Investors need to understand how your business works.

• What’s your burn rate? This informs the capital requirements, immediate needs, weaknesses, scalability, etc.
• What’s your company’s track record? Have you made money, how much, who from, etc.
• What’s your customer acquisition cost? Detail your company’s expenses and revenues and how they will scale.

"How much money have you made lately?" Early-stage investors are particularly interested in?short-term revenue projections. Which is typically based on what you made the last year. What revenue do you expect to realize in the next 3-5 years? That's when things become either cooled off, or a juicy deal depending on what your answers are. This may seem so cruel to your early-stage startup to have great expectations, however, take the reverse approach.

To put you in the shoes of your investor...the average holding period of angel investment is nine years. Layer that with the angel's subsidized failed investments with only a very few that bring large returns (ideally around 25-30%). Therefore, your projections must show them realistic returns?within a five-year window, otherwise this is too much risk for them. That makes complete financial sense to frame it this way. Is it fair? No. Boo-hoo for you. That's life.

All this being said, investors understand your projections won’t be 100% accurate. Which isn't the point. They want to see how your company will grow and if you put in the time to realistically understands the upside, the downside, and the side where all the opportunity sits for them.

The Ask

This is where the air gets sucked out of the room. Queue the Shark Tank sound fx. This is the pivotal moment of your pitch where you tell investors how much capital you’re seeking and?at what valuation.

• They’ll want to know your capital structure
• Who’s already invested in your company
• If you’ll be seeking further rounds of funding in the future.

In the eyes of investors, your valuation is the product of a risk/reward analysis. If your company shows more risk, its valuation will be lower (and vice versa). The objective of your pitch?up until this point is to temper the presumed risk of this investment.

1. Think of the lifespan of your business and its expected trajectory built upon everything you have presented thus far. What’s the next step for your company? Specifically, what are your financial and sales goals, and what constitutes success?
2. Break down your long-term vision for your company with defined, measurable milestones.
3. Lastly, describe to the investors what their money will be used for and how it will help you reach the next milestone. This also can be broken out in a separate slide called 'Allocation of Funds'. Very common breakdown.

Combined, these pieces of information?will then decide?whether the percent stake you are offering is a "juice worth the squeeze" to them after an?exit.

Conclusion

The final slide summarizes the important points of your pitch and the note you want to leave them on. You need to drive home why your business (AND YOU) are worth the investment of their hard-earned and sacred money. Where they invest in you, they will not invest in someone else. Be sure to include with a strong call to action with your contact info. During your “in-person” pitch this should be the climax, not a boring recap. Bring it home strong. See where relationships can be built. Find the ground this can stand on. This is how they’ll remember you.

When making your pitch deck, be sure to continually think about these three questions:

1. Why is this problem worth solving?
2. Why are you and your team the right people to solve it?
3. What prior validation do you have to prove that your business can grow and scale?

This is not the first and last step of the transaction. This is establishing a relationship with someone that can not only fund, but mentor and steer the success of your relationship. They are also courting you and you will eventually understand if they are interested all the different resources they bring to the table.

The content of the deck is really only half of the equation to get funded. You’re selling yourself just as much as the product. Having the confidence and charisma to own your pitch and impress investors is the most important—and challenging—part of the pitch.

NEED A PITCH DONE FOR YOUR STARTUP? Book a call with me here and let's do a free strategy session to see what you need to get things rolling!

Book Pitch Deck Strategy Call Here

This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.