These 11 slides provide all the elements investors need to understand your business
The pitch deck is how startups introduce themselves to investors. It’s arguably even more important than the product itself, so you have to make it compelling.
The pitch deck provides investors with a summary of your business. It needs to be comprehensive in scope, covering everything from the problem and solution to the business strategy to the investment terms. But each slide should be simple and succinct and together tell a cohesive story.
The goal of the pitch is not to cover every detail but to get investors excited about joining our journey. A successful pitch doesn’t get us a cheque from investors. But it’s a critical step in the process.
For a pitch to an investment group, you usually have 10–15 minutes to present, followed by 10–15 minutes for Q&A. That isn’t much time and there’s 11 separate topics to cover. That give you only about 1 minute for each topic and every one of them is important.
A successful pitch gets you to the next meeting, a half-day deep dive where we go into all the detail and answer all the questions that you didn’t have time to cover in the pitch.
The pitch deck is not about how great your product is or a technical review of how it works. For technical or specialized products, most investors won’t have a clue what our product does. But that doesn’t matter as long as you can show us how we’ll make money by investing in you.
What you’re pitching is an investment in your company’s stock. A good pitch deck tells the story of how an investor will make money from buying stock in your business.
The stock of an early-stage startup is an extremely risky investment that won’t pay off for 5–10 years, if it pays off at all. The goal of the pitch is to convince investors that you’re the 1 out of 100 that’ll hit a home run for us.
You do this with a pitch deck covers that covers 3 broad areas: the product, the business, and the investment.
Here are the slides in order and how they flow together to tell the pitch story.
Section 1: The Product
The pitch starts off with the basics — what you are making and why.
Many early-stage founders over-emphasize this section. Your product is an important part of the story, but so are the other 2 sections. Keep it simple with just 4 slides:
Problem: Why do people need a solution? What’s wrong with what they’re doing now? Keep in mind that most investors know nothing about our industry so keep it high level. (More details here.)
Solution: What is your product and how does it solve the problem? Most founders over-explain, describing the tech stack and feature list or showing a long demo. Save the product deck for customers and explain the product in a single slide to investors. One technique to get the right level of detail is what I call the parent test. I try to describe our product to my elderly parents. If they can get it, investors can, too. (Change this slide when speaking with an investor who specializes in the industry.)
(Article on crafting a killer problem and solution slide here.)
Market Size: How many people need your solution? This is the TAM/SAM/SOM slide where you show investors there’s $100M or more in customers ready to buy your product.
Go-to-market Strategy: A great product is useless if nobody knows about it. How will you get your product into everyone’s hands — advertising, distributors, direct sales, or social media influencers? Do you license the technology to partners or manufacture it yourselves? Do you sell online, retail, or through resellers?
Section 2: The Business
Having a great product is the beginning rather than the end. From MVP to exit, a million things can go wrong. This section describes your battle plan to get to the finish line. It consists of 4 slides:
Intellectual property or moat: How will you keep out all the copycats once you prove there’s a huge untapped market? Do you have patents, and if so, what do they protect? Or will you use marketing to build up a brand name that nobody can replicate. Or do you have technical expertise that no other company can match?
Competition: Who are the current competitors and why are you better? This is either a 4-quadrant matrix or a checklist showing how you compare. Try to find a way to keep the explanation simple and easy to understand — i.e. you are the only solution that can do something important rather than a long checklist of features.
Team: Who’s on the management team and what relevant experience do you have? Especially in the early stages, investors are betting on the jockey rather than the horse. The management team is more important than the product because a good management team can pivot multiple times before finding true product-market fit. Domain expertise, managerial experience, and startup experience are all critical in building the right product and rapidly scaling the business. A mixture of technical, business, and sales expertise is needed to cover all the bases.
Traction and milestones: How have you executed so far, and what’s the plan going forward? What milestones have you met and what will you accomplish with this investment? If you have sales already, this is the time to highlight your success. If not, do you have pilot users or letters of intent from big customers to prove you can sign up customers?
Section 3: The Investment
How will investors get a return on their investment? Many decks leave off these slides, but without them, the pitch is like a movie that ends in the middle.
This section consists of 3 slides:
Financial projections: How big will the business be in 5 years when you’re ready for an acquisition? It’s all theoretical and no startup ever hits their numbers, but especially for early-stage investors, we need to see the plan. How big will the company grow and how quickly? Will there be any sales this year, or is it all backloaded to 4 years from now? Do our expenses match your revenue projections — how many employees do you need to hire and how much will you need to spend on advertising to drive predicted sales growth?
Exit Strategy: The exit is the way investors get a return on their investment in your business. The goal is to show that if you build a successful business, another company will acquire it at a high multiple (or you’ll be big enough for an IPO.) Who will acquire the business and how much have they paid for similar acquisitions? Big numbers for related acquisitions get investors drooling. Comparables are shown as price/revenues provide guidance on how much your startup will be worth.
Deal Terms: How much are you raising now and at what valuation? Is it a SAFE, convertible note, preferred equity, or common stock? How much have you raised already in this round, and how much is remaining? How much did you raise in previous rounds, and how much will you e need in the future?
Intro and closing slides: I’ve left these off the list of 11 slides, but the deck should include a title slide and closing slide with your contact information.
Note: In later rounds when pitching to big VCs– they already know all the potential acquirers. Personally. And were involved in many of the acquisitions. There’s no need to spell out the exit strategy to them. But the angels and small VCs that invest in early rounds are generalists and need an explanation of how their investment in our stock one day gets converted to gold.
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