- On June 20, 2016
- By Michael
How to Create a Winning Pitch Deck
We have been getting a lot of questions on what it takes to get funding. One of the keys to getting funded is sharing your compelling story and influence the audience to participate in funding your business. They key to making this happen is a Pitch Deck – a pitch deck is typically a presentation used to talk with potential investors in person or via a web based meeting.
A Pitch Deck is important because it is almost the first impression you will make to the investor. It tells your story. Ultimately, if you have the right story in place it can help you secure funding in an easier way. Based on our experiences, there are a lot of variations to a pitch deck and we will discuss some of the keys to presentations we have used to produce success with our fundraising efforts.
Most importantly, when you are fundraising, it is important to understand you are telling a story and that story needs to be roughly three minutes and forty four seconds long. Further, the quality of the pages is more important than the quantity, and lastly, investors are most interested in the financials. (For more statistics and analysis around the art of the pitch deck, check out this great article by TechCrunch)
To start any conversation, it is important you make an introduction, and your pitch is no different than a conversation.. The introduction in the pitch deck is completed through your cover page, usually with a logo, your slogan and ideally you can personalize it to the audience. You only get one chance to make a first impression, so as you build your first few pages, it is also important to make sure you have a professional assisting with the design, images, formatting and layout of the presentation. One great resource to use is Concept Drop.
Next, you want to paint the picture; you want to sell the dream. So, you are going to focus on selling the dream, your vision in the next part of the pitch deck. Sharing your vision gives the audience an understanding of where you will go given their resources.
Once you have shared where you want to go, it is important to discuss your market. By demonstrating the size of your market, you can show the opportunity that is available to your business. One mistake many entrepreneurs make is choosing a market size that basically represents the entire population on the planet. Rather, be specific, be niche and be focused – whether it is by geographic location or demographics, or user interest, make sure you identify the very specific target market you are seeking to acquire in your business. This is important for two reasons – first it shows that you have gained insight about your business by doing the necessary research; secondly, it provides you with a very good idea of potential valuation of your business based on your ability to capture a percentage of the marketplace.
The next slide should demonstrate your business knowledge. Do you understand your competitors? Do you understand the market dynamics? Do you understand the marketing segments you are going after? Being able to demonstrate that you understand the industry and where you are going is very important with investors. A great way to present this slide is through two-axis graphic plotting the various competitors based on the key attributes in the four quadrants.
At this point, it is important to interject the importance of conducting research and gathering data. While many people want to create or sell, the core of a successful business is understanding the customer, the market and the nuances of the market. This can be done through a variety of sources including:
- Primary Market Research completed by you and your team
- Secondary Research completed by a third party
- Data gathered from an Association
- Information provided through Government guidance
- Research conducted using maps
- Insight created from interaction with college and universities
- Details from Dunn & Bradstreet
- The best resource is going online and Googling it
As any good salesperson knows, you sell to a buyer’s pain, so in the next slide should talk to the current pain being felt by the market and customer. This question answers why your product exists. You need to be able to answer the question – “what problem do you solve?” When you can answer that question you are defining your competitive advantage and defining whether you are evolutionary or revolutionary.
As with any good sales pitch, once you define the pain, you should provide them with a solution. The next slide is your chance to share about your product and the differentiators. What makes you and your products or services different? How are you better than the competition? What are the unique attributes of your product or service?
It is all about timing and your next slide should discuss the ‘why.’ Why is it the right time? You can have a great idea and if the timing is off because of various factors, the concept will just flop. If it weren’t for timing for Airbnb, it wouldn’t be where it is today; Uber wouldn’t be where it is today. It’s all about the timing. So why is the time right for you now? Being able to share that to your potential investor is important.
The next thing is to always show the traction; you’re telling a story, you’re talking about where you’re going to go, but where did you come from? Maybe it’s humble beginnings, maybe you’ve made a bunch of progress, maybe it’s your customers, maybe it’s your revenue, or maybe it’s your rounds of financing. But being able to timeline and sequentially show where you have come from and where you will go is really important. That traction gives them an understanding, a background, relatedness to you and your project. It also shows momentum, energy and forward progress. No one wants to invest in a stale idea or a business that is not going anywhere.
In the next slide you want to share with the investors how the business makes money. You are asking them to invest and in exchange for that investment, they are asking what type of return do I get and how do I get it. Showing them you understand your business and how it will make money is very important from the investor seat. Answering the question “How are you going to create a return for them as your investors?” is very important. Just think about the popular show Shark Tank – one of the most popular questions is’ how much revenue have you generated selling your product?’ If you can show cash flow that will be a huge bonus. (In this article, Inc. Magazine examines the most important questions for Shark Tank.)
As a bonus slide, if you can explain to the investor how you are going to acquire customers, it will go a long way. The ability to demonstrate proof of a minimum viable product allows you to demonstrate there is a possibility for growth. As opposed to having an idea without the resources invested to prove the validity of the model. In this slide you should explain how you are going to go grow your customer base. How are you going to go about selling? How is that business development going to occur for you? It’s really important in this slide to explain where you are going to do your business development. In 2004 Facebook did an amazing job of demonstrating projected growth. By showing they had over 70,000 members creating millions of monthly impressions, there was definitely something in the idea and it was this information that created the real interest for the investors. (To learn more about theFacebook.com pitch deck click here)
At some point the investor is going to care about the team; who are you going to empower to drive the plan forward towards the vision. At the end of the day, this is your chance to influence the beliefs of the investor as to the people who can execute on the plan. This is your chance to demonstrate you have the team in place or at least identified who can bring the knowledge, expertise and skill sets to the business to take it to the next level and reach the goals outlined in the previous slides. The reason you show this towards the end is to close the deal. If you show your team in the beginning and they do not believe this team has the right skill set, the presentation could have a less than desirable outcome. However, with the right story throughout the pitch deck, showing a team that fits the needs of the business can provide the icing on the cake to land the investor you are seeking.
As you wrap up the presentation, it is important to have a summary; what are the three or four bullet points you want to leave them with? If you wanted them to only remember a few things, what would they be? Remember, they are investors so look at it from their perspective; they are looking for a return on investment and they are focused on how you are going to execute the plan.
The last slide is the money slide, no pun intended. This is where you will be talking about fundraising, the deal points. This is where you will be asking for a certain amount of money in exchange for some form of debt or equity. This is where you lay out the deal terms; this is where you go in for the close. Make sure you understand what you are asking for and why. Also be prepared to discuss the breakdown of what the funds will be used for.
As a last slide, make it something memorable; you want to end with a lasting impression. People will remember the first thing you said and they will remember the last thing you said, so on your last slide, you want to leave something that’s going to leave an impression, that’s going to let them remember you, that’s going to let them remember the investment and the project you are working on.
As you can see, this pitch deck is small, only fourteen slides. Remember, you have limited time to present to the investors. By presenting what they want to know up front, you will leave time for their questions and for delving deeper if their interest is peaked. These are the slides we have found to work very well for presentations and have been successful in raising funding from investment sources.
