If you’ve launched a startup, chances are you’ve heard of a pitch deck. A pitch deck is a marketing presentation designed to convince investors or lenders to give your business capital. Ultimately, it provides potential investors with a high-level overview of your business plan, success thus far, and growth potential.
Any time you land a meeting with an investor, expect to present your pitch deck to several people – and expect them to ask plenty of questions. Think of your pitch deck as the bridge between your company and future startup financing. And oftentimes, financing plays a critical role in your business’s ability to grow. With half of all small businesses failing within five years, your pitch deck can mean the difference between establishing a fruitful brand and becoming another statistic.
Pitch decks are typically created using presentation software such as Powerpoint, Prezi, Keynote, or Google Slides. Within a span of a few slides, your pitch deck should be both informational and compelling. Your slides should be clear, include high-resolution images, be visually aesthetic, and stay light on text. But creating the perfect pitch deck is easier said than done. Here’s what you need to know to increase your chances of success:
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#1. Company introduction
The first part of your pitch deck should be an introduction to the company. Your goal here is to attract potential investors with just a few sentences. This is where your elevator pitch comes into play. An elevator pitch is a quick description of your company that allows the listener to understand its concept within a short period of time. It shouldn’t take more than 30 seconds to get your pitch across.
This was an introduction included in Facebook’s original pitch deck, and while the platform has changed over time, you can see that Facebook’s objective was to deliver a clear message. Overall, there are three elements your introduction must include:
- Your elevator pitch
- A description of your company and what it does
- Your value proposition.
#2. Problem and solution
Next, it’s time to talk about the problem your target market faces and the solution you can offer. Ideally, your business would provide a solution that addresses a gap in the market. No investor wants to hear about a problem that already has several solutions in the market (and if this describes your business, your solution should be unique).
A good way to describe the problem is to create a narrative and put yourself in the shoes of your target customer. How would a real person experience the problem and what would they do and/or need to find a solution? You should find two to three problems and solutions and keep your slide text simple and easy to follow.
Here’s a pitch deck sample of a problem and solution for Airbnb:
And this is an example of a problem-solution slide for Castle, a property management startup:
At the end of the day, investors want to be involved in projects that solve real issues. They want to work with you to create innovative solutions, but they need to be convinced that your company is the one to do the job.
#3. Market opportunity
No matter how great your product is, if there’s no market for it, there’s no money for it. The “Market” section of your pitch deck should be anywhere between 1-4 slides, depending on market size, segments, and deck design. Because of this, your market size will be one of the most crucial data points in your presentation.
There are several ways to present market data in your deck. They include:
- Value theory, which predicts the consumer’s willingness to pay;
- Existing in-house market data, and
- Industry-based research.
Many companies will use a combination of these tactics to illustrate their market potential. Your key statistics and industry revenue numbers will help potential investors understand market potential and trajectory.
This is the part of your pitch deck where you go in-depth about your product or service. Up until this point, you’ve talked about your company, the problems it solves, and what makes it stand strong in your industry. Create a simple statement with images, screenshots, or videos to communicate what the product is and how it works. Highlight the features and key differentiators of your product and what differentiates it from comparable products. Here’s a sample illustration of how Uber could communicate their product:
#5. Traction and growth potential
At the end of the day, investors want to see a return on their investment, and the success you’ve achieved thus far is one of the greatest indicators of future success. Traction describes what your startup has achieved so far. Essentially, the traction slide presents data that proves your product or service is desirable. For example, you might display a graph that shows your sales growth or rise in customer adoption.
It’s important to note that you don’t necessarily have to have sales to show traction. This is common for early-stage startups who need funding to achieve future milestones. If you don’t have revenue, there are other ways to show traction. Trial sign-ups, beta sign-ups, pre-orders, and letters of intent are viable options. You can also show how many people are visiting your website, as site traffic is a good demonstration of heightened interest.
Your potential investors need to know what they’re up against. Your “Competitors” slide shows who your competing businesses are and what makes you different. Many startups choose to use a “Magic Quadrant” graph to show where they stand against competitors. Developed by Gartner, this graphical representation consists of a graph with a vertical and horizontal axis, which creates four quarters.
Another option is the Power Grid, which offers a more detailed analysis of how your startup beats the competition. In a Power Grid, columns represent competitors while rows represent benefits or features. Here’s an example from Dreamit:
This is the part where you get to talk about the core people behind your product. Describe their role, mention previous accomplishments, and the value they bring to the business today. Though this slide is fairly straightforward, it goes a long way towards humanizing your company and helping investors understand not only what they’re investing in, but who they’re investing in.
The financials slide helps investors understand what projected revenue will look like over the next several years. It should contain detailed numbers about your business and finances. At this point, you should have already completed a business plan, and you can pull plenty of data from the financials section of your plan. Take a look at a startup business plan template if you need to create both a pitch deck and an official business plan before your investor meeting.
Because this section is so numbers-heavy, it’s important for you to create financial models that are easy to read and simple to understand. After you’ve left the room, your potential investors are going to spend the most time analyzing these details, so it’s important that your economic plan – including your distribution channels and operating structure – are clear.
#9. Investment ask and use of funds
This slide tells investors what you need and what you’ll do with the money. Being transparent about how you intend to use your funds helps build credibility and trust early on.
Your investment ask should be realistic and purposeful; don’t ask for a high number for the sake of getting more money. On the other hand, don’t ask for less money than you need to reach your goals for the sake of increasing your chances of investment. Asking for less doesn’t make your business any less risky. Instead, focus on asking for the right amount to cover your goals.
Guest author: Dave Lavinsky is an internationally renowned business plan consultant who specializes in capital raising and new venture development. He is the co-founder of Growthink, a firm that has helped over 1 million companies develop business plans to start and grow their companies.