A pitch deck is a concise introduction to your business plan, including your products, services, and growth potential, that you present to potential investors. The main purpose of a pitch deck is not to immediately secure funding, but rather to move on to the next stage in the process. The funding process is typically a multi-step process, and a compelling pitch deck is an initial step. The main objective of this is to capture investors' attention with an intriguing idea and encourage them to interact with you.
As described in the book, The Art of Startup Fundraising by Alejandro Cremades, “Ultimately founders need two different sets of pitch decks. One version will be with a lot of text and information which will be shared with people via email. The other version will be the pitch deck that entrepreneurs present to investors in person with more visuals. Having more visuals will contribute to having investors focused on you.”
On the other hand, Peter Coughter says in his book The Art of the Pitch: Persuasion and Presentation Skills that Win Business, “The audience will not remember the vast majority of what you say. But they will remember what they thought about what you said. And what they felt about what you said. So help them. Leave moments in your narrative for the audience’s reflection.”
Importance of pitch deck
For startups, securing funds from investors can be a difficult undertaking due to limited resources and a lack of experience in the market. To overcome these challenges, a well-crafted pitch deck is crucial. Since it is usually the first point of contact with investors, it is essential to establish credibility to keep the conversation going. With a compelling pitch deck, you can compensate for the absence of revenue projections and bolster the investors' confidence in your business. This can help convince them that your startup has the potential to succeed and grow quickly.
As Peter Coughter says in his book, “There are three categories of stimulus present in human communication—the visual, the tone of voice, and the words used (spoken or read). He suggested that 55 percent of what we take away from communication comes from the visual, 38 percent from the tone of voice, and 7 percent from the actual words.”
Some of the keys to powerful pitch decks that can get you funded:
Clear and simple: Your pitch deck should be easy to understand and follow, even for people who may not be familiar with your industry. Use simple language, avoid jargon, and keep your message focused and concise. Use visuals, such as charts, graphs, and images, to help illustrate your points and make your message more engaging.
The first one or two slides in your pitch deck should introduce your business idea and your story. It's important to make a strong first impression, so these slides should be clear and creative. The beginning of your presentation is crucial, as it sets the tone for the rest of your pitch and can influence whether or not investors stay engaged and ultimately invest in your business.
Compelling: Your pitch deck needs to be more than just clear and simple, it also needs to be compelling. You want to capture your investors’ attention and make them excited about your business and its potential.
Use storytelling techniques to help your audience connect emotionally with your message and the problem you are trying to solve, and focus on the unique value proposition of your business.
Easy to act: Finally, your pitch deck should be designed to make it easy for investors to take action. Include a clear call to action at the end of your presentation, such as an invitation to schedule a follow-up meeting or request additional information.
Make it easy for investors to get in touch with you and provide them with the information they need to make an informed decision about investing in your business.
What’s Included in a Pitch Deck
Founders often have the urge to overload investors with information about their business. However, the most effective pitch decks are concise and straightforward.
Typically, a pitch deck shouldn’t consist of more than 19 slides. While there are varying opinions on the essential components of a pitch deck, by analyzing successful startup’s pitch decks we’ve noticed that there are usually 10 key slides that are included in most presentations.
Research done by DocSend found that investors spend on average 3 minutes and 44 seconds per pitch deck. After analyzing over 200 pitch decks, the research revealed that investors usually spend more time reviewing the slides related to financials, teams, and competition.
Following is a list of essential slides that are usually included in a pitch deck:
The first slide of your pitch deck holds significant importance as it provides the opportunity to create a positive initial impression. It's crucial not to miss this chance. Keep the first slide concise and to the point by introducing yourself and stating the purpose of your presentation.
And the purpose of the introduction is to capture the attention of investors and provide them with a clear and concise overview of your business idea. An effective introduction can set the stage for a successful pitch, helping you to win over investors and secure the funding you need to grow your business.
To create a persuasive pitch deck, it is important to identify a specific problem that your target audience is facing and that the market is currently not addressing. The problem slide in your pitch deck should focus on highlighting two or three key problems that your product can solve while avoiding being too lengthy or complicated.
In a pitch deck, the problem slide is where you highlight the pain points that your target customers are experiencing and explain how your business is uniquely positioned to solve those problems. This slide should convey a clear and urgent need for your solution and make a compelling case for why your business idea is relevant and necessary.
To create an effective problem slide, start by identifying the key challenges that your target customers are facing. Then, highlight the negative consequences of those challenges. You can use statistics, customer testimonials, and other data to illustrate the severity of the problem and build a sense of urgency.
Overall, the problem slide should convince investors that your business is addressing a significant pain point and that your solution is necessary and effective. A strong problem slide can help build momentum and excitement for the rest of your pitch, and increase the likelihood that investors will see the value in your business idea and provide the funding you need to bring it to life.
Identify a concise and clear solution that investors can easily follow.
The solution slide is where you explain how your business solves the problems that you highlighted in the previous slide. It's important to clearly articulate your solution and demonstrate how it provides value to your target customers.
You should also explain why your solution is scalable. Because most investors want to invest in a company that can grow big.
In addition, it's important to explain why your solution is relevant now. Timing is a critical factor in business success, and being in the right place at the right time is key. Starting too early or too late can be a significant factor in a startup's failure.
It's best to avoid making statements that suggest you are the only one doing something or that you are the clear leader in your field. As Mark Cuban has pointed out, there are likely many other people who have had the same idea as you, and there may be other companies trying to solve the same problem in a different way.
04. The Market
Provide investors with a clear understanding of the market you are targeting and the potential for growth and profitability.
To create an effective market size and opportunity slide, start by defining the market you are targeting. This should include a clear description of your target customer and their needs, as well as the size of the overall market. You may want to include statistics and data to support your market definition, such as market research reports or industry analyses.
Whether or not you receive funding will be determined by the market. If you're operating in a small market, investors may consider the potential return on investment to be too small or risky and therefore may choose not to fund you.
Considering including a graph that displays the past market growth and future growth potential. This can help investors assess the potential return on investment. It's important to include sources from research papers to ensure credibility.
This is the section of your pitch deck where you showcase your business's actual product or service. If you're selling a physical product, it's a good idea to include professional photos that display the product from multiple angles.
If you're offering an app, online tool, or service, consider including screenshots that showcase its most distinctive features.
To make it even more impactful, you can include a description of the product and quotes from existing clients expressing their satisfaction with the product.
The purpose of this slide is to showcase the growth of your business, including the number of sales you have made, significant milestones you have achieved thus far, and your next steps for growth.
Because traction is a crucial aspect of any startup's success, investors want to see that your business is gaining momentum in the market. This section of your pitch deck should provide evidence that your business is making progress and gaining traction.
You can include metrics such as the number of users, revenue growth, customer acquisition cost, customer retention rate, and any other key performance indicators (KPIs) that are relevant to your business. Highlight any notable milestones, such as partnerships, or awards, that demonstrate the progress your business has made.
It's important to be honest and transparent about your traction, even if it's still early in the game. Investors appreciate startups that are upfront about their progress and have a clear plan for achieving their goals. Showcasing your traction can help build investor confidence and increase your chances of securing funding.
The team slide is a crucial component of any pitch deck, as investors want to know who is leading the charge and what makes them uniquely qualified to execute the company's mission and vision. It's important to keep in mind that there are likely many others who have had the same idea, so execution is key. And having the right people in the right roles is essential for the successful execution. However, when investing in a first-time founder, there is also an element of education and learning from mistakes that is inherent in the journey.
To showcase the team slide effectively, focus on the leadership team, particularly the co-founders. Use bullet points to highlight each team member's two or three most significant achievements, ideally related to the company seeking funding. This will help investors understand the team's strengths and what they bring to the table.
It's a good idea to use a visual diagram to illustrate your competitors and how your value proposition compares to theirs. This slide should clearly differentiate your company from the rest and showcase what makes it unique. Another useful slide to include would be one that outlines how much capital each competitor has raised in the past and their valuation. This information can provide perspective on market trends and can be helpful in negotiating investment terms.
Investors tend to spend a significant amount of time reviewing the financials slide in a pitch deck.
The financials slide is one of the most critical parts of any pitch deck, as it provides investors with a clear picture of your company's financial health and growth potential. This slide should include projections of your revenue and expenses over the next 3-5 years, as well as your cash flow statement and balance sheet.
When creating your financials slide, it's important to be realistic and transparent. Provide accurate and detailed financial data that demonstrates your company's profitability and growth potential.
Furthermore, it's important to have your financial statements prepared in Excel format since investors might request to see them after reviewing your pitch deck. As a result, you don't need to provide too much detail in your pitch deck. A brief summary should suffice.
10. Funds being raised
In the "ask" slide of your pitch deck, it is recommended to avoid specifying a fixed amount for the fundraising goal. Instead, it is better to provide a range, for instance, between $3 million to $5 million. This is because some investment firms have a maximum investment limit, and if you state an amount higher than their limit, they are likely to reject your proposal. By providing a range, you can attract a wider range of investors who may have different investment capacities. Therefore, it is advisable to go with a range instead of a specific amount to appeal to as many potential investors as possible.
Additionally, it is essential to provide clear contact information for interested investors, such as social media links or email addresses, as this can facilitate communication and potentially lead to successful funding.
As a startup, it's important to prioritize your story and problem-solving instead of fixating on statistics. Conduct research on your target market, competition, and the personal preferences and interests of potential investors, so you can approach them from different angles. Seeking assistance from professionals is a wise move, as they can bring their expertise and experience to the table and increase your chances of successfully raising funds.
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