For all existing and upcoming startups, one cannot afford to not know what is a Pitch Deck and additionally one need to master the art of making an impactful pitch deck which beautifully articulates the whole purpose of your existence and what you intend to achieve in a concise and impactful manner.
A Pitch Deck play a critical role in successfully articulating why investors should invest in a company.This document assumes even more importance in the case of start-ups as they have ideas and execution plans that are yet to be proven in the business context. Having an impactful pitch Deck is important for all businesses and mostly it is the first point of formal introduction on the company, its promoters, the business plan and future growth path. For a pitch deck to be impactful it should have the following key features:
1. Easy to Understand
2. Makes a Compelling Investment choice
3. Gives Easy Action Plan
Let us now look at the essential components which must be included in a pitch deck to provide the investors enough information and creates interest to look at taking the investment proposal for further evaluation:
CONSTITUENTS OF PITCH DECK:
The Pitch Deck’s should typically cover the following key sections:
- What is the Problem
- What is the Solution
- What is the Market
- What is the Product/Service to serve the market and solve the problem?
- What has been the Traction so far?
- Who is the Team and why is this the best team?
- What is the intensity of Competition and what is the USP of this startup?
- A summary of Financials – Both till date and future plans including investment
- What is the amount being raised and for what purpose?
As a startup, what problem are you solving? This slide should explain the pain point which the startup intends to address in the market. It needs to be a problem that people can relate to and also understandable by investors. The better an investor can relate to the problem it becomes easy to capture the attention for subsequent section.
The solution needs to be concise and clear and should solve a wider problem at scale. Please note that too much of complexity around the solution might give an impression of lack of focus. Also one need to articulate why it is the right time to provide this solution. For instance if the solution is APP based it needs a huge smart phone penetration and high internet connectivity. Many startups can fail for being either too early or too late to market.
It is important to give a sense of the market the startup is targeting. Remember that investors are looking at potential exit and that is typically possible if the market size is big enough to allow room for growth at each stages of funding. Institutional investors look for companies that can disrupt their industry and also have the potential to fundamentally reshape the consumers experience/behaviour with a market. Having verified sources to provide market size data along with past and future growth gives comfort to Investors.
Here you have to reveal your product/service offering and its salient feature. It can include screenshot of your product in action, description about the product, client reviews, efficiency parameters. The idea is to showcase why the product is the winning product and capability to make a deep impact. If the product is yet to get to reach MVP, all research work done to proof the product viability should be used
This is the section which should showcase achievement from the time you have conceived your idea. It should cover quantitative aspects like growth in total customers, month on month revenue growth, any industry recognition. This is an important aspect as it throws light on the execution capability against limited resources.
One of the most important slides in any pitch deck is the team. The team slide should clearly highlight why this team is the ideal team to deliver the unique proposition. Remember that at the idea stage, what one is looking at is 100% commitment, conviction, passion and clarity of the team members to convert the vision into reality. The team should ideally contain the leadership team i.e. co-founders and the advisors. Few bullet points one two or three achievements from every member could be incorporated.
Leading business school MIT Sloan expressed it well when they stated that the past is the best predictor of the future. Thus, for many investors the valuation at which they enter is predicated on the ability of the promoters to deliver success, which in turn is contingent on the past track record of the promoters. The academic background of the promoters also plays a pivotal role in extending comfort to investors.
Investor wants to see the competitive intensity in the space the startup wants to venture or progress. This gives them a sense of maturity of the industry or segment and it also highlights the understanding of startup on the space and to showcase its differentiating value proposition against competitor.It is here that you may also include financial parameters for the competitors like revenue, total funding round and valuation which could help in providing perspective on the market valuation. This will help during the negotiation stage.
Investors want to understand how the money will be utilized and how will this reflect in the top line and bottom-line over the next 3-5 years. Typically, one should look at a 3 year projection with granular details. While these are the best estimates which the founders are looking to achieve, it clearly highlights the thought process around various line items towards Go to market. For instance; what is the salary expense for Employees, how much money is going for technology, marketing, product development etc. It provides a good idea to the investor as to how grounded the management of the the company is.
Remember, this section forms an important part of your subsequent reviews and hence it makes sense to work thoroughly on this section and if needed take help of advisors.
Professionals who can help in guiding you on creation of the plan. It is always a good idea to be more on the conservative side and to over deliver. Typically, you should provide high level summary in the deck and keep the financials handy in Excel format for sharing with investors if they want to review it in detail.
- Amount being raised
Finally, what is the startup looking at raising and what is the allocation of the amount being raised. Since the deck is likely to go to various investors with minimum-maximum ticket size philosophy, it might help to provide a broad range for the fund required like between $2-3 Million. If the startup has received commitment from some marquee investors, it would be good to highlight as it provides comfort to other investors on the proposition. Needless to say, website details, contact information of the person handling investor relationship should be always included.
In summary, making a pitch deck is both an art and science and not all founders are expected to be good at it and hence if required the startup should engage services of professionals, advisors who can help in refining the proposition. Remember first impression is the most valuable impression for the investment world.