Preparing an investor pitch deck is a task that most start-up companies encounter in the fund raising process. While almost all companies create investor pitch decks, many fail to do so effectively or with maximum impact. Founder teams often consider the pitch deck an afterthought to a company’s MVP (minimum viable product) or the beta version of its platform, for instance. But that is a huge mistake! Sharing a pitch deck with a potential investor can be a special opportunity to engage and connect with that person or group. Professional investors and funds receive 200+ pitch decks per month. It is critical to communicate effectively and concisely to stand out from the pack. Below are eight insights and considerations to keep in mind when formulating your pitch deck.
Do not simply provide the size of your market and claim a percentage as your company’s anticipated market share. Investors are not impressed with this approach. Instead, connect the amount of investment you are seeking to the achievement of certain milestones, and describe how reaching those milestones will lead to an increase in valuation for your company. This approach answers at least two questions for the potential investor: “What are you going to do with my money?” and “How will that make the company more valuable?” When you simply say the market is X size and our company will claim Y share, these two key questions are not necessarily answered.
The size of the company’s fundraise should coincide with the ‘runway’ needed to achieve milestones. Frequently start-ups will include significant milestones to be achieved three or more years out, yet the amount of money requested will only take them to year two. Investors want comfort that the current raise will bring the company to the next stage of development and/or valuation.
Explain why your team can deliver. Often founder teams only include their respective headshots and positions at the company. Your “team” page of the pitch deck should also highlight relevant accomplishments and qualifications of the founders, particularly if any of the founders have experience running a successful company.
Convey your competitive advantage. Investors do not want to invest in a company that can be beaten by competitors with money alone. If being the first mover in a space is your only competitive advantage – you better move fast! Competitive advantage can take many forms, including intellectual property rights (e.g. patents, know-how and trade-secrets) and strategic relationships. If your company will be successful because you’ve figured out how to do something better than anyone else – convey that! If the secret behind your venture is that one of your team members is friendly with a distributor that normally doesn’t work with early stage companies – convey that!
Accurately define your customers – it’s not always as straightforward as you think! Many mobile app companies include number of users and downloads on a ‘customer slide’. However if revenues will come from advertisers – these are the ‘customers’ investors want to know about. For example, a life sciences company’s obvious customers are the end-user patients, but do not fail to address the ‘customers’ at the insurance provider and physician levels as well.
Don’t Ignore Risk Factors. A start-up may not want to dampen the mood with what may go wrong. However, ignoring the obvious or the relevant will make you look unprepared in the eyes of the potential investor. For example, if you are pitching an ‘on-demand’ mobile app product, you should include a bullet point regarding the status of the workforce (i.e. currently there is a debate whether workers for companies like Uber and other ‘gig-economy’ businesses are independent contractors, employees or a hybrid of the two). Also identify existing competitors – if you are not the only game in town, better to let the investor know up front.
Highlight Potential Exit Opportunities. Although your venture may be early in its life-cycle, providing a long-term perspective with potential exit strategies is something investors welcome. This answers the paramount question “How do I make money?” You tell the investors ‘how’ by describing the potential for a strategic merger or acquisition (identify potentially with whom), IPO or if your strategy is to become a large operating company.
Cite your sources when possible. Citing sources adds credibility to the statistics and metrics in your pitch deck. Further, if your pitch includes relevant industry trends, providing sources that concur with your team’s perspective will only benefit you with potential investors.
Each introduction or opportunity to share your pitch deck is a chance to get funded. Investors are looking for a proven team, innovative idea, traction in the market, or a combination of all three. Make the most out of each chance by communicating effectively and answering the questions that matter most to potential investors – pitch perfect!
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