t’s one thing believing in your idea and being convinced it’ll change the world, but it’s another thing getting others on board to believe in it to the extent of funding it and help build it into a successful business.
To get started, you’ll need an Investor Pitch Deck, and most probably a business plan (check out this guide to help you with the latter).
Your pitch deck lays out key details of your startup that will convince investors to back your venture. But crafting an irresistible investor pitch deck in itself is a common challenge.
Here’s a secret pro tip:
The 3 things investors care about the most are 1. The problem you are aiming to solve. 2. The value you bring. 3. The people leading your venture.
Yep! Falling in love with the problem is far more important than falling in love with your own solution. Study the problem, study your audience, be passionate about it and bring real value
In this post, we’ll get into details of what makes a good investor pitch deck that will convince investors to back your venture and hit your ground running to build a successful business.
Before getting started...
Think of crafting your pitch deck as telling a story. A story that captures your audience’s attention from the start, engaging them all throughout the plot, reaching the climax and finishing off with a happy ending that they wish to be in.
How does this look like in an actual pitch deck?
- Title Page.
As with any remarkable story, a strong and compelling introduction will influence how your audience will follow through with your pitch.
Capturing investors’ attention is crucial and you only have one shot at creating that first impression. The introductory slide should be short, startup jargon-free and straight to the point. It should describe what you do in one sentence.
Take for example Airbnb’s first slide from their 2009 pitch deck that raised $600k from Sequoia Capital and Y Ventures.
‘Book rooms with locals, rather than hotels’.
It’s straight to the point and investors would more likely be engaged with the rest of the pitch. This introduction nailed it in three key aspects, it:
- Answered what the product or service is.
- Sparked investor curiosity (how is it possible to book with locals).
- Explained how it’s different from others because you can book with locals, something never heard of before.
So basically the introduction should strive to answer What is the product, why is it valuable and how is it different.
Describing what your product is early on will plant seeds of curiosity that would compel investors to follow through with slide 2.
You already have your audience’s attention. To fully immerse them in your story, describe the problem in a way it creates a mental picture that solicits them to nod in agreement.
As opposed to a story though, there isn’t the luxury of time to build on the status quo and the problem. And as humans, our attention span is as short as a life of a wave.
So to deliver the problem in a way that holds investors attention, strive to be straightforward, use simple words and lay out the actual pain points faced by the market.
Airbnb did a great job describing their problem (just make sure you proof your slides for grammar and typos :) ).
Investors can empathize with this as they nod in agreement; Indeed price is important for travellers, they travel to experience the thrill of other cultures and hotels don’t really give out the feeling of the local experience.
And finally, investors can guess their business model and build interest in how Airbnb seeks to bring this local experience to tourists.
For the investors who skim past slides, you can use bold texts highlighting the key aspects of the problem to direct their attention to the crucial points.
Airbnb did it and so did Uber in their pitch deck.
In an instant, my eyes were fixated on the texts in bold and could empathize with the problem of hailing cabs by hand or phone.
To create a strong basis for the pitch to work from, the problem needs to connect with the audience.
Now that you have a strong base to build your pitch on, describe the three most important reasons why customers would buy your product or use your service. Highlight your key value propositions.
You might have a ton of reasons why a customer might buy your product but by conforming to the rule of three, investors are more likely to remember your points.
Our brains are made to cling to patterns. A trio of events is more memorable and effective than other numbers. You are able to create a pattern with the smallest amount of information and your audience is more likely to remember the information communicated.
Think of The Three Little Pigs or The Three Wise Men, stories that we still remember while in our adulthood.
Airbnb used this to describe their solution in their pitch.
In your solution, it might be tempting to describe the features of your product but by highlighting the benefits your audience stands to gain, investors see how your product will fit in the market.
The more you are able to summarise the benefits of your product in simple words the higher the impact on the investors.
- Underlying magic
Also known as the secret sauce or the competitive advantage. This is where you are able to describe what sets you apart. Describe the technologies used and patent developed that make your product unique.
For Uber, they described their route optimization system ( reduces travel time) and reputation tracking (Reviews) that gives them a competitive edge over the then-existing ecosystem.
As another example - when first starting out, Wholefoods’ competitive edge was focusing on healthy and organic foods.
- Business Model
The importance of this section can’t be overstated. After investors understand your business and what you are trying to achieve, they’ll be eager to know how you’ll make money.
“We take a 10% commission on each transaction” describes Airbnb’s business model in one simple sentence.
Although you may have different sources of income and are tempted to lay out all of them, it’s more important to describe one leading business model or the main source of income over the next years.
Investors are looking for ventures where they’ll get their money back and earn a good return. By projecting your revenues in the next coming years and your pricing strategy, you would work into assuring them of a good return.
For Airbnb, they estimated that by serving 15% of the addressable market and with an average fee of $25, they would yield $200M between 2008 and 2011. A projection that would excite anyone.
Strive to keep your business model simple and informative and define your vision in the next coming years and your business model.
- Go-To-Market Plan
The go-to-market-plan implies the strategies you set in place to grow the business and achieve the revenue projections laid out earlier.
These plans will allow you to reach the revenue projections without breaking the bank and the tough task is to come up with a G2M that is doable, affordable, has a strong impact and will help you reach those goals. In your research, you need to find out what everyone else is already doing and come up with a plan that will set you apart.
Below is an example of Mint’s (now part of Intuit) go-to-market plan in their pitch deck.
They laid out the strategies they would implement to achieve their growth and nail their revenue projections.
The main point here is to come up with ideas on how you will acquire more customers and your ability to execute them well.
This section involves having a clear overview of the competitive landscape. After a thorough analysis of the industry’s problem and how your solution will solve the problem, having a well laid out competition slide that explains more on your competitors will prove vital as investors would recognize your deep knowledge of your industry.
As Guy Kawasaki puts it “too much is better than too little”
To present your company as having a competitive edge over your competitors, you can use Gartner’s magic quadrant. It lists the main competitors and their respective positions in the matrix.
Steve Jobs used this in his iPhone presentation
And so did Airbnb in their pitch deck
Define two main ways you have the competitive edge and set up in a way your company is in the top right quadrant.
This is one of the most important slides in your pitch deck. Investors DON’T INVEST in TECHNOLOGIES, they INVEST in PEOPLE. Who are the people responsible for leading the growth of the company?
Investors need to know who they are trusting their money with. It can be the CEO, who is the face of the company; The CTO who ensures the product development is in line with the business strategy; and a growth hacker who will extensively market the company. You can include board members or advisory board members if you feel it’s important to present them as well.
To be more compelling, you can highlight their key achievements alongside their academic qualifications, and place one statement that answers the question: “As a team, what do you bring to the table that will make you win?”.
Traction is an important part of your pitch. Investors invest in a company that will give them a return on their investment.
And with this section, you would further compel them to invest in your business.
Traction is basically showing the success or progress you have achieved so far, whether it’s having 1000 customers in your subscription business or the 4,500 beta sign-ups, signing strategic partnership agreements, or winning innovation awards.
The point is to notify investors that you have customers willing to buy your product, you get recognition from the industry and your company is worthy of the investment.
Use of proceeds
And finally, how are you going to use the funds?
You can show how far you’ve come, what you have achieved with your initial funding and how they have been used so far.
Describe what you will do with the investment funds you now require, what you intend to use it on and the milestones you intend to reach.
The idea here is to leave investors confident in knowing how you’ll use their funds if they choose to invest.
When crafting an investor pitch deck, the exciting product development journey and the game-changing solution you have can often get the best of you… it’s all good, we all love what we create, but it can deter you from getting the funding you seek.
For a pitch deck made with the investors’ perspective in mind, the information presented would be to influence them to empathize with the problem (the market need), see your product as the best solution (the market fit), and convince them that people are actually interested in your solution, in other words, your product cannot only solve a problem but can also generate revenue.