If I had a dollar for every time someone asked me how to create a pitch deck or what to include in one, I’d be a wealthy man. Pitch decks are one of the first key steps to gaining credibility with potential investors. True, a great deck is not the only thing you need to ace to secure startup funding, but it plays an important role.
First things first: your deck should be 10–12 pages—that’s it. Include supporting documents that are relevant to your story such as financials and team bios in your appendix. Below, I’ll run through what to include on each slide.
You can follow along with this Pitch Deck Template from Marc Phillips’ book, Inside Silicon Valley: How the Deals Get Done.
Create a clear and concise one-sentence description of your startup’s reason for being.
Problem and solution
Clearly define the problem you are trying to solve. What is the customer pain point? How will you address it? Why is your product/service/approach better than the other options?
Who are your customers? Here’s where you describe the industry structure and dynamics (competitive dynamics, growth trends, and regulatory environment) before outlining and quantifying the market size. Make sure you distinguish between the size of the total addressable market and the segment your business targets.
Walk through your business model and the assumptions behind it and explain to investors how you will generate revenue. Which sales channels will you target? What do you expect your customer acquisition costs (CAC) to be? What are the main risks to your startup revenue model? What’s your plan for addressing them? You also need to outline your sales effort and production process, and key partnerships for distribution as well as any strategic business alliances. How will you gauge your progress? And what would success look like?
This is where you show off your any proprietary assets that will drive your business. Walk potential investors through your offering, explaining its unique selling points: what makes it best-in-class, and how it will scale? Product demos are a great tool to drive your points home! Then elaborate on your IP protection strategy. Are key proprietary assets trademarked? Have you filed patent registrations? How exactly would you defend against IP infringers?
Saying you have no competitors is not an option. Provide an honest appraisal of your product or service and how it stacks up against your competitors’. Describe how your business and approach are uniquely qualified to succeed.
Your financial model should include a bottom-up financial forecast with revenue projections for the next 3 years. Any further out and they’re likely to be too far off the mark. Be able to explain and defend all of your underlying assumptions and your relevant metrics, including revenue, gross margins, number of users, number of visits, and others specific to your business.
Talking about how much money you want to raise is obviously the point here. But you should also explain what valuation you’re working with; whether and when you anticipate needing future financing and what you’ll use it for; and who your lead/other investors are.
As you go through your planned use of funds, closely tie your spending to discrete milestones that you will accomplish over a 12–18 month timeframe. This helps investors see where their money is going, and, if you hit those milestones, sets you up for a much higher valuation going into your next raise.
For many investors, whether or not they believe in the team trumps most other considerations. Describe your team members’ backgrounds and past successes as well as their relevant domain expertise. This is also where you should address skill gaps/future hiring.
The initial meeting is just the first step in building a relationship with investors. Whether or not you wind up with a term sheet, use each meeting as a learning opportunity that will help you to refine your pitch.
Gearing up to fundraise?
This guide explains the most important components of a successful fundraising strategy and how to prepare.