On average, potential investors spend 3 minutes and 44 seconds looking over every pitch deck that comes across their desk. But what exactly is a pitch deck, and how can entrepreneurs make their presentations more conducive for investment? Simply put, a pitch deck is a presentation entrepreneurs put together to secure funding from potential investors – these presentations contain pertinent information about the product or service, and are usually around 19 slides long.
Ultimately, the founders of startups need two different, yet equally important, pitch decks. The first iteration focuses primarily on information and will be disseminated internally via email. Where this version has a litany of text and information, the second “version” usually has more visuals, which can help investors envision the usefulness of your product or service. At the end of the day, a successful pitch deck has three overarching qualities: clear and concise, compelling, and easy to act on.
In addition to these criteria, the slides included in a pitch deck fall into these nine categories:
- Capital needed/raised
Each of these categories will be discussed at length, but it is important to note that even though each slide is vital in its own way, DocSend, the organization that said investors spend an average of 3 minutes and 44 seconds per pitch deck, also said investors spend the most time looking at slides dealing with competition, financials, and team. This is important to keep in mind while constructing your pitch deck.
1.Problem – exploring gaps in the market
The slide dealing with the “problem” your product or service addresses should clearly state the gap you are filling in the market. Although the actions and failures of your competition will be covered in the aptly named competition slide, it is crucial to explain your position and the problem you wish to solve, not the pitfalls of competitors (in this slide at least.) If you begin your pitch deck by explaining what is wrong with other companies, it may sound like a lack of confidence to potential investors.
The problem you are addressing should be concise, and not include more than one problem – the reason the problem and solution slides are separate is because a single slide with a problem/solution may overwhelm investors right off the bat. In addition to keeping your problem concise, it is also wise to show that others commonly feel your problem; this will make it easier for investors to sympathize with the potential customer. After all, your product or service will spark the interest of an investor for the following reasons:
-The investor has experienced the same problem in the past or knows many people who have
-There is a clear sense of ROI in the future
-They understand the niche where your product or service falls (i.e., you wouldn’t pitch a healthcare startup to a group of Silicon Valley techies)
2.Solution – why you can solve the problem
A key attribute of your proposed solution is scalability – essentially, what makes investors salivate is the potential of your venture to grow. How will your venture increase output as demand increases? Explaining this in a clear, concise way will help reassure investors that you know your industry and understand how more will be needed as the demand grows. Scalability is especially crucial in technology startups because the technology sphere is incredibly fast-paced and ever-changing.
If entrepreneurs and investors can learn anything from the diffusion of innovations, it is incredibly important to introduce your venture at the right time in history – if you are too early or too late, even if your product solves a clear problem, the venture will fail. In your solution slide, explain why it makes sense now.
3. Market – “where are the returns?”
The size of the market you are trying to enter may impact an investor’s likelihood of giving you capital – the unfortunate reality of seeking funding is the market size (whether too large or too small) may be a turn off for some investors. On the “too small” side, a market size below $1 billion may not seem attractive to someone in a hyper-growth business. On the other hand, grouping your venture into a $100 billion market (for example) may cause investors to worry about your venture getting lost in the shuffle.
The reason many investors look for ventures in a $1 billion market is because they are looking to put capital into an idea that can give them a 10x return within 5 to 7 years. Although this may be the case, explain why your idea can give potential investors a sizable ROI without making grandiose claims that cannot be backed up – this is where some entrepreneurs get into big trouble.
4.Product – see it in action
This slide (or slides) has to be incredibly visual. How is an investor supposed to envision your product in the hands of consumers if there is only text on this slide? Throughout these slides, show all the features and benefits of your product – and for good measure, use testimonials from beta users or current customers to prove your product’s superiority. This is the point in the presentation where you have an opportunity to let your product shine, so don’t waste it.
5.Traction – how is your venture growing?
This is the slide where investors hope to see a graph bearing a “hockey stick,” or a month over month growth that seems to go up exponentially. This is an opportunity to include metrics, sales figures, or any bit of pertinent information that shows investors that everything, quite literally, is on the up and up. One piece of advice, though – if your venture is in a very early stage of development or growth figures aren’t incredibly interesting, there is no need to include that information. In doing this you aren’t being “sneaky” or hiding anything from investors, you are just attempting to increase the likelihood of securing an investment. If your venture is in an early stage of development, why should that hurt you?
6.Team – the people behind the pitch deck
In any pitch deck, the team portion is one of the most important elements – after all, an idea may be great, but if all-star players don’t lead your venture, then what sort of longevity will it have? Because the reality is there have probably been 100 people who have thought of your idea before you, your venture is 10% about the idea and 90% about its execution.
When showcasing team members, highlight those who are the most crucial to the venture’s longevity. Utilize bullet points to list two or three accomplishments of these team members, making sure those accomplishments are related to the venture (sorry, no ‘7th-grade chess club champ’ here.)
While you are introducing investors to critical team members, be sure to include pictures of those team members – although this may seem trite, ‘putting a name to a face’ can help humanize your members. After all, a stack of bullet points isn’t very friendly.
7.Competition – where do you stand?
Contrary to what you may believe, providing context is one of the most critical aspects of the competition portion of your pitch deck. Of course, you have already discussed what sets you apart from the competition in previous slides, but now is the time to review how much capital your competition has raised in the past, and more important, at what valuation.
In this portion of your presentation, you need to show what makes you unique – if you have already discussed this at length in previous slides, provide essential bullet points here. It may also be wise to include a diagram of where you fall compared to your competitors, and where your value proposition comes into play.
8.Financials – “show me the money”
Even though any sort of projection is a shot in the dark when it comes to startups, giving a general picture of where your venture is going helps contextualize it for investors. It is relatively standard to include three years of projections, but this will depend on the space your venture wishes to enter and the requests of potential investors – some venture capitalists require five years of projections.
One of the worst things you can do in this slide is over-promise. Similar to exaggerating the size of the market you wish to enter, showing grandiose projections may get investors excited, but will cause great stress to you as you struggle to live up to those proposed figures. Even though it stinks (for lack of a better word,) always be on the conservative side when it comes to sales projections.
9.Capital needed/raised – what’s the magic number?
When it comes to the “ask” portion of the pitch deck, do not include a specific number, include a range. Although this may sound counterintuitive, there is a reason for the lack of concrete numbers in this slide. Say a company has a limit of $4 million it can invest in a single venture. If you say in your pitch deck that you are seeking $5 million, then this company may automatically pass. But if you say you are seeking between $3 and $5 million, they know they have the capital to invest in you.
Overall, your pitch deck gives you an opportunity to make your venture shine. Before sending your pitch deck to investors, have your employees and professionals with an understanding of sales psychology look it over. A small re-phrasing or image placement change could mean a difference of thousands, if not millions of dollars.