I’m often asked by clients, in the initial fundraising process how to build a pitch deck. As a recent outside general counsel to well over a hundred emerging growth private companies in the technology, life sciences, medical device, and clean energy industries, in all stages of growth (from formation to liquidity), I am sharing my observations on what works.
Taking a business from ideation to formation, from formation to minimum viable product (MVP), and from MVP to revenue, most companies will need third party financing to pay for development. Venture capital firms receive hundreds of pitch decks a day, which means you have just seconds to make an impression, and make that impression count.
To that end, once an entrepreneur has tapped out their savings of her inner circle of family and friends, secured co-founders, done some survey of the market, and built a demo, it is time to go on the road, evangelize your venture, and find investment. Whether you are meeting with business angels or seed-stage venture capital investors, you are going to need pitch materials.
Most entrepreneurs will use three documents to solicit investors, starting with an executive summary, or short, one-page “teaser” that is used to seek meetings, and that others can use to seek introductions on your behalf. You will also have prepared an investor “pitch deck” or PowerPoint presentation, showing how much cash you will need to raise to reach defined benchmarks and beyond. Finally, you should be prepared to present a detailed business plan if the pitch deck generates a subsequent meeting.
The perfect pitch is visually appealing and concise, with slides that include the following vital points to make your first impression count:
Cover Page: Including a picture of the product can create a visual impression and will help the investor visualize your product. Note that the contents are confidential. Dates provide helpful context.
Overview: You want to begin your presentation with a simple declarative sentence that defines your company and sets out its key mission and specific purpose. Be as precise as possible, without getting into features and details. Why did you decide to create this? Why is this an exciting idea? This is the hook to capture and present your story, and includes what you must communicate right up front, your “elevator pitch”. Short and sweet, a few sentences about what you do, what you do for the target customer, and why the target customer would be interested.
The Problem: This is the slide that describes the problem that your product, your technology, will solve, and why your approach is unique and defensible. This is where you can specify the fundamental advance your technology demonstrates. Describe the pain that the customer is experiencing using the solutions that exist today. Convey the nature of the market opportunity, highlight what is “fragmented”.
Solution: Immediately after a description of the problem, your presentation should describe the solution and value proposition your company will bring to the market. This slide should answer how you will solve the problem, and faster, cheaper, and smarter. Describe your solution at a high level, convince your audience that you have a better approach. Do not underestimate the importance of this opportunity to detail your solution. It will be an essential point in closing your deal.
Customer/User: A description of a problem and a solution is not complete without clearly identifying who are the target customers, the target users, and why they are experiencing pain. This should answer not only who they are, but how many they are, and how you will find them and acquire them.
Competition: No description of a market is complete without describing who else is in the market. Describe who else is addressing the TAM and the SAM, describe the other solutions to the problem that is out there. Why aren’t the current solutions addressing the issue and the market in the way you can? List the significant competitors, understand their processes, and what your competitive advantage is. How well funded are your competitors? What do your current customers say appeals to them, and why?
Demonstrated Achievements: Do you have a minimum viable product? When did you start recognizing revenue? Do you have monthly recurring revenues? This is a place where you can include logos of customers you have already signed up. Do you have letters of intent from potential customers? Have you been able to generate any press buzz? This is the place to pound your chest.
Business Model: Investors need to understand your business model. You need to present how you will make money, who is the payor, is there third-party reimbursement, how much do they pay, how do they pay you, from where? The more numbers and metrics that you can show, demonstrating customer traction, retention, and satisfaction, the more believable your business model becomes.
Financial Overview: Your business model should naturally segway into expected revenues, expenses, and EBITDA over a three- to five-year period post-investment. If the round of financing you are seeking will not get you to profitability, you need to describe how long will this round’s cash will last, and what would be the benchmarks for success that would enable you to raise the next round. Venture firms typically want to fund companies sufficiently so that they can operate for at least 18 months. Following the disappointing results of some late-stage companies that achieved deep market penetration but are still burning cash, there is a renewed focus on demonstrating the profitability of the business model, and how it scales.
Team: Investors want to know what qualifies you to execute your idea successfully and better than the other companies in your space: work history, network, and skills are all key. Can you attract superstars? What have you done previously that has been a knockout success, business, or technology? What is unique about your team’s background that will enable you to be successful? That’s what investors are looking for. You’ll need to introduce your team in a few slides and a manner that not only highlights your team’s strengths but, more importantly, makes it clear that they are people that are committed and are going to be great to work with. Show your history together: did you work together in a previous company? At an early stage, the key driver of our investment is the people.
Funding and “The Ask”: Every presentation needs to make an ask. It needs to state how much you are looking to raise clearly. It should also describe the use of proceeds. Will the money be used to grow team, support overhead, expansion capital? How much you have raised to date and in what form and from whom. Finally, include milestones and your vision for the future. What will you achieve in the next three years?
Contact details: Make yourself accessible and easy to follow up by including your cell phone number and your email address. Don’t include social media links that contain extraneous content.
Details: Get feedback from other entrepreneurs who have raised capital. Make sure the graphics are tight. No spelling errors. Don’t shoot yourself in the foot!
Following Up: This is essential. Make sure you have a working website, a LinkedIn Profile, and offer a business card. Follow up with a list of customer references or letters of intent.