As an entrepreneur, nothing can seem more overwhelming than getting up in front of investors to pitch as you try to raise funds. And I’ll be honest, it’s going to be a massive part of what you do as a founder, especially in the early years. But, like any job you need the right tool (unless you're Thor, then you just need a hammer). Your pitch deck is going to be that tool. What goes in that pitch deck? Let's talk about it.
No matter what state you are at with your startup, you are going to be pitching to venture capitalist and angel investors, a lot. As an entrepreneur, that’s just part of the game. Your pitch deck is the most important tool you have at your disposal.
There are a number of things that have to go into your deck and that you should keep in mind when pitching.
Keep it short!
I like to keep by pitches between 10-15 minutes, if I even have that much time, because I think the time is better spent answering questions from the investors. I’ve actually been to pitch events where some people actually show up with 30+ slides and then run out of time on the fifth one. That’s never a good look.
I always open with a quick overview of the company, similar to an elevator pitch. I take about a minute to tell them what the company is, what the product is, why it’s a good opportunity, and what sets us apart from anyone else in the space. Quick, simple, and to the point.
What’s the problem?
Once I lay the groundwork with the overview and opportunity I jump into the problem we identified in the market. Highlight that impact and why working to solve that problem is going to set your company apart, making it a smart investment on their part.
After you identify the problem, jump right into your solution, and show how your company has formulated a better mousetrap. But most importantly, you need to show them how you will fix the issues that your potential customers have been struggling with. This is a great time to use some illustrations in the deck to keep your audience engaged.
Know your market.
Next up, I talk about the market, who my customers are, and how I’m going to get them (oh and I will get them… wahahahaha). I start by showing calculations of the total addressable market (TAM) which is basically your maximum possible customers multiplied by how much you could make from each of them. Then I dive a bit deeper, describing my target customer in detail, and I can use that to calculate the served addressable market (SAM), which is the smaller segment of the same market that you are more specifically targeting and state why. Is it geographic, by age, income, maybe something else, just make that clear.
The next thing you need to talk about is your serviceable obtainable market (SOM). This is basically how much of the market you are going to capture and how you are going to go about it. Break down how much of that market you think you can capture, what your customer acquisition strategy is, and how you’ll execute.
Who’s in this fight against you?
Now that you have carved out the part of the market you are going after and how much of it you think you can get, you need to talk about who you are taking it from. Who’s your competition? You should provide a list of your main competitors, how well established they are in the market, what are their strengths and weaknesses, and how your solution stacks up against theirs. Showing how well you have researched your competition is going to let the investors know that you have taken them seriously and you are ready to open a can of entrepreneurial whoop ass on them.
My Mind on My Money and Money on My Mind
Of course, you need to talk about how you make money (dolla bill, ya’ll). This is where you discuss your business model. Here you will refer back to what your customer acquisition cost will be and follow that up with the lifetime value of each customer. You will need to add your cash flow and burn rate to those numbers to show your runway, then based on some projections, speculate what your break even point will be. Even if you don’t have revenue yet, you need to pull some estimates together and spend some time talking about it with the investors. Never, ever, I repeat never, tell them “it’s a bagillion dollar market and if we just capture 1 percent then…” That gets you nowhere real quick.
Follow up your business model with your team. You were saving the best for last. Talk about the founders and the other team members you have brought on board to help make this idea a reality. This is where you take the time to reinforce the story of the company's beginnings, discuss the skills of each founder and how they came together (Avengers, Assemble), what each member brings to the table, and why you believe in the mission of the company.
This not only adds some personality into the mix but it reinforces all your previous slides by (hopefully) showing your potential investors that you’ve built a team that will bring this idea to reality.
Show me the money!
After you capped everything off with your team, you close with the ask. This is where you let the investors know how much you are asking for and what you plan to do with their money. So, if they give you one million dollars, how are you going to spend it, on market? Operations? Staff? What are the splits going to be?
I always find this is the best way to close out the pitch. Tell them how much you want, how much equity you will give them in return, and let them hit you with some questions.
Some Final Thoughts
The biggest piece of advice I can give you about pitching to investors, though, is to practice. Practice as much as you possibly can. Practice in front of people. Get as much of the nerves out of the way as you can. The more you practice, the more confident you will be during the presentation.
It’s also a good idea to prepare more slides that can help you address questions from investors, and there will be lots of questions: things like what IP you might have, what does your product or service branding look like, more in depth team member bios, and what your exit strategy would be as well as any other questions you think you might be asked to go into more detail on.