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11 things investors look for in your pitch deck

A pitch deck is mostly your first impression to an investor. Chiara, who works as a VC, shares her pitch creation 101 that every founder should know.


Basic guidelines for a pitch deck

As an entrepreneur if you start fundraising, you will need to pitch in front of investors. It’s possibly the single most important skill a founder needs when approaching a VC. Although most of what is following in this post, might be common knowledge, I see pitch decks or pitches on a daily basis that completely neglect some basic guidelines. So, here comes a couple of guidelines for entrepreneurs to follow for your pitch deck, which is mostly the FIRST impression to an investor.

A pitch deck should consist of 10-15 slides that present the
ESSENTIALS of your company. There are two main challenges that you need
to balance: Explain and Convince!

Initially, an
investor spends little time on a pitch deck. Hence, no matter how
complex your solution is, you need to show with few words and maybe
pictures, what your company is doing and why it is amazing. Your goal is
that the investor becomes curious and wants to learn more about you and
your company.

Since you are not always sure who is on the
receiving end of your pitch deck, you will have to structure the pitch
in a way that would convince someone who has never heard of your
industry and someone who is a total expert in your industry. Here are
the main components:

1. Cover page

Name of your
company and one sentence that explains what your company is doing (this
is possible!). When pitching live, catch the attention of the audience
at the beginning and make sure to say within the first 30 seconds what
your company is doing. I have seen lots of pitches where 10 minutes into
the presentation although having explained already all world economic
problems, the team failed to mention what they are actually doing. The
attention is gone by that point and no one in the audience will ever
know what you are doing.

2. Problem

Start with the
problem that your company or the solution that you have developed is
solving. If no problem exists no matter how great your solution is, no
one will care (investors and customers). A lot of entrepreneurs forget
to mention the problem or think it is so evident and there is no need to
mention it. But don’t forget that you need to pick up the investor at
the beginning of the story. The investor has no idea about the company
(and sometimes neither the detailed background into the  industry).

3. Solution & product

Explain the essentials of your solution or product. Answer the W
questions: ‘What is it?’; ‘Why is it great?’ and ‘Who wants or even
needs it?’ If possible show your solution or product with screenshots
(avoid live demos if you are not asked for it – they can go wrong). Make
sure a layman would understand it and an expert would be convinced.
Also, make sure that the solution actually solves the problem you
explained before.

– Intellectual Property (IP) & Technology: If your technology / IP is a barrier to entry, explain why the technology you have developed is superior.

– Unique selling point (USP):
What makes your solution unique / superior to existing solutions? Is
what makes your product unique what the customer is looking for /
missing in other solutions? Is your USP sustainable?

4. Traction

What do you have accomplished so far? Show revenue (if you have any
revenue, state it, no matter how marginal), number of users, LOIs,
contracts, number of customers, product launches, technological
milestones, key hires etc. It is nice to see how these KPIs have
developed over time.

5. Market

Please do not state the
total market size of your industry sourced from some market study.
Rather apply your business model and define the bottom-up potential of
your targeted market to get an addressable market size

6. Market entry strategy / Marketing / Sales

After you have shown the potential of your product / solution, you will
have to acquire customers. How are you planning to acquire them? How
will you reach them and get the word of your company out? What will it
cost? And what have you tested?

7. Competition

There is
always competition! If not there is no market. Your job is to show how
you differentiate from the competition. What makes your company superior
and how will you outperform the competition? Is your competitive
advantage SUSTAINABLE? One good way to illustrate your value proposition
is by showing a matrix listing your competitors vertically on the left
and a list of features/benefits horizontally on the top. Mark the
services that are (not) offered by these companies. Ideally, your
company offers everything and your competitors lack key areas. Don’t
just focus on large incumbents when doing this analysis.

8. Business model

You are talking to an investor and they want to know how you will
generate money. Who is the paying customer? Is it a SaaS, license-based,
transaction-based, affiliate-model? What’s the gross margin, repurchase
rate etc.? Get the Key Performance Indicators (KPIs) for your business
model and state them. This is the basis for the financials to come. It
has to be clear how much money you can make with one customer and how
much it costs you to win a customer. If you don’t know this yet, make
reasonable assumptions from your experience so far and the potential
uplift from that or take your peer group. Bottom line an investor wants
to know if this is a sustainable business model and for that he needs
your unit economics: It all comes down to Customer Live Time Value
(CLTV) vs. Customer Acquisition Cost (CAC).

9. Financial Projections

Although you might think this is a look into a crystal ball, an
investor is highly interested of where you think the company will
develop financially. They will give you money and want to know how it is
spent and what the expected outcomes are, especially for the next 12-18
months. But rather show your revenue projections (and number of orders /
customers) over the next three to five years. Back up your numbers by
sharing your assumptions on a product basis – this is the stuff
that the investor is really interested in. It is very important to show
the cost structure of the company, since this will be key for your
funding needs (especially if revenue does not develop as expected). The
rest is sanity checks: Does the financial plan fit the market
assumptions? Is it a realistic plan (you are allowed to show
different scenarios) or are you assuming an above 50 percent EBIT margin? Be
sure to explain your assumptions and any over-proportional growth.

10. Team & Personnel

This slide is super important since investors rather invest in people
than in ideas. Markets, business models and products might change over
time but the team should stay. Show why you are the right people to make
this company a success through the balance of skills you bring. It is
also legitimate to show what key hires might be missing.

11. Funding needs and next steps

State how much money has been invested already and by whom over which
time frame and show the ownership percentage. Then show how much money
you want to raise, what it will be used for (milestones) and where it
will get you. If you have part of the investment already committed,
state it.

You do not have to stick to the exact structure
but all of the above should be included. Do not use buzzwords. Do not
use words that would describe any other company in your field. Do not be
angry if the investor does not understand what you are doing: look to
see if you are doing the best you can to explain. 

Get your pitch deck
ready, start practicing as much as possible and most importantly have
fun while pitching!


More VC advice on EDITION F:

I won’t tell you the name of my start-up, if you don’t sign an NDA! Read on

How we got a job at a VC. Read on