One of the most challenging aspects of being an entrepreneur is creating an effective pitch deck. The purpose of your initial presentation is to persuade potential investors to offer you a follow-up meeting, even though your ultimate goal is to raise money. Building that relationship requires carefully planning and organising the elements of your pitch deck so they tell a compelling tale.
Any compelling story must have tension to keep the reader’s attention and elicit an emotional reaction. That tension is introduced by the problem statement. The problem statement, which is a description of the problem your product or service will attempt to solve, must be precise, individualised, and concentrated on the main source of suffering (though you can discuss other pain points in your presentation). Be up front about the negative effects of not finding a solution to the issue so that your investors will feel a sense of urgency to find one.
Don’t hold out on the solution; give investors the answer right away. This slide must specifically address the problems presented in the first slide in order to keep your story concise and clear. Otherwise, you’re just creating an issue out of nothing. Many business owners find it challenging to come up with a succinct solution because they are frequently too attached to their product or service to take a step back and define it in a straightforward, objective manner. Resist the impulse to go into great detail about your goods. Instead, concentrate on what gets consumers most pumped up. Anyone may use Google to locate nearby coworking spaces, but OfficeFlex offers value by assisting users in choosing those that best match their needs and facilitating simple booking
Since this is the key that will open the solution you just offered, demonstrating the features of the product is the pitch’s main focus. Here, you want to concentrate on what makes your product unique and how it solves the main issue you identified. Imagine it as a real estate listing that focuses on a home’s most unique qualities.
Investors are also interested in learning how challenging it will be for rivals to duplicate your offering. This is your “competitive moat,” the long-term competitive advantage you have. Be sure to emphasise this. Nevertheless, use restraint and stay away from overly technical and jargon-filled explanations of how the product functions. Be upbeat but realistic because overconfidence might backfire and cause investors to become wary.
It’s time to describe who this product will benefit now that you’ve established the setting for your tale and captured the attention of your audience. Investors want to know if there is a large market for the issue you plan to address, as this indicates a promising future for revenue development. You’ll define the market size on this slide. In order for investors to comprehend your strategy, you should be able to articulate your consumer categories. While business-to-consumer enterprises concentrate on individual characteristics like age, life stage, or household income, business-to-business companies often segment based on employee headcounts, technology used, or geography.
Competitive Landscape and Potential Risks
The next step is to increase investor trust in your capacity to fulfil your commitments. Raising the tension once more is a good approach to accomplish this—of course, so you can release it later. Knowing your competitors is just as crucial as understanding your product and target market. A thorough competitive study demonstrates that you are aware of your position in the market and your strategy for outwitting rival companies.
The Gartner Magic Quadrant is the most well-known graphic representation of competitive analysis, especially for tech companies. It divides competitors into four categories on a grid: leaders, visionaries, challengers, and niche players. It’s not the only choice, though. The creators of OfficeFlex have decided to show their rivals on two axes that best reflect what their customers value.
Adding a presentation that candidly exposes your issues to your competitive analysis is counterintuitive yet helpful. This study is supposed to offer insight into what keeps you up at night while demonstrating that you’re not naive and that you’re treating the venture capitalist’s time and money seriously. Eric Lagier, Founding Partner of byFounders, has termed this forthright risk assessment the “ugly slide.”
Revenue and Operating Model
It’s time to show how you’re going to carry out your plan of action now that you’ve shown that you comprehend the terrain ahead. Your revenue and operating models should give a thorough overview of your business plan and address the tension that was raised in the preceding section. Due to the fact that venture capitalists’ primary concern is revenue, this may be the most crucial section of your presentation deck. However, it can also be the most dangerous aspect since, for early-stage and pre-revenue startups, market research might be the only method to identify the ideal business model—and reality might turn out completely otherwise. Fortunately, experienced VCs are aware of this.
In addition to your price points, you should be prepared to offer projections for gross revenue, margin, and profits. You should also be prepared to discuss how you arrived at your price points. Even if you’re currently optimising them, you should give specifics about your unit economics and marketing strategy. This is a lot of information to include on one deck, so you might decide to break it up into two presentations or explain some of it verbally. OfficeFlex chose to emphasise its operational strategy here after mentioning its price points in the competition slide. Investors are given a better sense of the users of OfficeFlex thanks to the consumer personas.
A track record of accomplishment may be the best method to convince investors to believe in you. Use this part to highlight your accomplishments and future goals in areas like:
- Customers, agreements made, or statistics on monthly active users
- recruited team of consultants and advisors
- operating capability, such as opening sales offices or securing retail space
Another strategy is to highlight the product milestones that have been achieved, which can lead to a roadmap describing ideas for future features and improvements.
This is your chance to persuade potential investors that this project will be worthwhile. Many entrepreneurs are shocked to discover that investors are much more concerned with the credibility of the business assumptions than with actual revenue and profit estimates. That’s because business assumptions are generally accepted conjectures and are simple to comprehend, whereas predictions frequently have very little facts to support them.
The purpose of creating a thorough prediction is to express these assumptions in detail and stress-test them to determine how they affect performance. Describe why you think the selected inputs are reliable. This reasoning will show that you are aware of the distinction between guessing and estimating and that you know what is required to establish a successful firm. OfficeFlex’s predictions don’t mention money at all, other from the desired yearly recurring income amount for Year 1. Instead, they focus on the factors that have the most impact: global expansion, product development, and data gathering.
Every business connection is built on relationships between people, and investors want to feel confident that the team working on your project has the knowledge and expertise to see it through to completion. Because of this, raising funding is substantially simpler for successful founders. If you haven’t previously had a successful exit, think about include the following in your deck:
The founders’ time commitment
The core team’s years of experience in the industry
Background in business and management of the core group technical expertise of the core group
You now describe the part an investor will play in developing your product. You must at least specify how much money you require, what you need it for specifically, and how the investment will affect the company’s value. Make sure to explain how the money was used in relation to the targeted milestones you have set, such as your break-even point, any significant growth, or the creation of your product.
You can also go into further depth about the valuation advice and/or equity you’re offering. For founders who have never participated in a pitch, investment advisors can provide a lot of value.
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