If you want to get funded, you need a great pitch. The best pitches have a few common ingredients: You need a great idea, solid business fundamentals, and a persuasive presentation.
A pitch deck is like the basic scaffolding of your pitch. Investors have lots of meetings with startups and entrepreneurs. If you want to cut through the noise, you need to be able to tell a great story. And all great stories need structure.
In this article, I'll show you how you can structure a pitch so that it resonates with investors. I'll demonstrate what information you need to include — and in which order — to give your company the best chance of smashing your funding round.
#1. What is our purpose?
The opening five minutes of any pitch are the most important. You need to start strong and impress right out of the gate.
Investors give an idea the most attention in those early moments. They'll lose interest if you can't communicate what is unique about your product. Once an investor's mind starts wandering, it's over. It's almost impossible to win them back from there.
So start your pitch with your company's purpose. It isn't the time to start showing off cool features. You need to be direct and tell investors why your product exists.
So think about your mission. What problem or pain point have you set out to solve? If you've written a mission statement already, read over it and boil it down into one impactful sentence.
Your first slide should just include the statement.
How you formulate that question largely depends on your business. But it should at least define two things:
Problem: What problem or pain point is your target audience struggling with currently?
Solution: How do you plan to solve this problem?
We'll deal with how to present these issues in later slides. But for now, use them to form your Company Purpose slide.
What it all comes down to is that investors don't really care what you're doing. The purpose of a pitch is for you to show what you can do for them. And namely, that is to give them a return on their investment.
People buy products and services because they make their lives easier. That could be because they can do things quicker or cheaper, or it could be because it allows them to achieve otherwise impossible goals.
The problem you are setting out to solve will tell the investors a lot about the potential of your business. For starters, it will give them an idea of how large the total addressable market (TAM) is for your product.
Of course, people have been successfully pitching niche products for years. Your product doesn't have to solve problems for everyone. However, it does need to address an issue clearly.
There are three elements that you need to include. Again, what you are doing here is using a fundamental storytelling technique to set the scene.
A) Present the problem
First, you should present the problem of your target market. You need to show a real issue that people are facing. The bigger the problem, the better.
B) Talk about the existing solutions
Then, talk about how your target audience is currently trying to solve their issues.
C) Show why the existing solutions don't cut it
Demonstrate why the current options on the market are leaving your audience short. It could be because they are too expensive, complicated, or insufficient.
What you want to do with this slide is demonstrate how your solution can transform your audience's lives for the better. Show the investors that you really get the problem.
Paint a vivid picture and tell the investors why your product or service offers a unique and compelling solution.
Essentially, you want to tell the investors:
- There is an audience for the product
- You understand the market
- You'll be able to grow and win market share because your solution will be valuable
Once you've demonstrated the problem, it's time to discuss your solution in more detail.
What value does your product provide? How can it help your target audience?
Again, it's all about proving your value to investors. So think about which critical points about your product or service demonstrate that best.
One of the things you should consider talking about is the moment you realized that this solution could work. Storytelling is a very powerful way to impart information. So talk about how you came to understand the problem and the juncture you knew you could solve it.
Additionally, make sure to underline your value proposition. Your value proposition is important for acquiring investors and an audience. Basically, it's the reason why someone will choose your business over your competitors. So ensure that is communicated in the slide.
Finally, include details about the market you want to address and how you think it can grow in the future. Investors love to get involved in emerging markets. So if your product or service is in a growing area, include some forecasts about the market size in the future.
#4. Why now?
The next important part of the story you want to tell investors is why now is a great time for your product or service.
There are a couple of things you want to achieve here. For starters, you want to inject a sense of urgency into your proposition. Good timing is an important part of investing.
For example, investors want to get into a business early. But by early, they typically mean a few short years before the company grows significantly. Although some investors and industries can have longer timelines, something that won't pay off for five or ten years won't appeal to every investor.
There are a few reasons why, such as opportunity costs and a reduced ability to forecast how things will look in the more distant future.
So, basically, you want to make your pitch suggest to the investors that there is an opportunity here, and if they get in at the right time, they'll reap great returns.
There are a few questions you also need to address. First, why hasn't your solution been built by someone before? Or, if something similar has been tried but failed, why will things be different this time around? Again, this comes down to showing why your solution offers a unique approach to the problem you are aiming to solve.
It's also important to communicate why the technological landscape is making your product possible. For example, many of the great startups over the last few years would not have been possible without the explosion of smartphones and high-speed internet.
Investors are interested in new areas that have been opened up by technology. Similarly, recent trends or interests can also open up new possibilities.
For example, an emerging generation that is happy to spend more money on entertainment, food, or other luxury goods could suggest a market for particular types of products or services.
Whatever it is, see if you can find a trend, either technological or social, that is on the rise that will allow your product to grab market share. It will give your pitch some impetus and maybe even cause some FOMO among your investors.
#5. Market size
While subsequent slides may have touched upon market size, now is the time to offer investors some hard numbers.
Investors can get excited by ideas. They can believe that a product or service is a worthy pursuit that can help people, but if the numbers don't stack up, it's going to be a difficult sell. So you need to show very clearly that there is a market for your product and show what size that market is.
There are three main measures that you'll need to communicate:
- Total addressable market (TAM)
- Serviceable available market (SAM)
- Serviceable obtainable market (SOM)
If you're running a startup, these concepts should already be familiar to you. However, we will explain them in more detail below.
What you need to do with this slide is identify the customer persona that your product or service will appeal to. Then, list the TAM, SAM, and SOM.
TAM refers to the upper limits of revenue that a product or service could generate based on market size. Essentially, it measures the amount of money that is in a market. For example, hair care, streaming services, rideshare applications, etc.
So look at your industry and include the total market size in your slide.
Of course, most businesses can't serve the entire market. There are lots of things, like geography, price, quality, features, etc., that will limit the portion of TAM you can hope to achieve.
Again, include the SAM on your slide.
SAM refers to the amount of your serviceable addressable market you can capture. Again, you need to think about your competitors and how they will grab some of the market share. Almost no businesses have a monopoly on any market; there will always be alternatives out there. So build into your pitch how much of the TAM and SAM you can achieve.
We touched on competition in the last section, but now it's time to really focus on it. Having a great product that people like is one thing, but if there are better products or businesses out there, it will be hard for you to compete.
There are lots of reasons why one company will outcompete another. Investors will be wary of this, and they'll want to know which businesses will threaten their potential investment.
Anyone building a product or service needs to know what else is out there. It's useful for benchmarking prices and features. Additionally, it can even open up strategic aims or opportunities. For example, if you want to move into a market, but the only options for people are high-end, it might make sense to offer a cheaper option.
So make it clear who your direct and indirect competition is. Show how much of the market each solution currently holds. Then detail your plan to disrupt or win customers from these solutions.
Basically, you need to make an argument about how your business is unique. Show how you plan to wrestle customers from your competition, be it by offering lower prices, better services, ease of use, or any other differentiating factor.
Telling investors about your product is good, but showing them is even better. A short product demo can be a great part of a pitch. It can really help your idea resonate with your investors.
So, consider recording a product demo. Keep it short, sharp, and concise, and only show the core elements and maybe a few features if they are particularly impressive.
You can trigger this video during your pitch and give an explanation over it.
What you show and how you show it will depend on your product. For example, if you've taken a particularly innovative approach to development, it could be worth sharing.
This slide is a good time to share a development roadmap too. Investors will be eager to see how close you are to turning your promises into reality.
#8. What is your business model
When it comes to the crunch, investors want to generate ROI. A great idea isn't going to be worthy of investment if it can't make money.
With the financial markets taking a hit and interest rates high, there is a new sense of pragmatism in the market. The 2021 highs of VC spending seem like a distant memory, so you must ensure you have a viable business model. And that means being crystal clear about how you generate revenue.
There are a few different ways that products or services make money. The main methods are:
- Subscriptions / signups
Depending on your product or service and industry, you may use one or a combination of each of these approaches.
Additionally, there are two big metrics that you need to include that will give investors a good insight into the viability of your business.
Customer acquisition costs (CAC): CAC is the sum total of your marketing and advertising costs for your win for each customer.
Customer lifetime value (CLV): CLV refers to the average amount of revenue each customer brings.
These two metrics work hand in hand. Typically, investors prefer to see a CLV: CAC ratio of 3:1 or more. If acquiring customers costs a lot of money, it can be difficult for a business to scale or grow.
So, show how you win users. Additionally, make sure your numbers are rock solid. Any interested investor will do their due diligence, and it's a bad look if your numbers don't check out.
#9. Who is your team?
There's an old phrase in investing that says you should "invest in people, not companies." A great idea is one thing, but investors need to know that you have a team capable of executing your plan.
So make a slide that shows who your team is and why an investor should be interested. Highlight any expertise, experiences, or backgrounds of key team members that will demonstrate what you can do.
Detail your founders, managers, and any other impressive staff who could make decisive contributions. Additionally, if you have a board of directors or the help of an advisory board, you can also add them to this slide.
The last, most important section is to show financials. You'll already have listed things like market size, CAC, and CLV, but you need to go further in this slide to prove to investors that you're a solid bet.
The key here is to keep it simple. Dumping a dizzying amount of metrics and financial data on screen will just bog your pitch down. So pick key metrics and growth charts that show the direction your business is going in.
Most crucially, you need to make very clear how you will spend any investment. Basically, you need to show how funding will change your business.
So, for example, if you have excellent customer retention rates, you might need money for marketing and advertising. Or if you need the cash to improve your team and your product or get it to market, including that.
This slide is a good opportunity to introduce a product road map. Pick a few key milestones, like revenue, user numbers, and product development, and map them out.
Additionally, show things like profit and loss (P&L), cash flow, and your balance sheet. Investors understand that funding a business carries a lot of risks. So make their decision easier by showing that your business is solid enough to mitigate some of the risks.
Making a pitch can be nerve-wracking. But if you have a solid structure, you can present your business in a way that will intrigue and interest investors.
Follow these steps so you can set up your slides to deliver key metrics and information in the best way possible. Remember, a great pitch is all about selling a great story.