Preparation is key when trying to raise capital. Not only do investors prefer working with companies who are ready for their raise, they prefer clear organization in presentation. It is vital for you, as the leader of your firm, to keep your firm’s road-map transparent to overall strategy.
Simple as they may look, pitch decks are tricky. Brevity and concision are key.
The 10/20/30 rule, made famous by Guy Kawasaki, captures this. In short, each slide deck should be no more than 10 slides long, 20 minutes in length, and font no smaller than 30 points.
Since each presentation is unique to each firm there is no cookie-cutter approach to fashioning it, however there are common slides that should be included in each deck.
Effective when used as the first slide, a problem slide helps to frame your company in terms of the overall problem statement that the company addresses. Typically, problem slides highlight the situation in terms of the prime customer segment using 3 prompts
- Highlight the situation a user is in
- Indicate how she tries to solve it conventionally
- Pinpoint the pain she experiences
Visually appealing problem slides draw the investor into the problem and help her to empathize with situation.
Most powerful when directly following the Problem slide, the solution documents your company’s answer to this problem. It must be made clear, however, that your solution was developed as a solution to a problem, rather than as a product or technology that is carving a niche to find a problem to solve. This subtle difference sticks out to investors- solving true problems is the first step toward realizing market potential (which is what investors look for). Forcing a service and hoping for traction is a much riskier game.
Market Size (Potential)
Quantify the opportunity in terms of $. Highlighting how large the pie is will help investors see how big a slice they may get.
Visual methods of portraying the Market Size are often the most effective. The TAM/SAM/SOM diagram is a solid choice as it defines the current market share that you have (SOM), the addressable market that you could reach (SAM), and the total available market (TAM). Moreover, having part of this slide to define the validation of the product in the market through consumer quotes and service reviews.
How will you generate revenue and what are your costs that must be addressed. Presenting the solution in terms of $ generated per customer will draw connections for investors between market size and individual customers.
Pricing strategy could be shown, however it can sometimes be more beneficial to underline the COCA (cost of customer acquisition) and LTV (lifetime value) for a specific product or service. LTV highlights the expected return in $ per one customer over her ‘tenure’, while the COCA breaks down how expensive it is to actually get her onboard. Of course, investors are looking for a large LTV compared to the COCA.
Once the value per customer is defined, how are you planning on reaching them? Will you use typical marketing strategies, or plan on using word-of-mouth to generate.
Mention the main channels and customer adoption techniques. Moreover, highlight and distinguish competitors. Competitors aren’t always bad, they validate the market, but they should be contrasted to the business in terms of product, price, and how you will reach your customers in a more ‘profitable’ method.
The quality and potential of the firm has been highlighted and your plans have been laid out. Now it’s time to show the real numbers. Financials bring validation to a new tier by showing the real-life traction of the product thus far, and the expected movement of the industry.
Tell, and show.
Highlight the key points of the financials upfront with a more in depth analysis and models appended at the end of the deck. Spread the focus from solely revenue to other aspects – costs, operations, cash flow – to show you understand the workings of your business. All of these are important to investors.
Included either at the beginning or toward the end of the slide, the team slide brings a human factor to the presentation and helps anchor the points you have made. Experiences and accolades can help validate why you and your team are best to solve the problem and launch the business to success.
As with all stories, conclusions help tie everything previously mentioned together. Here, you could briefly reiterate the main points of your presentation and why the investor should come onboard.
Finally, ask them for the raise goal. If you are hoping to raise $5M in a series A round and are willing to offer 20% equity – lay it out for the investors. They will ask, so preempt them and show them. Even better, show them, and tell them how you will use the funds to scale your business to reach the market potential.
Of course, this is a subjective process and you must approach the creation of your slide deck critically. Only you know for sure what best represents your company and how to portray this to the investor. Different decks will permute the slide order, or include other slides – maybe on product technology, IP, company press, or even a product storyline. Each will characterize your firm and set you apart.
Don’t forget to keep it short and elegant. Remember – 10/20/30.