How do you create a winning pitch deck to raise funds?
Originally published on PURE LAMBDA
You are a startup with a great mission and a great problem to solve that will help a large number of people in their everyday lives. You need funds to build and expand your product. You need to talk to investors and convince them to believe in you and your dream. Trying to raise money for a new business or idea is difficult. It is often a lengthy and frustrating process of having meetings and interviews with potential investors.
How will you build the perfect pitch deck to help you raise funds and stay true to your mission? You are in the right place. At PURE LAMBDA, we have helped dozens of entrepreneurs improve their pitch decks and communicate their dream efficiently to investors.
This article is going to be divided into sections that correspond to each slide of your pitch deck. Those slides are arranged in a way that makes sense for most startups, but if you feel you can better engage your audience and tell a more compelling story by changing their order, go right ahead.
Keep in mind that what you are building is a sale pitch, you are trying to sell equities of your company in exchange for money or other services based on your specific situation. A sale pitch cannot be too long or too detailed or you will end up boring your audience. The average attention span of a human is usually about 5 minutes of intense focus, the focus rapidly decreased after that. For this reason, try to keep your pitch short and fast-paced. You usually want your presentation to last about 5 minutes and with no more than 20 slides. That means about 15 seconds per slide. So keep them short and to the point.
It is important to remember that this is not going to be a check-signing ceremony when your presentation is complete. This is a sales pitch, a teaser. For this reason, you do not need to cover every aspect of your business, only the ones that matter to your audience.
We will begin by introducing a few general notions to keep in mind as we progress through this journey. Let’s learn more about what investors want.
Know your audience, think like an investor
To raise funds for your startup, you need to think like an investor. A good pitch deck is vital in presenting your startup to investors. So, how do you create a winning pitch deck?
Create concise material that provides investors the key facts they need. Prior to the meeting, ask them questions and investigate to find out what kind of companies they want to fund.
Put your feet in the shoes of an investor. Their goal is to provide a high return on investment for their own stakeholders and investors. To accomplish this, they need to be efficient in filtering the startups that come to them and select the right one. That involves understanding and limiting the risks, as well as assessing the potential returns.
To satisfy those constraints, you need to be straight to the point, respect the investors’ time. That means having slides that are not too wordy and present the right numbers in an easy-to-understand manner. And finally, pitch your project like an investment opportunity. And, importantly, doing so while telling a compelling story!
Let’s look at the slides that should be included in your pitch deck.
Your opening: who are you?
This is the first slide of your deck. It needs to captivate and excite your audience instantly. For this reason, you need to work on a short one-sentence punch line that explains what your project is. Think of it like a classic tweet, no more than 140 characters. If you need help, feel free to read our other article: From Idea to Product-Market Fit.
In addition, this punch line needs to be easily understandable by people outside of your field of expertise, think of a kid, your parents, a friend, they must understand it and be excited about it. Try your line on them and iterate until you see their eyes light up when you say it. This sentence must give a quick taste of the value of your company and make the investors excited to learn more.
This slide should also contain your company name, logo, and contact information. Think of this slide as a big business card.
Your why: what problem are you solving?
Second slide! The Why! Why are you building this company? What is the problem, so significant to people, that it requires you to fix it?
This step, which may take up to two slides, describes the problem you are solving. The investors need to understand that many people are facing this issue today.
Telling a story is an effective way to achieve this. Share a personal story or testimony that illustrates how this problem affects the life of the person in your example. Even better, you can talk about you, your family, or a close friend that has had their life heavily impacted by this problem.
To make the investors understand, you can also describe a world where this problem has been solved and people are free from this burden. Tell a story that helps the audience imagine a better tomorrow with this problem resolved. With this approach, you get to describe your company vision and goals for the future.
Companies, and therefore investors, rely heavily on perfect timing. Some companies propose ingenious solutions too early and the market is not ready, so they fail, allowing the next one to succeed. You want to emphasize how your problem has become more critical over the past few years, and why now is the best time to deal with it. Find articles, trends, and research papers that have shown this recently.
Your opportunity: how big is the market your company is targeting?
Now that you have described the problem, your audience is understanding the gravity of the situation. The next step is to describe the number of people affected by the issue, which will change the perspective to a business angle.
At this stage, the goal is to make the investors realize that a lot of people are willing to pay to get this problem solved. You want to talk about the specific target market you want to start with and potential expansions. You can learn more about this specific aspect by reading more about TAM (Total Addressable Market). You also want to talk about the size of the industry your problem is part of.
In this slide, it is important to have accurate and specific market research. Your professionalism and seriousness will be on display here.
Your competition: how competitive is the environment where your business operates?
At this stage, you want to talk about the competition that is trying to solve this problem with their own solutions. Who is already eating a slice of this market? Investors want is a market with healthy competition. And you want to demonstrate that you have a competitive advantage over this market.
This slide usually contains a table or axis with competitor logos and your own. Be careful, at this point in time, your audience is not familiar with your logo, your product, or your company name. You want to make sure that it is obvious which one of your logos represents your product. The points of comparison between your competitors and your company must be chosen carefully to show genuine differentiating value and disruptive advantages.
Once again, you can incorporate this slide into your storytelling. Explain why those advantages, or the combination thereof, are what make your product the product customers will want.
Your solution: what product is your company building?
In this slide, you want to showcase your solution to the problem you presented earlier. By doing so, you want to check a few boxes:
- How does your solution solve the problem for those affected by it?
- How is your solution better than the competition? What is your competitive advantage? (if you haven’t already showcased that in the previous slides)
- Why nobody else can build this solution but your team?
- Why is now an ideal time to build this solution? Is there a core requirement that is now possible, thanks to new technologies, that was not possible earlier?
- Explain if your solution is an improvement over previous solutions or a brand new disruption to the market. Some investors prefer disruption: the risk is higher, but also the rewards. But others might want to take a low-risk approach. Be sure to know your audience.
For yourself, keep in mind that your company is anchored on the Why, not on the solution. People will follow you because of the Why. If you have not, I recommend listening to the TED talk from Simon Sinek — How great leaders inspire action. Because of that, your solution might change over time as you learn more about your market and industry and that’s okay, this is called pivoting.
Your business model: how will your company generate revenue with the product?
Finding a business model that fits within your solution can present a challenge.
You can skip this paragraph if you already have a working business model. Otherwise, let’s talk about it. Your goal as a company is to make a profit, and this is what the investors are looking for as well. Their goal is to have positive returns on their investments. Over the past few years, people have become more aware and engaged about ethical ways to make money. If you cheat your users or leverage shady practices, it will be harder for you to raise funds, hire great talents and find customers that are willing to be associated with you. To avoid being in this situation, make sure to align incentives. By aligning incentives between your company goals and your user goals, you will create a win-win situation: when your users get satisfied, you get paid.
Aligning incentives means that your company gets rewarded only when the users get their problems solved. Let me explain. Depending on the problem your company is focusing on, there might be a lot of intermediary steps involved before the user get their problem solved. It is sometimes tempting to monetize the intermediary steps toward the solution. Be careful, that will end up creating incentives for your company to elongate these steps as much as possible to maximize profit. Do not build an ethical trap for yourself where to make money, you have to not help your users. You want to design a business model where you get rewarded for helping your users. You want to create a win-win business model. If you are having trouble finding a win-win business model, PURE LAMBDA can help you brainstorm and find innovative revenue models.
In terms of displaying this information, it really depends on the business model you chose. Are you B2B? B2C? B2B2C? B2C2C? Do you have a free tier and a premium plan? Is it a subscription or a one-time purchase? Are your customers the same as your users or two different entities? Your goal is to explain simply how you get paid when you solve the problem.
Your traction: how many users are lining up to use your product?
In this slide, you want to show the investors that you are on the right track to product-market fit. You want to show that customers are happy to pay for your solution.
If you do not have a product yet, show that you have a growing waitlist of potential customers. You can use platforms that allow you to collect emails of people showing interest. You can also use marketing surveys you conducted to show that your solution would be well received. Try to show accurate and reputable data to demonstrate that people are excited to pay you to solve the problem.
If you already have customers, perfect. Show the speed at which you are acquiring them. Show the retention rate, show that customers are not only happy to purchase your solution but that they come back more than once for it. For most businesses, the number of sales and the retention rate are the two most important numbers to show. And you need to show them in terms of evolution through time, you want to show growth and acceleration of your growth.
You should also add predictions for the future in a design style that highlights the fact that those are estimated predictions such as dotted lines.
Your strategy: how will your company grow to the next level?
In this slide, you want to demonstrate that you know what you are doing to the investors. You want to show that you have a clear strategy, a clear plan to get your first customers, and beyond.
You first want to establish the current baseline by showing, if you can, early adoptions, channels that have worked or not worked, press articles, or social posts that have gone viral. Any kind of approval from external recognized sources is a significant advantage to show at this moment.
Then, you want to show a strategy for the short and long term to acquire more early adopters, and how to expand to more customers. For each of those strategies:
- What are the risks and how you are to mitigate them.
- Layout a detailed timeline.
- Which key channels are you going to use (for instance: paid search, social media, email marketing).
- What are the acquisition cost per user and potential total returns per user based on your sales and retention rate.
Remember that this step is crucial because it does not matter how great your product is if no one knows about it.
Your team: who is making the magic happen?
The team slide is vital to the investors who are going to take a bet on the company. A typical investor will usually place more hope on the people than on the product. As experience shows, companies often pivot and revise their product, which means previous slides on your solution may no longer be relevant. However, the team will stay, if they are passionate about the problem the company is set to solve. With a dedicated, skilled, and motivated team, the company is more likely to succeed and be able to adapt to the challenges it faces.
In this slide, you will have to display those qualities to the investors. Here are a few pointers on how to achieve a good team slide:
- Limit this slide to the key members of the team, no more than 4.
- Keep the background of each member brief and relevant to the problem and your solution.
- Show why your team is the best team to do the job.
- Investors put more faith into members if they are working full time for the company, including yourself.
- When there is a talent gap in your team, use a placeholder to show that you are actively looking to hire for this role. It also shows that you are aware of your own weaknesses which in turn shows professionalism.
If you or someone in your family is directly impacted by the issue, you can move this slide to before or after the problem statement to communicate that your team is the best to solve the problem. Above all, make it fit naturally in your story.
Your Demand: what are you seeking from the investors?
The purpose of this pitch deck is to raise funds, so here is the moment to do so. Now that you have the investors’ attention, it is time to ask for what you need. Remember to think like an investor, you want to position your business as a great investment that will generate great returns. Great returns mean low risk and high reward. With the previous slides, you have hopefully demonstrated those aspects to your audience.
You want to highlight the total amount of money you are asking for and a detailed description of how you are planning on using it. Investors want to know where their money is going and how it is going to be used. If your friend came to you to ask for money, you would be curious about what they are planning to do with it.
Further, you do not have to put this information in writing, but let the investors understand that you do not need the investors’ money. Ideally, the money should only accelerate your growth, not enable it. Investors prefer to invest in low-risk investments. Rather than being a lifeboat, they want to be a rocket booster.
Your personal touch: how to customize your pitch deck for your own company, problem, and solution?
So far we have 10 slides and those are the foundation that is required for most companies but each startup is different. You have your own dream, goals, and values you want to highlight during your pitch presentation. This section discusses extra slides you can add to your presentation based on your company, your product, and what you want to emphasize in your presentation to show your company’s value. You can add those slides directly in the flow of the presentation. Another option is to add those slides as an addendum in case one investor asks a question. This will show them that you are prepared to answer and anticipate the needs.
- If you have patents or conducted unique research, you should build a dedicated slide to display the value of your intellectual property.
- If you already have well-known customers, have a slide with the logos of your current customers.
- Especially for B2C companies, you can show screenshots of your product if you have a working prototype or wireframes.
- If your company relies heavily on technology and your audience is composed of technical experts, you can explain your tech stack. Most of the time, this slide should be at the end of your presentation to answer questions, but avoid incorporating it into the main presentation as to not bore the non-technical audience.
- If there have been news articles or research papers explaining how the market has drastically changed, you can dedicate a slide to answer the “why now” question. This slide would show the evolution of the market and the recent trends.
- If you already have board members and some who are famous or have a positive reputation in your industry, you can build a dedicated slide to present your board. You can usually insert this slide right after the team slide. If you have a board, but no famous personalities, you can just include this slide at the end of the deck for questions.
- Furthermore, it can be beneficial to include a slide that presents your exit strategy and timeline, depending on which investment fund you are presenting to. Be careful to make sure your vision aligns with the long-term plans of the investment fund listening to your presentation.
If you have more suggestions, feel free to add a comment or send a message to PURE LAMBDA.
Your success: how to recognize signs that your pitch worked?
So you now have your completed pitch deck. In the next section, we will discuss a few general tips, but first, we should spend some time discussing the signs that you have an effective speech.
Investors asking questions are an indication that you and your company are of interest to them, it is a sign that you are on the right track.
Next, if the investors are talking about the next steps in the process, clearly this is a good sign. It is also a good sign if they are scheduling meetings with more investors or investors higher in the chain of command of the fund.
The investment business is all about connections and networking. Therefore, you are unlikely to hear a clear “no” from investors. They will most likely save your deck and information so that they can keep track of your progress. By doing so, they can keep opportunities open in case you become the next unicorn. The purpose of saving your pitch deck is to compare it with the following slide deck if you meet again, so they can measure your progress.
Some extra notes
We are close to the end of this article. Here are some general advice that wouldn’t fit in one specific section:
- Do not forget to add the typical “Confidential and Proprietary. Copyright © by [Name of Company]. All Rights Reserved.” at the end of each slide. Ask your corporate lawyer for the exact formulation you should be using.
- Consistency in design (font, font size, spacing, color scheme, etc…) across all slides is extremely important as it shows the quality of work you can produce. Investors want to invest in someone reliable, consistent, and accountable.
- Additionally, ensure that all the numbers have units, all charts have a legend and a title to demonstrate your professionalism.
- Make sure that each slide has a page number so investors can easily ask specific questions about a section of your presentation.
- As you meet more investors and refine your pitch, include more slides at the end as an addendum to address their common questions.
- Send your pitch deck as a PDF to the investors after your meeting. Also, share a read-only link to the live document that you are going to keep up to date so they can keep track of your progress.
- And most importantly of all: tell a compelling coherent story!
Thank you for reading this article until the end. I hope you now feel better equipped to raise funds and build your dream company.
- Business model
Once you have those foundations built, add extra slides to personalized the deck to your company, the problem you are tackling, and your solution. Finally, include additional addendums to provide answers to common investor questions. If you need help polishing your pitch deck, feel free to reach out to PURE LAMBDA.
Originally published at https://purelambda.com.