4 Key Things to Include in an Investor Pitch Deck
A pitch deck is the tip of the iceberg that is your business. Here's how to make one investors love.
This post was originally published on Medium.
“Will you review my pitch deck?”
I get this message a lot from entrepreneurs, especially in San Diego where I live and breath in the startup ecosystem.
At the start of 2019, I reviewed about 100 startup pitch decks a month. 2020 will be more.
I’ve vetted startups that mimicked AirBnB’s pitch deck or Uber’s pitch deck. I’ve seen investor presentations at accelerators like Y Combinator and Techstars.
What I realized was how entrepreneurs think so similarly across the planet. At some point we all think we have something unique. We all think we have something worth investing in.
It’s not that you don’t.
You just haven’t been able to articulate your startup’s story (given you have one).
In fact, after asking over 60 professionals in my venture network about startup fundraising, I found the 2nd and 3rd most common challenges were articulating your business model and having a viable one to tell at all.
What can investors possibly be looking for that you haven’t already thought of?
Let’s quickly go through the common mistakes I see on pitch decks.
You can find the typical pitch deck structure anywhere online. The slides include these:
- Problem slide
- Solution slide
- Competition slide
- Market slide
- Financials slide
- Team slide
This is list is neither complete nor in any correct order. That’s not important.
The mistakes are:
- No clear market problem or customer need
- Too much emphasis on the product or solution
- Misunderstanding of competitive advantage
- Misaligned go-to-market strategy
- No clear understanding of financial projections
- Not strategic about new team recruits
- Bonus: No clear plan for an exit
I won’t cover all of these in detail here. But take a look at a few of the things investors want from entrepreneurs.
1 - Profile the Customer and the Buyer
They’re not the same thing.
What you’re doing here is creating an alignment between the sale of your solution to a customer and the sale of your company to a buyer.
If you already planned to build a business for an exit, it’s important to know who could potentially buy your business.
Many entrepreneurs want to be bought by Amazon or Google, but the truth is you may not fit the corporate development strategy of those companies. Your cultures, technology, and customer segments may not be aligned either.
See "Why Entrepreneurs Never Plan to Exit Their Startups."
But if they are, then you want to consider what kind of customers they go after. Look at the challenges those customers have and how your potential buyers serve those challenges.
Then take a look at the gaps. What are these companies not providing their customers that your solution can, and does your solution have a significant impact on their lives or work?
2 - Get Buyer Validation
In other words, do you have strategic partners who could be exit targets? Here are some of the different types:
Serve to integrate with your technology for enhancing or outsourcing features
Most early stage entrepreneurs I work with are engineers. And naturally they view strategic partners as companies that can help them advance their technologies. Their focus is flawed at a fundamental level because overlooks the rest of their business model or the benefit their product provides the customer.
Serve to get your product in the hands of customers (more of a logistics role, even if it’s digital)
Serve to increase the followers and ambassadors of your vision/content
Serve to increase your revenues and many times sell complementary products to a similar customer profile
Serve to reduce the complex and costs of engineering at scale
I consider having strategic partners in these different functional areas of the business as potential buyers because they can have an investment stake in your company.
See "Forget Speed to Market, Focus on Speed to Acquisition."
3 - Set Sales Objectives
Set realistic sales growth objectives. You can use OKRs like this:
Objective: Generate $200k in revenue in 2021
- Key Result 1: Sell 10 units at $10k a piece by June 2020
- Key Result 2: Sell 10 subscriptions at $100/mo by October 2020
- Key Result 3: Sell $97k in install and training services by July 2020
These are arbitrary numbers.
The process is what’s important because it helps you create leading indicators. As long as you can realistically achieve these goals, you can plug them into your financials and demonstrate how you’ll grow.
Articulating your financials becomes easier because it becomes integrated in the rest of your startup’s story.
4 - Bridge Your Financials With Operations
In an early stage startup, the financials are merely projections and therefore don’t mean shit.
That is, they don’t mean shit by themselves.
When an investor asks you about your financials, what he wants to know is how you’re thinking about your operations.
We can look at financials and understand the way operational waste circulates through the anatomy of your business. We’ll know what parts are failing, and need amputation or reconstruction. We’ll know what aspects of your business need to be fed in order to create growth.
Your startup floats in an ocean of other complex baby organisms. There’s no one-size-fits-all solution for how it fits in the wider ecosystem.
Be wary of claims like “this pitch deck will guarantee investment.”
A pitch deck is the tip of the iceberg that is your business. Investors need to see the bottom to know you’ve thought about all the inner workings.
How would they know they can even help your business, let alone take a financial risk on it, if they know little about it?
You’re fine to follow the available resources on pitch decks. That’ll give you the basic format and what’s worked for others. My tips above culminate and distill the thoughts of dozens of investment firms I’ve experienced.