What should be in your pitch deck?
Mar 18, 2020
I would like to talk about the essential parts of any fundraising pitch deck, but also want to point out that one structure doesn’t fit all circumstances, and what works for a seed-stage doesn’t specifically work for round D. I will speak about pitch decks for the pre-seed stage to Round C. Okay, Let’s go.
The first page is called “Title” and it compromises the name of your company, logo, and a headline that summarizes in one statement what is expected inside your deck. If it’s a fundraising deck, I put the amount of investment you’re looking for and stage of investment round as “Seed stage” or “Round B”. It will help potential investors to frame their expectations of the document and understand where you are right now and how much money you’re looking for.
Regarding design, this page is only the only one that could be designed differently, but you still have to stick to your corporate style and colors. I also recommend writing the month and year on the title page so that investors have a feeling that it’s an updated version. The good news is that the title isn’t the last page that a potential investor sees, at least they see the next page.
2. Executive summary
The most important page in your deck, because it basically summarizes every other page of the presentation. You definitely need to describe in one, two statements your business idea. I know it’s hard sometimes, but you have to and it also helps you in further negotiation to articulate your idea in 60 seconds. It’s also critical to mention your current stage, what the is/are next stage/stages are, and what usage of proceeds.
The final piece of information should be your secret sauce — what factors allow you to compete with competitors or create a new category of products or services. For each above-mentioned question, it should be one or two statements at most. Remember, this page is the most important one and it’s essential to convey a message about your business very clearly and succinctly.
State a problem you are trying to solve. Explain what is wrong with existing solutions, why they don’t work, or aren’t efficient. Your potential customers experience what costs because of the absence of your solution?
Explain how your service or product will solve the problem. If possible, show some cases or studies where your solution does solve the issue. Show why your solution is unique and what competitive advantage you have around your service or product that other competitors couldn’t easily copy.
5. Target Market
how the potential size of the market. Most of the materials about pitch decks suggest that you should use three main measurements: TAM, SAM, and SOM. TAM is the total addressable market, SAM is the segment of the TAM targeted by your products and services which is within your geographical reach, and SOM is the part of SAM that you can capture. But to be honest I’m not a big fan of these acronyms and actually, I’ve never seen it in any materials of any mature company. I would recommend using the target market size instead and explain in a very simple way how you calculate your potential market size and if applicable give a few examples. Very often startups create their own niche and it’s better to justify with some evidence why a potential consumer will pay a certain amount of money for your services.
As a second step is to calculate how many possible customers there are.
Then multiple one number by another and you will get the potential target market. I really believe that you shouldn’t show the market as large as possible and completely disagree with this article: alexanderjarvis.com/big-can-get-market-sizing-question-killed-many-startup-fundraises
It’s better to show that you understand your market very well albeit it could be a niche, but you can capture a larger part of your niche, building a sustainable, competitive advantage around your company. It’s far more important than a large potential addressable market that you will chase with many other competitors and destroy all the value along the way, but unfortunately, this message doesn’t play well with some VCs, which is still looking for a unicorn in every startup.
Explain briefly all the core functionalities, features of your product or service, and how it will help your potential clients. Emphasize new or novel features of your product that don’t exist in the market right now. Again, use a very simple and clear language.
7. Business model
Do you think this slide should be about money? And yes and no. Definitely, you need to show the path to profitability, but you should pay more attention to at what point you will begin charging clients, why do you think this is the right moment. What distribution channels will you use? What is the rationale behind it? Can you compare it with your competitors or find some in related sectors? For example, you want to start charging your clients $5 per month for a subscription for your service and you estimate that 15% of all users will subscribe.
Try to find information that supports this assumption in some closely-related sectors or products.
Pricing is another very important topic. Again, try to find some facts that support this price and why customers will buy at this price. If you have several streams of revenue show it as a long-term opportunity to scale up, but don’t overemphasize them, keep it simple, show your main revenue stream.
You need to stress what each member of your team has done for the time being relevant to your current endeavor and what he or his area of expertise is. If you’re doing a software start-up you must have a CTO and you should state it clearly who the CTO in your team is. I wouldn’t put an advisory board on your deck other than if you’re really engaged with them regularly and they bring a lot of value to the company.
If yes, please write at least one statement that is your current protocol of interaction with your advisory board. For example, you meet with some of them twice a month and have a call with the whole advisory board each month. It will sound as if you, indeed, work with the advisory board permanently and it shows that you will work the same with the board of directors.
If you’re at a really early stage of pre-revenue or revenue is very small I highly recommend putting a bunch of metrics instead of the full stack of financials (P&L, Cash-flow). I recommend that you show MRR - Monthly recurring revenue, ARR - Annual recurring revenue, current burn rate, and what will happen with your operating profit when you reach your next milestones. Show how much money you’re going to raise and what the use of proceeds and explain how the use of proceeds will convert to your next milestone.
It’s very important to call for action in this slide like: “Contact us to hear our story” or “We’re happy to talk about how we’ll change X industry”. I highly recommend mentioning a lot of contacts such as Linkedin, WhatsApp, email, and telephone number. I also insist that you register your email domain if you haven’t done it yet.
I leave out certain sections which you could find in some other pitch deck templates such as the famous Sequoia Capital template that you can find here: slideshare.net/PitchDeckCoach/sequoia-capital-pitchdecktemplate. I leave out one section which is called “Why Now”. I believe if even a potential investor would like to hear it, i believe it could be very tricky, and very often it’s difficult to articulate why the time is right now. I would recommend that you put this section only if you’ve got bullet-proof arguments about why the time is right now. The whole presentation should make up 12 pages at most, even better 10–11 pages. I mentioned above 10 sections, so it would be perfect if you devoted one page per section.
I know sometimes it’s a very daunting task and I sometimes break my own rules, but it’s so critical to keep it short. The most wide-spread mistakes that I see again and again are that all the time startups talk too much about unimportant topics and run out of time to answer questions from investors. I beg you to speak much less and save more time for questions. The same approach applies to the visual preparation of a presentation. If you have any questions about fund-raising, pitch deck, or terms sheets, please contact me, I would be happy to help you.