It takes a lot of time and effort to get an opportunity to pitch to investors. The pitch deck is a key tool to help secure their interest and recently I’ve seen a number of pitch decks which made some fundamental mistakes. So use this checklist to increase your chances of success.
Before starting just a quick word of warning – make sure you do your homework on prospective investors that you’re pitching to. Not only to make sure you know what is interesting to them – their hotspots, but also to make sure that they are bonafide. You don’t want to be sharing confidential information even in a summary form like on a pitch deck with just anybody.
So with that …
Here are my top tips
Tip 1 – Make sure it is very, very clear the pain (or problem) that you are solving and allude to the size of this pain. One of the biggest complaints from investors is not fully understanding what it is you do.
Tip 2 – Again explain clearly in a jargon free way how it is that your product or service addresses this problem. Just what are the specific benefits and value the customer will derive from using your product?
Tip 3 – I personally think it’s really important to get the team information upfront. Why is it that you are the right people to deliver? As I’m sure you know, fundamentally investors are going to be backing you – that’s why I feel this information needs to go high up (please be aware that with everything I’m saying here there is more than one school of thought – it’s very important that the pitch deck speaks to you as you are going to be the person presenting it).
Tip 4 – Markets and marketing is a crucial part of the pitch deck. You have already alluded to the potential size of the market. Now you really need to show you understand the addressable market and your share of this. If you’re not familiar with TAMSAMSOM, have a quick Google.
Tip 5 – Marketing is something that investors pay a lot of attention to. No matter how fantastic your product, how are you going to build that bridge between you and your customer so that they know about you? And what is this going to cost – you should know and be able to answer questions on what is called your ‘customer acquisition cost’ i.e. what is it going to cost to get a new customer. This is very relevant when comparing it to the lifetime of the customer and the average spend over that period. Whether you reveal all your marketing metrics e.g. conversion ratios, web traffic estimates etc in your pitch deck or not, you must have them at your fingertips and be prepared to answer detailed questions on them.
Tip 6 – There is a temptation to gloss over competition believing that your product or service is unique. This is very rarely the case. Investors will expect to see a clear analysis of the competition and why you feel you have the edge.
Tip 7 – The ask $. You may have verbally indicated at the start of your pitch how much money you are looking for. But what a lot of people don’t do is explain clearly what the money is going to be used for. Personally I think the pitch should also include what percentage of the company you are prepared to offer and the implied pre-and post money valuation.
Tip 8 – The dreaded financials. Personally I think the worst thing you can do is include a table of steadily increasing sales and profits or even a graph. Investors never really trust spreadsheet forecasts or any thing derived from them. If you are in an early stage business the first key financial milestone is breakeven. So I suggest describing what it looks like – how much web traffic do you need or how many distributors. You can also include in financials details of the unit economics. How much does one product cost to make, what is the selling price and how much is the gross profit? Milestones can also help investors understand your story. What is it you’ve got to do by when to deliver on the plan?
Getting money from investors is all about telling them a story – and making that story seem believable! The pitch deck is just one of the tools along with the executive summary and business plan. A key part of making your story believable is to make it clear – never assume any prior knowledge. Just imagine your granny is listening and reading – would she be clear what you are doing?
Monster’s advice by Barfoot + Duggan