What all are things startup should consider while preparing Pitch Deck?

17-December-2020 by Virtue Ventures

Raising capital from investors is difficult and time-consuming; therefore, it is absolutely crucial for startups to effectively establish value through a pitch deck that articulates a compelling and interesting story.

A pitch deck is required to present idea of the business to the investor. Pitch Deck makes it easier for the investor to clarify his doubts regarding the business plan.

Here is the summary of few critical elements that required for a great Pitch deck.

Cover & Summary Slide

Utilize this slide to present your big idea. You will likely catch the investor's eye in the initial 10 seconds, so you have their consideration for the following 20 minutes. Portray what you do with a basic decisive statement.

Summarize the highlights of your business opportunity before you go further. There's no reason to make investors wait until the finish of your presentation. In fact, without this synopsis they probably not bother reading or listening through to the end at all.

Keep in mind; they are searching for investment that provides maximum return with minimum risk. So ensure you underline the potential of your business opportunity and clarify how you have minimized market, product and execution risk.

Problem & Solution Slide

Clarify the difficulties you are solving in straightforward terms that any investor can understand. Recognize the individuals who are dealing with this problem. These are your potential customers and users.

How painful is the issue? Is it the main issue for target customer? How do your potential customers and users tackle this problem today? Manually? Or with some traditional techniques? What are the problems with these current solutions (your competitors’) that make open door for new solutions like yours?

In your Problem slide, you should have explained, or at least hinted at, how your target customers and users have been solving their problem before you came.

in your solution slide. Again, use simple language. What is it? A site? An application? What does it do? A gadget? And, what are the significant advantages of your solution for each and every targeted customer?

Product Slide

In your Solution slide you portrayed the "what" and "why" your product is perfect for the customer or user. What it is, what it does and why your targeted customers will mind enough to quit using current solutions and switch to your solution.

Your Product slide is additionally an extraordinary spot to feature any innovation licenses you may have been allowed or have underway.

Business Model Slide

Here you will mention how you will make money. Keep it straightforward.

Focus on the primary revenue model you will actually use to monetize your customers rather than a laundry list of potential revenue streams. Generally, Investors prefer active revenue streams instead of passive revenue streams.

Competition Slide

This is the place where many pitch decks miss the mark. Your Competition slide is basic for most investors and yet many startups do a poor presentation on separating their product/solution. Remember that investor is hoping to limit both market risk and product risk.

Don’t make mistake of saying there are no competitor available in the market. You will lose credibility quick. A market without any competitors proposes to investors that your market doesn't exist or is too little to be worth pursuing. You should recognize your competitors’ and you should provide at least one-two reasons why your product/solution is superior to them.

Remember that you will typically have both direct and indirect competitors’. Be sure to identify both. Google, for instance, competes straightforwardly with Microsoft (Bing), Yahoo, Facebook and different suppliers of online advertising. They additionally compete indirectly with TV, radio, and other providers of offline advertising.

Growth Slide

This slide represents execution risk. Investor need to be convinced that you realize how to change a competitive product for a large, developing business sector into a significant, maintainable business.

Any successful business executes well on these three operational activities:

  • Customer Acquisition: How do your Sales and Marketing teamss spur mindfulness and create interest for your item to secure new clients?
  • Customer Retention: How does your Customer Service team keep your current clients happy so you don't lose them to your competitors?
  • Product Innovation: How does your Product Development team continue improving and expanding your solution so that it remains competitive?

There are three significant numbers (key measurements) you need to disclose to investor to exhibit that you have a practical business that can scale. You need to get exact information for these three numbers as fast as could reasonably be expected. 

They are:

customer Acquisition Costs (CAC): What's your total fully loaded cost to acquire a paying customer? Eg: $100.

Lifetime Value of Customer (LTV): How much will a customer pay you before you lose them? Eg: $100/mo x four years = $4,800

Payback Period: How long does it take for a customer to cover their acquisition cost? Eg: $100/$100/mo = 1 month using the example above.

Having the option to generate a LTV that is a strong multiple of your CAC is a basis for a profitable business. Obviously, you'll also need to cover your cost of revenue and other operating expenses, such as product development and customer service, to be profitable.

Traction Slide

This is one of the important slides in your deck. It addresses all three aspects of risk that investor are looking to minimize as they evaluate you as an investment opportunity, namely market risk, product risk and execution risk.
Assuming you can acquire customers profitably, or at least show a trend of declining acquisition costs to demonstrate a path to profitability,
When utilizing key metrics to illustrate traction, be sure to highlight trends and rates of change. An ideal situation for investor, for instance, may be customer and revenue monthly coupled with declining customer acquisition costs.
If you haven't yet introduced your product, then consider using this slide to instead identify major milestones for product, key hires, funding, etc. Even if you don't have traction, I would always identify your key metrics. It tells investors you to understand the mechanics of your business and the levers you will need to pull in order to make it successful. When discussing key metrics generally startup should include revenue drivers.

Financial Slide

Your financial slide is your best judge projections of revenue, costs and expenses over the next five years.

Highlight your key projections in the model, such as revenue drivers and the amount of money that will spend on key operations such as marketing, sales, product development and customer service.

Investor than will decide on own that following assumptions are reasonable or not?

Also, try to include gross margin, sales and marketing as a percentage of the revenue.

Team Slide

It speaks to execution risk. Investors want to know that the team has significant experience and expertise in as many of the following areas as possible:

The team in an early phase is everything. Before there’s any product or traction, investors are backing the founding team’s vision, so it’s important to answer the “why you?” question with this slide. One of the most important things investor looks in founders doing their life’s work, founder’s relationship with the problem.

Funding Slide

In this slide you should have clearly identified a large growing market, describe a competitive product/solution that dominates the market, and convinced the investor that you have what it takes to execute against your opportunity. In a nutshell, you should have left with an impression of huge upside potential with nominal market, product and execution risk. Also try to provide use of fund that are going to be use such as operations including sales and marketing, customer support and product research and development.

General Advice

  • The pitch deck should be short and sweet.
  • Try to depict your thought with images and highlight of statistics only when necessary.
  • A realistic forecast backed up with facts and well-reasoned research is less likely to trip you up in the future.
  • Be realistic with your assumption.
  • Growth is important and something that all investors will have a keen eye on. However, A realistic forecast backed by facts and well-reasoned research is likely to impress investors.
  • Investors will ask you about Competitors and investors will want to know how and why your offering is better. What is it that differentiates you? For the most part, investors will want to be sure that you are aware of the competition and that you have a plan to beat them.
  • Any investor will do due-diligence and background check of founders history and on startup so, be ready to give answer regarding to that.