Seven things to include in your pitch deck to investors

Often enough it’s not what you do, but how you do it

In the MIT entrepreneurship boot camp, a team which was trying to build an event management app for brides very beautifully described their problem by showing the picture of a typical bride, Sarah, and then describing her persona and her problem when she wants to marry

“I have a great idea but I do not have money”. This is the common problem in Pakistan with many aspiring entrepreneurs. The good news is that now you have many ways of funding. The only thing which you need is to have the right skills and strategies to get the funding and a primary one among them is how to pitch to your investors. While pitching to investors, do not even expect that every investor will love your idea and they will line up in a queue to invest in your startup. Many of them will praise your idea but then will never pick your call, some will laugh at you and some will reject you at your face, but do not get disappointed; that is how the world reacts to those who want to change the world. The basic rule of thumb is that only 20–30pc of the investors will show an interest in investing in your potential startup. And if it is just on the papers yet or just a prototype, then the chance is that even fewer will be interested. However, if you get the basics of pitching right then probably your chances of getting funding will increase manifold. Every startup is unique and so should every pitch be. However, there are some common rules which apply to every pitch deck. Some of them are here:

1. Build a story around your customer’s pain point

An audience always feels more engaged with a story rather than just simple boring descriptions. They can emotionally connect to the story leading to empathy and understanding. So, always start by building a story e.g. describing a typical persona of your target consumer and his or her pain point. For example, in the MIT entrepreneurship boot camp, a team which was trying to build an event management app for brides very beautifully described their problem by showing the picture of a typical bride, Sarah, and then describing her persona and her problem when she wants to marry. Similarly, you can use your target consumer persona to build a story around him or her and describe their problem from their own view point.

2. Present a customer centric solution

Marketing guru Philip Kotler once said : “If you are selling drill machines, the customer does not need your drill machine, what he needs is a better hole” so when describing your solution, try to describe it in terms of how it can solve your customer’s problems, not in terms of your product features. For example, if it is an event management app for brides, try to describe it in terms of how it can solve the problem of brides which they are facing at the time of their marriage e.g. non availability of time, lack of complete information, etc.

3. More visuals, less description

An impressive presentation always contains more visuals and less description. Whatever you have to describe try to do it with interesting visuals be it info graphics, pictorials, bar charts, pyramids or whatever it is and less and less description. It is an old adage that “A picture is worth a thousand words” so the same applies to a pitch deck as well.

4. Traction is king

Traction is basically the number of users, buyers or visitors which you have gained over a period of time. Gaining traction is very important as it indicates two things. First is that either you have achieved product market fit or you are on the right track to achieve product market fit and the product is now resonating with the consumer. Secondly, you are using right marketing strategies with the right customer persona which can help in scaling your startup. If you have a B2C startup, your startup success will always be measured by how much traction you have gained. If you have early adopters buying your product, present your traction journey with a strong story and visuals as how you are progressing. And if you are in pre-launch phase then try to present data backed strong projections for traction. Traction is the thing which will entice an investor to invest in your startup as without traction there is no money and without money there is no use of investing.

5. Describe your business model

Many of the internet startups are businesses which are formed on a completely new idea having no precedence before. And, a business is always there to make money, not to donate money. So you must explain in your pitch deck about your business model, how you are going to make money, who is your customer, and what will be your operational costs. For example, if you are going to have a freemium business model, or a percentage of sales model or whatever it is, you should explain it with at least one beautifully created dedicated slide.

You need to present an optimistic picture to your investor if you are in the pre-launch phase. Two of the important financial metrics used in startups are the cost of customer acquisition and customer life time value

6. Tell about your TAM and Beach head market

TAM stands for total addressable market. While doing segmentation you should try to find data about how large is your target niche market and to how many people you can sell your product after segmentation. That number of people, or number of customers or the existing firms for which you are making a new product multiplied by your revenue/unit is your total addressable market. After calculating your TAM, the next step is to calculate the size of your beach head market. Beach head market is your primary market where you will launch your product. For example, if I will launch it in Lahore before launching all over Pakistan then Lahore is my beach head market. It is important to mention both of these statistics as investors usually want to invest in those markets for which the market potential is huge, usually around in millions or billions of dollars. If, after proper segmentation, your target market becomes too small in term of revenue generation then probably few investors will be interested in giving you the money.

7. Include financial details

You need to present an optimistic picture to your investor if you are in the pre-launch phase. Two of the important financial metrics used in startups are the cost of customer acquisition and customer life time value. Cost of customer acquisition means how many rupees/dollars you will need to spend to acquire one additional customer. Customer life time value means how much onan average a customer is of worth to you, i.e. of how much worth of products a customer will buy from you over his or her entire relationship with your company. Another important term is the churn rate which means what percentage of customers on average will stop using your service or product after a certain period of time. The length of this article will not allow me to describe these concepts in detail. You can google these terms to see how you can calculate them for your startup. If you have already launched your product then based on current growth rate you should include graphical information for future revenue and profit projections. And if you are in the pre-launch phase still then, based on some scientific back ground e.g. a survey or whatever it could be, include your graphical projections.

In the end, do not forget to add some slides about your core team and what you are asking from the investors i.e. the required amount, and a basic breakdown of the expenditure for which it will be used. Just remember, pitching is a science as well as art, even if you don’t succeed, do not give up. Instead, if you believe in your idea just keep pitching to the investors, observe those people whose pitches got them funded, observe the key differences between yours and them and try to keep improving your pitch. Almost every founder goes through this process of learning by mistake in his journey to success.