What is a Pitch Deck and how to attract investors’ attention?
Entrepreneurship is a complex process that involves much more than relying on innovative ideas and a latent market. It is a known fact that the success of running a startup doesn’t depend only on the entrepreneur’s commitment, but also the importance of fundraising as a growth driver movement is undeniable.
But how to do this?
The Pitch Deck is a great method to attract the attention of investors and is one of the most common and efficient practices in the market. This article invites you to understand what is a pitch deck and how to create one. Enjoy the reading!
What is a Pitch Deck?
Pitch Deck is a short presentation that provides investors with an overview of the business, with the objective of getting their interest. This presentation consists of showing the solution offered by your company, sharing the business model, analyzing the monetization strategy, and introducing the team, among others that we will discuss below. The presentation time is short (between 10 to 15 minutes) and must bring information that is capable of attracting the investor’s attention.
1 – Show the problem
It is essential that the startup have it clear for themselves what is the main problem it pretends to solve. An innovative product or service that is focused on solving a specific demand comes out ahead in the race for good investments because it impacts not only the desires of consumers but also their needs.
Remember: Bring real and important data that can support your point of view.
2 – Show how your solution solves the problem
Present how your solution solves the problem mentioned. It is important that you show and explain why your solution is different and better, showing your strengths.
Remember one way to make your solution easier to understand is to bring photos, explanatory videos, and demos of the solution.
3 – Bring the size of the market and the future perspective
Every investor is looking for a startup with a great market, one that has space and potential to grow and scale. To demonstrate the potential of the market you are entering, use one of the most common methodologies: TAM, SAM, and SOM.
• TAM is Total Available Market and represents the total market demand for a product or service. For example, if the total software licenses sold per year is $200 million and the average ticket is $5 million, the TAM is $1 billion.
• SAM is a Serviceable Available Market and it is the part of the TAM that is within your geographic reach. Following the example, let’s say you work with CRM software for SMEs and they represent 10% of the market. In that case, the SAM would be $100 million.
• SOM is a Serviceable Obtainable Market and it is the part of SAM you can achieve, that is a realistic customer acquisition forecast. Here, the investor normally calculates between 1% and 5% of the SAM.
4 – What are the ways to monetize your business
Here’s the time to show how you intend to make money from selling your solution. After all, what is your monetization model? It can be a recurrence model, a percentage of the sale, charge the final customer…
5 – Who are your competitors and what makes you different?
The first thing to remember is that all companies have competitors, no matter how innovative or different their products are. It may be direct or indirect competition from even a similar product, but you should keep an eye on it. Even if you’re opening up an entirely new market, your potential customers are buying other products to solve the same problem you are trying to solve. Here, reinforce your differentials. Explain how your company differs from the rest of the options currently in the market. It is also important to put a comparative chart between your company and your main competitors, the criteria most valued by customers to make this comparison, therefore your differentials are even clearer for the investor.
6 – Who is part of the team
The importance and impact of a team on the startup’s success is a fact. At this stage, bring the main team members, their academic background, their successes in other companies, and their market experience, showing their expertise in the area, if any. It is also worth remembering that investors are looking for a complementary team, with different skills, and don’t forget to emphasize why you and your team are the right people for the job.
7 – Essential indicators
Showing your track record of results and how positive it has been it’s very important. For this, some indicators are key and cannot be missing, such as revenue, the number of customers, churn, runaway, CAC (customer acquisition cost), LTV (lifetime value). The best way to show this is through chart graphs.
8 – Fundraising
Finally, show how much money are you are asking for and the % of the company you are willing to give up. Most importantly, you should be able to explain why you need the requested amount and how are going to use those investments, showing how is the moving going to be distributed within the areas of the company.
Extra tips:
- Be objective, but don’t skip on relevant information, this brings credibility to your speech;
- Keep the presentation updated, always with the latest numbers about the business;
- Put the updated date on the cover of the document. Many investors look, send it to colleagues and in the process, the presentation date reference may be lost;
- Don’t forget to leave your contacts on the final slide.
Please see below two very famous and successful pitches!
Now you know what a pitch deck is and how to make yours a successful one. Write down these tips and join us for more investment market content.
