You’ve built an excellent company that is ready to grow, but to take off you need external funding. You’ve spent a few weeks searching within your network and the internet for potential investors and made a kick-ass list of names. Now it’s time to approach them. However, this requires a killing pitch deck that will grab the investors’ attention, bring you follow-up meetings, and convince them that your company is the next big thing. But what is the perfect formula for this winning pitch?
Let’s be clear from the start: a pitch deck is important, but at the same time, it’s just the beginning. Investors usually won’t immediately say "yes" or "no" to a million-euro investment request after hearing your pitch. A pitch deck is intended to get the investors interested enough to arrange follow-up meetings, or it can be used as support for an oral presentation.
The internet is full of tips and tricks on how to build an investor pitch deck, but they all say something different. That’s why over the last few years we, at Symbid, have been investigating within our investor network to find out what they look for in investment proposals. This research resulted in 11 key elements that you should cover in your pitch deck.
Every winning pitch deck begins with a story
Before we dive into these 11 elements, we need to discuss another vital element - storytelling. A good pitch deck will take an investor with you on your journey and tells them a relatable, believable, and inspiring story.
All this starts with covering the 11 elements in the right order. Including the elements in the order shown below will ensure your pitch deck forms a successful story and arouses investors' interest.
1. Vision and Value Proposition
First, you want to attract attention by expressing your company’s vision immediately. This gives you the chance to quickly show the investors what you promise to achieve as a company. It’s a short but powerful description of what you do and what you offer to your customers.
Tip: Consider this description as a short tweet to make sure you keep it concise.
Why is this so important? If you start out with convincing the investors about your convincing vision and value proposition, they will only need to see three other elements to get a good understanding of your revenue model, namely the price, the market size, and the costs.
2. The Problem
If you don't solve a world problem, it will probably take a long time before you have a moving company (or it might never happen at all). You want to raise questions immediately after your powerful opening.
Who has the problem? And how are you going to solve it? These are some of the questions that an investor wants to see answered. Make sure you tell a reliable story, present a problem that you can substantiate or that the investors also recognize.
Tip: Do not go into the market or the competition too much yet at this point. You can explain that later.
3. Target Market & Market Opportunities
After determining the problem, you want to tell investors more about the market and the opportunities. How big is the issue that you are solving? Explain to them by focusing on your ideal customers, the total market size and the positioning strategy of your company in the market.
To convince investors of the market opportunities, ensure that you have data to support your statements. You should be able to answer questions such as "How many people/companies are currently spending money on the market?". In other words, make clear how big the problem is and how far you can solve it.
But be careful, don't make your market too big. Philip Kotler, a marketing consultant, writer, and professor, has previously described this as follows; "There is only one winning strategy. It is to define the target market carefully and immediately offer a superior offering to that target market.” If your target market is too large, you will never win. Select and define your market as specifically as possible.
Tip: It will be wise to divide the market into different segments.
4. The Solution
Finally, it's time for the element that you have been waiting to show the investors - your solution! You’re now able to describe your product or service. Make sure that you explain how your customers can use your product and how it solves the problem that you have defined.
Why do you present this as the fourth element, and not earlier on? Remember, you are telling a story. You must therefore take the listeners on board with you. With story-telling, you want to build up the tension by first raising and stressing the problem. Try talking about how many people live with this issue, and after that move on to the solution: your product or service. By doing this, you can make your product relevant to the existing problem.
5. Business Model (Revenue Model)
After you have described what your solution is and how your product works, you now have to convince the investors that you are going to make money with this. How are you going to create revenue? How much do you charge for your product or service? And who will pay for it?
As mentioned earlier, for a successful business model you only need the price, the market size and the costs in addition to a value proposition.
Tip: Use your previously presented elements and combine them into the business model.
6.Traction and Roadmap
Investors are obviously aware that investing in young, fast-growing companies involves risks. After the first five presented elements, they will question what and how significant the risks are. Now you have the chance to eliminate some of the perceived risks by talking about the traction you already have or by describing reached milestones.
There are various forms of traction that you can mention here. If you already make a turnover, you can zoom in on this. Other things you can talk about are the traction in the media or traction with other investors. Just make sure to show proof of the demand for your product or service.
If you have none of the points above, you can also zoom in on the milestones that you have already reached and the next steps you plan to make. Milestones can be about what you have already learned along the way, or the prizes you have won.
7. Marketing & Sales
At this point, you want to show how you are going to reach your potential customers and how you will sell your product or service. You can only succeed in selling if you excel at finding the right buyers. Therefore, you must find the best way to reach the most potential customers.
Secondly, it is important to define measurable objectives in this part. You can only be aware of your progress by setting concrete, well-defined targets. And obviously, the investors want to see this.
Tip: With the previous elements, we talked about determining milestones. You could do that here as well.
When we ask investors what they view as the most crucial element they look at before deciding on investing, team performance is always mentioned either first or second. You want to show that your team has what it takes for success.
Why is this the right team? What successes have they already achieved? These are the types of questions you want to answer. In case your team is not complete yet, you can point out where the missing pieces of the puzzle are in your team and why you miss certain team members at this time. In this way, you show investors that you are working on the key factors for success.
Investors expect to gain insight into your financial forecasts. You should be able to present your plan on cash flow, as well as your profit and loss account, for at least the coming three years. If your company has been around for a while, make sure you talk about the current performance.
You do not need to use in-depth spreadsheets, as it is a challenge to read during a presentation. Instead, you can send them after. However, make sure you show how much sales you expect to make, how many customers you expect to attract, and what the costs and additional profits are. You must be prepared to validate these figures with assumptions.
Keep in mind, investors understand that your numbers are predictions and you may fail to achieve them. But the elaboration of any assumptions will show the investor your track of thoughts, your research and whether you may have overlooked things. Remember, there are no right or wrong predictions; they only can be realistic or unrealistic. Investors are also big fans of scenarios. By giving your assumptions context, you give more depth to your financial figures.
10. Competition & Risks
Even though some entrepreneurs believe that they have no competition, there are always competitors. Even if you have entered a whole new market, your potential customers already have alternative ways to spend their money. You want to indicate what your competition looks like and what makes you different.
There is also room to talk about the risks at this point. Some people think that talking about risks scares investors off. It is actually the opposite. Investors know best that investing via venture capital involves risks. You can only be more trustworthy when you are honest and open about this. Furthermore, you can always present your plan to minimize risks and gain even more credit.
11. Investment Plan to end the Pitch Deck
We finally arrive at answering the question of why you are pitching. Your entire story so far has built up the demand for money – or at least explained to the investors the potential of your business. However, as mentioned earlier, after seeing your pitch, no investor will immediately say "Yes, here - have €100,000." Therefore, it’s important to explain why you need this certain amount of money and what you will do with it specifically. An investor wants to know precisely where his funds will go.
There you have it!
These are all the elements you need to convince investors you are their next champion. Follow the order, master your story and practice until it is perfect. We hope our guide will help you to bring home the investments you deserve. At Symbid, we’ve not only raised over €5 million in funding for our own company, but we’ve also helped over 200 entrepreneurs with their funding. We want to empower entrepreneurship by providing everyone who dares to be different with access to the required funding.
Curious where your start-up is in the funding life-cycle? Check out our previous article for tips and tricks to find the right investors.
Jesper Vieveen is the marketing manager at Symbid. He has helped over 120 companies raise funds to grow their business in the last 3 years. On a daily basis, Jesper helps clients build killing pitch decks, communication plans and storylines for successful fundraising.