So your investor pitch, and supporting pitchdeck, better nail it.
But for every venture capitalist or angel investor out there, there is a different opinion on exactly how to approach the investor pitch deck. 6 slides? 10 slides? 15 slides? No slides, just a killer demo?
I have never seen a presentation that has too few slides, too big a font, and too little graphics.
Guy Kawasaki, Venture Capitalist
You can explain your startup in mind numbing detail or you can inspire an investor and let them imagine.
Guess what works better?
When you sit down and build your investor deck, think of six slides that will inspire and leave something for the imagination.
Fred Wilson, Venture Capitalist
The most fundamental strategy of a startup is the financing strategy.
If your company runs out of finance it will close no matter how good the product strategy is.
Reid Hoffman, Entrepreneur, Venture Capitalist
[A ten section] business plan format, within 15–20 slides, is all that’s needed.
Sequoia Capital, Venture Capitalists
In this post we provide the authoritative consensus on the slides you need in your business funding pitch.
We have looked at what the world's most influential venture capitalists, entrepreneurs and angel investors, including Guy Kawasaki, Reid Hoffman, Fred Wilson, Brad Feld, Mark Suster and Dave McClure, look for in a pitch deck (it is a veritable who's who of Silicon Valley VCs). We have then summarized that advice on pitching investors into an easy to follow plan.
What is a pitch deck?
A pitch deck is a brief, written presentation that supports your oral, fundraising sales presentation. It is a business pitch. The objective of a powerful pitch deck is to concisely layout the rationale for investing in your business (the investment opportunity).
After canvassing leading entrepreneurs and investors, the consensus set of investor pitch deck slides are:
- Company Purpose (The Title slide)
- The Problem
- The Solution (and your Demo)
- The Market
- The Competition
- The Value Proposition
- The Business & Revenue Model
- The Team
- The Financials
- Current Status & Use of Funds
In the rest of this article we explore each of these slides in detail, providing advice and examples of what to include, and what not to.
We also look at how your pitch approach must change depending on what stage your idea or company is at. We discuss pitch requirements for startup seed pitches, series A and B pitches, and IPO roadshow decks.
When do you need a pitch deck?
A pitch deck lets you present your business plan to potential investors when new funding is needed to develop the business.
You don’t need a pitch deck to attract funding if your business is successful, growing organically and at the right level and scale for the market and your ambitions.
What are you trying to achieve with your pitch deck?
Your goal is to persuade investors to put money into your business, to fund your business's growth. The funds are used to push your business to the next stage of its development.
Pitch decks are the tool to convince investors of the merits of funding your tech startup or business.
Who is your audience and what are their questions?
The classic partner in a VC firm is exposed to 5,000 pitches in a single year.
Reid Hoffman, Entrepreneur, Venture Capitalist
At SlideHeroes we provide presentation training on how to develop McKinsey presentations that focuses on:
- Identifying your audience,
- Determining the question in the mind of the audience that you are there to answer, and then
- Structuring a clear answer to that question
Your pitch deck target audience is any potential investor who provides investment for new business ideas (Venture capital, see funding). This will typically be VCs or angel investors and their question will be 'Why is this company worth investing in?'
While this may seem obvious (it is), a surprising number of pitches can lose sight of this fundamental question. Focus on answering this exam question.
It is worth noting that fundraising from angels and venture capital is tough.
- Competition is fierce: VCs are exposed to thousands of pitches a year, and may only make a few investments.
- Venture Capitalists are looking for significant returns: Because startup investing is risky (90% of investments fail), VCs must compensate for these losses with a few big wins. As a consequence, venture capitalists are looking for investments that have the potential to return at least 10x the initial investment.
- Venture Capitalists specialize: VCs tend to specialize in particular areas where they either have expertise or a strong investment thesis.
As a consequence, fit between investor and startup is critical. Look for quality over quantity of investors. Research your target investor and see if they invest in the sector you are in or the stage of company you are at. Tailor your story to the particular investment theses or sector focus of the VC you are speaking to. Research past investments to understand what ideas resonate with your audience.
Michael Wolfe says you must get across how “this company is going to become more valuable in the future.”
As Reid Hoffmann explains, when pitching LinkedIn, “My strategy was to steer immediately into the revenue question because that was investors’ biggest concern in 2004.”
What do you absolutely need in your pitch deck?
Research from Professor Tom Eisenmann from the Harvard Business School for Docsend looked at the fundraising of 200 start-ups as they went through the seed and series A funding process, raising over $360 million.
It found that:
- The financial and team slides were viewed the most and longest at 23.3 and 22.8 seconds each on average
- The problem and solution pages were viewed for the least length of time at 11.3 and 10.6 seconds
- Avoid listing deal terms and funding information in your deck, instead deliver them in person (they will vary for each investor)
Seed, Series A, Series B and IPO Fundraising Rounds
Michael Wolfe puts it best when he states: “The pitch deck you used for a seed round will not be what you need for series A or B pitches. Your business will have changed, the market too and what you want to get out of the investor meetings.”
Broadly speaking, there are four types of pitches related to businesses at different stages of development.
1. The 'Seed Round' pitch deck
A seed-round pitch deck is a pitch for initial funding from startup investors. The seed investment round can often come before you have a product for sale or any revenue. The focus of the pitch is typically on the problem being solved, the size and potential of the market, and how compelling the solution and business model is.
Seed investors are typically small venture capital funds that give between $250k - $1m. Angel investors, wealthy individuals investing their money directly (angel investment), are also an important source of capital at this stage of fundraising.
There are important differences between these two sets of audiences, and as a consequence, what they are looking for from a pitch.
Angel investors typically invest, in aggregate, substantially less than VCs (even micro-VCs specializing on seed rounds). As a consequence they are likely to take more of a personal interest in the founders and the business and be in a position to offer a more hands on role in advising the company. But they will be unlikely to invest in follow-on rounds due to their capital constraints. Their focus is typically on understanding the entrepreneurs vision for the product and commercial opportunity.
The biggest mistake presenters make is that they think that they are so interesting and have so much to say that they are the exception to the 'less is more' theory of presentations.
Guy Kawasaki, Venture Capitalist
2. The 'Series A Round' pitch deck
With a Series A funding round, the business has typically figured out product/market fit and are now looking for money to:
- Figure out or scale distribution,
- Master a revenue or business model, or
- Adapt a business model to new markets
As a consequence of this change in objective, the focus of the Series A pitch deck changes as well. The pitch deck must:
- Demonstrate how the product fits into a target market
- Show investors how funds will enable the company to master a business model, or
- Show investors how more funds will lead to more customers, quicker
The investor profile may change in this round. Some investors specialize in follow-on rounds, others in very early stage investments. Do your research and tailor your story to the questions the prospective investor will prioritize.
3. The 'Series B Round' pitch deck
A Series B pitch deck focuses on scaling the business. You have a user base, customers and growing revenue helped by earlier funding. New funds are used to scale the business model, make further acquisitions and invest in key capabilities.
- The focus shifts from describing the vision and concept to providing evidence that you have a viable business
- The pitch should include details of what you have achieved with funding from earlier investment rounds
- It should offer a more mature view of the market, revenue model and competition
- The focus should be on sustainable growth models that drive scale
4. The 'IPO' Roadshow Document
Series C pitch decks and on-wards, including IPO roadshow decks, seek funding to expand, often into new geographies or adjacent markets.
- At this stage the company has been very successful and has proven its viability
- The IPO process is usually managed by investment banks, who will develop extensive material to support the investment process
- IPO decks tend to be a longer and contain significantly more financial detail
- But, as with pitch decks for earlier stage companies, clarity of message remains paramount
The Perfect Pitch Deck: The Consensus View
Based on the research we have conducted, these are the 10 slides you need.
The optimum time for a pitch, according to Kawasaki and Suster, is 20 minutes.
If your business has certain problems that, at this stage of its development, are still awaiting answers - confront them head on. Address these issues directly because you can be sure your potential investors will.
The best pitch is a conversation. It should be cohesive, tell a story and explain a trend.
Mark Suster, 2X Entrepreneur, Venture Capitalist
Slide 1: Company Purpose
Cover slide. A title slide. A teaser slide. Whatever you call it, you need to start somewhere. And it makes sense to start with who you are.
Ideally you want to define the business idea in a single declarative sentence. Define, succinctly, what the company does or aspires to do.
As Michael Wolfe says “starting with a brief snapshot helps ground people and head off questions.”
And make it memorable. Show the vision of the business.
Reid Hoffman thinks the first 60 seconds of your pitch are the most crucial, so how you begin is incredibly important.
Brad Feld believes all entrepreneurs should have a variety of verbal pitches to use in different situations. A 15 second, three sentence overview should be 'very tight but get me interested in you.' This is the verbal voice-over for this slide.
In 60 second verbal elevator pitch version should be able to show “what you do, who you do it to and why I should care.” This is a brief investor pitch to spark interest in your business idea. Hone this elevator pitch obsessively so it becomes a winning pitch.
The 5-minute pitch should lead with the 60 seconds, “then go deeper.” A 15-minute pitch will be a full, high-level pitch and at 30 minutes it will be an extended pitch deck presentation with more detail.
You are obviously also going to need the name of your company, a logo and the names of the presenters. Consider adding a line about the purpose of the presentation along the lines of 'Investor Presentation to Sand Hill Road VC'. This is a small (very small) signal that you have tailored your pitch to the audience (always a good thing).
Objective: To give VCs a taste of your business and provide contact information for them to follow up
Include: Company name, your name and title, address, email and mobile phone number
Common mistakes: Including too much information that is difficult to take in and also steals the thunder of later slides.
Slide 2: The Problem
A problem well stated, is a problem half solved.
Charles Kettering, Inventor
There is pretty strong consensus on this one. Your pitch deck should start with describing the problem your business intends to solve. Guy Kawasaki calls it the ‘opportunity’. Others talk about alleviating a pain or, as Dave McClure puts it, ‘making your customers happy.’
This is the opportunity to show exactly why you have a business. Mark Suster argues that the problem definition must be strong because in essence “it is why you exist.”
Objective: To show the investor that there is a large, painful problem that you can solve in a way that generates revenue.
Common mistake: Not defining the problem in a way that illustrates that customers are dying for an alternative.
Include: Explain the problem, why is it a problem? Who has that problem? How it is being solved now and how can you solve it better?
Grab the attention of your audience by showing the problem through an image or screenshot.
Slide 3: The Solution (and your Demo)
A great demo in the middle of a presentation is the best-case scenario. A picture is worth a thousand words, but a demo is worth a thousand slides.
Guy Kawasaki, Venture Capitalist
After defining well the problem that must be solved, this section of the pitch deck describes how your business solves that problem. This is where you show your product and highlight its uniqueness. Where possible, show a live demo, use screenshots, animation or video to show your solution in action.
Nearly all our experts stress the importance of demoing the product at this point in the pitch. Brad Fled states, “I don’t want to hear you describe what you are going to do, I want to see it. Or – if it’s not built yet, see an example of it.”
Guy Kawasaki's advice "is to provide just enough information to make people want to watch a demo.”
This allows VCs to come to their own conclusions about the product.
Objective: To show your audience your compelling solution to an important problem.
Common mistake: Telling your audience what the solution is rather than showing them.
Include: An example, images and a demonstration of what your product does. Highlight the benefits to your customers.
Example: In Reid Hoffman’s LinkedIn Series B presentation he uses a slide to illustrate how his solution is version 2.0 compared to what went before it, introducing the concept of networks over 1.0 flat directory solutions.
Slide 4: The Market
In this section of the pitch deck you want to first identify and profile the customer you cater to.
Then you need to size the total addressable target market (TAM) for your solution and explain how it is either already large or will be large in the future.
Finally, calculate the serviceable addressable target market (SAM), which is the part of the total addressable target market that can actually be reached given the companies capabilities. This is the market opportunity.
Kawasaki says this should “explain how you are going to reach your customers without breaking the bank.”
Objective: Illustrate the potential size of the market. As Dave McClure says, “bigger is better.”
Common mistakes: Not understanding, or being able to clearly define, the market you are operating in.
Include: The state of the current market, how it is likely to grow and how you can grow your position in it. Who else is operating in it and how is your company different? Use business charts.
Example: Wolfe provides an analogy of how AirBnB could use the hotel industry to show the large TAM for its business.
Slide 5: The Competition
Investors want to know about your rivals, how you are distinct from them, how future technologies might disrupt the market and how you will respond to them.
This is a chance to show your deep knowledge about the market space, a vital point as Wolfe says: “The best way to communicate your business to investors is to actually know your business.”
Mark Suster says: “The competition slide must show the progress of your company and its key milestones.”
Who are your future rivals? Identify them and show how you will beat them.
Objective: To provide a complete overview of the competitive landscape and address how you are different.
Common mistakes: Focusing on a few major rivals rather than the whole competitive landscape.
Include: Images of your product that show why you are better or offer a useful alternative.
Slide 6: The Value Proposition
This slide is a natural build on the earlier solution slide. This is the opportunity to elaborate on the product and frame it in the way it would be marketed to customers.
A value proposition positions the product or service and illustrates what benefit it provides. As Guy Kawasaki describes, you want to communicate ‘the secret ingredient’ that makes your product unique from all other potential solutions.
This is also the section of the pitch where you can go into more detail on the product line-up, including expanding on form factor, functionality, features, product architecture, and intellectual property ownership. If additional development work is required to complete the product you should include a development roadmap as well.
Objective: To show how your product solves customers' problems or improves their situation, how it delivers specific benefits and tells the ideal customer why they should buy from you and not others.
Common mistakes: Some pitches ignore this element or don’t understand what they should say. It needs to show how your solution will resonate with customers.
Include: Talk about benefits, not features. Show what type of product you are selling, include further information on the potential returns for investors.
This slide could also include information on how you can monetize the product. It should illustrate why a customer should buy the product.
Slide 7: The Business & Revenue Model
The Business & Revenue Model slide focuses on how the business will make money.
You should cover things like:
- Revenue model and pricing
- Sales and distribution model (how will customers find you)
- Customer acquisition costs, average account lifetime value
- Customer/pipeline list
- Barriers to entry
Michael Wolfe says: “Investors know that customer acquisition is where most startups fall down. Devote a few slides to the topic.”
According to Guy Kawasaki, in many cases “the best way to illustrate a revenue model is to make such a compelling demo that the audience can fill in the blanks for itself on who, when, and why people will pay,”.
Include 1-3 revenue streams. Reid Hoffman included three for LinkedIn, targeted ad’s listings and subscriptions, but admits this was unusual. He says, “The general rule is one business model drives the business. The charitable interpretation, which was true in our case, is that the company’s team doesn’t know which one model will work. The bad interpretation is that the team lacks focus and doesn’t understand that they generally need to drive to one business model to succeed.”
Objective: To present how you will make money for your company and the investors.
Common mistakes: Many investors focus too much on the problem and not enough on customers and the business model.
Include: Information on pricing, how you are going to attract and retain customers, customer numbers and what they are spending.
Slide 8: The Team
Team can be crucial. In fact in some instances, with repeat entrepreneurs, it is the team that is funded, rather than the idea.
Generally, the goal here is to show that the team has the requisite experience to suggest they know what they are doing. If there are any parts (skill sets) of the management team that are missing, be sure to articulate a plan for filling those gaps.
Don't bring more than three people to the pitch. Mark Suster suggests you split the presentation 65:35 or 50:25:25 if you have three people. The CEO should act as the quarterback for the presentation and questions.
Objective: To demonstrate that the team has that necessary skills that build and manage the business.
Common mistakes: At an actual presentation, if you bring and introduce key members of your management team, be sure to utilize them, otherwise investors will question why they are there.
Include: Introduce the key members of your team, briefly outline their role and how they add value to the business. Introduce other investors and a board of directors if you have them.
Slide 9: The Financials
This is one of the most important slides in your deck, so it is vital that the information on it is correct and you understand the numbers.
Objective: To provide investors with your financial results, a financial projection, an idea of potential earnings and what additional investment you need.
Common mistakes: Being unprepared. Answering questions incorrectly on financial details is a sure fire way to put off an investor.
Include: Sales achieved and targets, customer numbers, profit or loss details and a balance sheet if possible. Also, show the revenue level you have achieved so far and customer testimonials.
Slide 10: Current Status & Use of Funds
This should show how far you have come on your journey, what the company has achieved, and how investment funds have been used so far.
You should explain what funds you now require, what you plan to spend the money on and the key milestones you intend to hit with the next round of funding.
Suster thinks an exit slide is vital, one that “plants a seed for selling the company in the future.”
This slide should introduce your funding status, what you need for the business, who is currently invested and ideas on future sources of investment.
Hoffman notes that you may not want an appendix but in preparation of investor questions, “preparing appendix slides with structured answers is impressive, showing that you’ve considered all of your business’ challenges, opportunities, and comparisons.”
Objective: To leave your audience confident that you know why you are raising investment, and that you know how to deploy these funds efficiently and effectively.
Include: A summary of what has happened so far, key milestones, proof of the positive use of cash so far, future funding requirements, and an idea of what is expected to happen in the near future.
A successful pitch needs an immediate hook to attract investors’ attention, it needs to articulate a vision and clearly explain the problem that your business is solving.
It needs to answer the question 'why now?' and, in a compelling way, convince your audience that your product or service solves a problem a significant number of people are willing to pay to have solved.
It must present a model that shows how the business can scale rapidly and become profitable.
In almost all cases a live demo is needed to show your audience your product.
The perfect pitch deck contains the following ten sections:
- Company Purpose (The Title slide): Your single sentence distillation of your company and vision
- The Problem: What customer (or customer's customer) problem are you solving?
- The Solution (and your Demo): What is your innovative, better solution to this problem?
- The Market: How big is the market?
- The Competition: Who are you competing against and how are you better?
- The Value Proposition: How is your product or service positioned to customers?
- The Business & Revenue Model: How will you make money
- The Team: Why will this team be successful executing on this vision?
- The Financials: What kind of return on investment are we expecting?
- Current Status & Use of Funds: How will the investment be used?
Your prepared remarks should ideally take around 20 minutes, so it’s not rushed and there is time for questions.