Creating your Business Plan: The Essentials
By James Martin
June 24th, 2020
For every entrepreneur looking to raise funds, producing a pitch deck that is crisp and concise, short, and sweet, which details the fundamentals in a concise and bitesize manner, is no easy task. Fortunately for the founders among you, we have collated advice from top investors on how to produce a perfect pitch deck so that you can maximise your chances of raising funds.
One size does not fit all
After 30 years of pitch deck knowledge, it can be confusing for an entrepreneur to know what to include for their product in particular. To further complication matters, pitch decks tend to be distinctive for different investors and for certain check points along the fundraising journey. The initial intro pitch deck is by far the most important as this will decide whether or not you will secure an investor meeting. The second and third meetings will require a more detailed deck and the final partnership meeting will mean resorting back to a simpler, more refined deck, similar to that of intro deck.
So, what makes an outstanding intro deck? Well, aiming for 6-12 slides and no more is a good place to start. If the story of the company takes longer than 5 minutes to tell, you're probably overthinking it. A presentation of 5-7 minutes, with 45 minutes of discussion, is a standard model; If you can't get the attention of a VC in three minutes, you're going to have problems getting that of the customers. The more succinct and eloquent the pitch, the better. It is imperative to address the problem and the solution, specific target customers, the market size, the amount of traction the product is getting, the team members' backgrounds, the advisors, any beta products, retained users and repeat buys. When Ann Miura-Ko at floodgate was asked about the fundamentals of a pitch deck, she stressed the importance of indicating the 'secret' that a company has uncovered, that nobody else was aware of. Effectively, by demonstrating you have a unique insight into a problem, you may be able to convince a VC you are heading in the right direction.
Other important areas to highlight include the type of business model, how much, who, how often, customer acquisition and the profit margin are all key markers. When discussing the founding team and their profiles, VCs like to know how long founders have been working together, where and if they have undertaken any other previous projects. Another indicator to be discussed is the competition. If you have done your homework and found the companies that are your direct competition, you are not only helping investors understand the market space better, but you are providing them with a shortcut to giving you an answer about whether or not they will invest. A VC will have to source the competition one way or another and to show them you've already figured it out is a powerful advantage. The final piece of the pitch deck puzzle is the vision, how big is the company expected to grow by, what are the revenues, costs, margins and any other customer metrics relevant to building a business for the next 5 years. This will give a general sense of the business and demonstrate how the founding team thinks and operates.
Not just Numbers
Once you've included all these non-negotiables, it is also worth focussing on the customer story. Many pitch decks emphasize the tech side of things, but at the core of the company there is a problem being solved. By getting a VC to understand the central issue and describing the customer journey, by demonstrating the decision process, you can create a clearer and more aligned vision in the minds of potential investors. Furthermore, showing visuals, prototypes and finished products are an instant hit for investors.
Keep it Simple
Essentially, every pitch deck needs to have information about the team, the problem at hand, how the company's product aims to solve this problem and what the early results look like. According to Hunter Walk at Homebrew, articulation is vital. Any slides discussing the total addressable market (TAM) is not of any interest as any pitch deck can say their TAM is vast. This also goes for any vanity and non-core metrics, such as the number of downloads, which adds zero value to the pitch. For Gigi Levy-Weiss, he is looking for three key points: information on the team, as that will decide if he wants to continue, what the market landscape looks like, including competition and, finally, the product itself. Investors want to get to the heart of what a founding team is aiming to achieve. Ultimately, the critical point you need to be addressing is the problem itself; Is it significant? Is it valuable? Is it urgent? If you are able to address all three questions, then you may just be in with a chance of sourcing a round of fundraising. If your pitch deck can only address two, or even only one out of the three, better to come back another time.