How to Create a Winning Investor Pitch Deck for Your Startup
That’s not a lot of time.
Every second counts. And good deck should be simple, to the point and have 10–15 pages.
In this article, I’ll explain ten core pages of a pitch deck based on a structure considered an ideal standard by many including Sequoia Capital, which also recommends these ten categories.
1. Company Purpose
This should be your one sentence pitch to explain the reason your business exists and why it matters.
As Simon Sinek agrees in his widely popular TED video, successful companies always have a strong reason WHY they exist.
For example, Warby Parker isn’t just a shop with glasses, Asana is not a project management tool nor Airbnb positions itself as a short-term rental app. Here are their mission statements:
- Warby Parker wants the world where everyone can see clearly, stylishly, and at affordable prices.
- Asana’s mission is to help humanity thrive by enabling all teams to work together effortlessly.
- Airbnb aims to connect millions of people in real life all over the world, through a community marketplace– so that you can Belong Anywhere.
Some of the best products are pain-killers (of course you could as well build a vitamin).
On this slide, you want to demonstrate you’re solving a huge customer pain. You want to show, the pain is so big, customers are willing to give their credit card details to an unknown startup.
“The bigger the problem, the bigger the opportunity. Nobody will pay you to solve a non-problem.” — Vinod Khosla
In other words, you need to show the pain you’re going to solve is both significant and monetizable. Also, make sure to explain how customers address the issue today and why it sucks.
Once you outlined the problem, you want to show how are you going to solve it.
This is where you explain what the Unique Value Proposition (USP) of your product is and why your solution is going to make customers’ lives better.
You want to highlight why it is a feasible solution and why customers are going to use it instead of whatever is available to date.
This is also about painting the picture. Words aren’t enough, show particular use cases of people benefiting from your product.
4. Why Now?
This is where most of our entrepreneurs at Appster struggle the most.
Timing is paramount to building a great startup. There’s time and place for some companies to succeed.
For example, if you look at many of the solar startups in the last decade, most came to market too early and eventually failed. The oil prices were going down and solar panels were still more expensive.
You might have found a great opportunity, but if you have to wait for the market too long, eventually you’ll run out of money.
Same goes for the most successful startups. iPhone came after PalmPilot, and it was successful also because the technology and batteries were good enough to make product customers would actually use.
Facebook came after Friendster and Myspace failed. The market and the demand for social networking were there, but the solution was missing.
Make sure to list all the critical reasons to explain your ‘why now.’
Alongside identifying the focus of your company and zeroing in on the specific problem that it will solve, it’s essential that a market for the solution you intend to create actually exists.
This slide plays a key role in your pitch deck and is the most important slide according to many entrepreneurs. Investor and software engineer Marc Andreessen insists:
“The market is the most important factor in a startup’s success or failure. Why? In a great market, a market with lots of real potential customers, the market pulls product out of the startup. The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along.”
Of course the ideal market is a big one with many wealthy customers willing to pay a premium price. It’s also a growing market and it is very fragmented.
If the market is fragmented, it means there is no clear winner with a superior solution. Google, Apple, Facebook, Spotify, Uber, Airbnb all of them are the dominant force in highly fragmented markets.
However, you don’t want to come over and say we aim to win the entire X trillion dollar market. Show a particular sub-segment that’s most likely to buy your product and demonstrate how you will win it.
For example, Uber and Airbnb started with a focus on Bay Area, Facebook won Harvard at first, Paypal dominated the eBay ecosystem and Tesla focused on wealthy customers from the tech industry.
List your competitors and your competitive advantage.
The best way to approach this slide is to create a chart showing your position in the marketplace, such as the one below. Another approach is to make a simple comparison table.
On this slide, you want to explain the details of your product.
What’s the functionality, architecture, design, intellectual property? What development stage you’re at and how far you’re from releasing a beta or release version.
Highlight the benefits of your decisions to go with some particular tech or design. Is it fast, intuitive, etc?
8. Business Model
Failing to find the right business model is the reason why most startups eventually fail.
In one of my previous essays, I wrote about nine app monetization strategies you can use to pick the right business model.
There are several things you want to demonstrate here.
- How are you going to make revenue and what is the pricing?
- What makes you think you can charge that price?
- What is your metrics to date?
The two most important metrics are Customer Acquisition Cost (CAC) and the Lifetime Value of Customer (LTV).
You want the LTV to be much higher than the CAC. If you don’t know what the values are yet, look into some data from your industry or research your competition.
Investors invest in people, not ideas.
A great team with a bad idea is more likely to succeed (and raise money) than a bad team with an excellent idea.
Airbnb was considered a ridiculous idea but the team demonstrated such an incredible persistence that made Y Combinator founder Paul Graham say:
“We thought Airbnb was a bad idea. We funded it because we really liked the founders.”
This slide is not a place to show your standard CV. Investors want to see people who get things done.
People who not only start but can finish too. That’s the true DNA of an entrepreneur.
Focus on showing examples of how you succeeded in past, how you got things done, and how you preserved in the face of challenges.
Nobody cares about your hobbies or that internship you had in the company that’s entirely irrelevant to your idea.
If you have a market experience, show it off. If you have some experienced mentors and/or advisors, absolutely show them off too. Sell yourself as at this point of your pitch it’s not the right to be timid.
Here’s the truth about financials. Most people know that your cash-flow forecast is likely a BS. Yet, it demonstrates several things. Firstly, it shows how ambitious and realistic you are.
The job of a VC is to find unicorns, not a nice business that does well. Likewise, if your numbers are totally unrealistic, you’ll lose some trust as a potential CEO.
Secondly, and most importantly, your financials demonstrate how viable your business is.
A lot can be learned from your expenses and profit margins. In other words, your numbers may look great, but it turns out that you entirely rely on ambitions like viral marketing, or unrealistically high average order value you won’t convince anyone.
So spend time nailing your finance as it is the slide investors spend the most time studying.