If you're a start-up seeking equity investment, getting investors to buy into your vision could be the difference between your idea changing your world or being consigned to the bin.
This makes your investor deck one of the most important pieces of marketing you will ever do.
To succeed, you’re going to need to be clear on your proposition, your target market and the commercial opportunity, and be able to communicate all of this in a clear and compelling way.
Your potential investor must understand the opportunity immediately, be excited by its potential and convinced that your team can deliver on it. And, of course, they must believe that a healthy return can be made in a reasonable period. This is an investment, not a donation.
The purpose of this article isn't to decide whether your business is investable or not, we’re going to assume that it is, but to help you present your proposition in the most attractive way.
A well designed and well presented investor deck won’t cover for a weak business idea, but it will make sure justice is done to a strong one. At the same time, it will underline your professionalism and make sure you stand out from the crowd.
Recommended content for your investor deck
Decks can take many formats and deciding what to leave in and what to leave out, and what order to put it all in can be tricky. Here is a good structure for you to follow.
- Opportunity. Treat this like your executive summary. You must get across in a paragraph or two what need your business meets, the scale of the opportunity, why now is a good time for an investor to get on board and the amount of investment you are seeking. You could also include business valuations and anticipated returns.
- Concept. Here is the place to go into detail about your product or service. Explain the market that it serves, the problem that it solves and, in high-level terms, how it works. Think of this like an extended elevator pitch. You want enough detail for the reader to be able to understand it, but not so much that it becomes boring. Keep your language clear and plain. Don't try to impress with jargon or making it appear complicated. The test here is 'would your mother understand it?' - with due respect to your Mum, of course!
- Business model. Now you need to explain how the business will generate revenue. What are the different customer types and how will they be charged? Will it be a one-off price, a subscription, or possibly a licence fee? Is your strategy based on giving your product away to build a large user base for monetisation later, or are there premium features that users can pay for? All of this needs explaining in this section.
- The market. You will have touched on your target market in the concept section. In this section, you can expand on the market size, how it segments and any trends that you intend to tap into. Quantify the addressable market (namely, the market size in total), the serviceable market (the size of the market that has the distinct needs that you will meet) and the obtainable market (the proportion of the serviceable market that you realistically expect to be able to secure over a given period of time). Be realistic with your numbers, anything that defies belief will undermine your credibility.
- The competition. Every business has competition of some sort. Sometimes it will be direct competition, other times it will be indirect (indirect competition for an airline, for example, is boats and trains). Competition proves demand so there is no need to understate this section for fear it will weaken your pitch. Name your principle competitors and comment on their strengths and weaknesses. Highlight what your points of difference are. Think too about the risk of new players coming to your market after you've launched. Comment on the barriers to entry and how long you will have before copy cats dilute your unique selling points.
- Sales and marketing. Our favourite section! Describe what your sales and marketing models will be. For marketing, what channels do you intend to use and what budget will you need? For sales, will you have direct sales people, sell through intermediaries, sell from premises or sell online? If you've already launched, comment on what you've done so far and what you've learned from the experience. If you've got the data, include information on conversion rates, cost of acquisition and the length of the sales cycle.
- Milestones and traction. Using a timeline is a convenient and visual way of illustrating significant milestones passed so far. This can start with when the business was founded and continue to prototypes being developed and soft launches taking place. Other significant events might be investment money coming in, new features being added to the product or service, partnership agreements being signed and important new hires joining the business. If you've got customers already, map out how these have grown and how many you've got now. User testimony can come into this section too.
- Company structure and management team. Investors will often say they don't invest in the product, they invest in the people, so this is a great opportunity to describe the knowledge, skills and experience you have in your business. Naturally, you should keep everything relevant to your product. If you think impressive CVs will support your case, include the highlights here and put the CVs into an appendix. In the company structure, name the legal entity that owns the IP to the idea and say who the principle shareholders are. If the company is part of a group of companies, you should explain this.
- Financials and investment. Now we're getting to the nitty-gritty. You should state the amount of money you are trying to raise and how it will be spent. A pie-chart is often the clearest and simplest way of illustrating this. You will need to show the share price and how it translates into a valuation of the business - often referred to as a "pre-money valuation" - and support this with projected profit and loss accounts and cash flow forecasts so that investors can see when the business will become self-supporting, or when the next tranche of money will be needed. The existing and planned debt and equity structure should also be shown.
There is often a lot of information to communicate in this section so follow the principle of showing the main points in the body of the deck and having the detail in the appendices.
- Exit plan and return on investment. In many respects, this is the most important section for your prospective investors as they will want to know what they are likely to earn on their money and how long they will have to wait. If your planned exit is a trade sale, state the type of business that is likely to be a buyer and why it is a realistic prospect. If it's a flotation, state the market that you are working towards listing on. If your business is projecting being profitable in the short term, what dividends can your investors expect to receive? Again, we urge you to be realistic here as wildly optimistic claims will let you down.
- Contact information. Finally, don't forget to let people know who they need to contact for more information if they are interested in investing!
Let's close with some simple Do's and Don't's
- Have a logical flow
- Use clear, plain English - short sentences with a focus on readability.
- Illustrate key concepts
- Keep the design and tone of voice “on brand”
- Highlight your most powerful claims and statements
- Include lots of user testimonies where they exist - we like to disperse them throughout a deck
- Make good use of appendices for detailed information or say that it’s available on request
- Get professional help with the content and design if these are not your core skills
- Fill it with jargon and complex language to try and sound impressive
- Create overly complicated diagrams, when a few words will explain the concept more clearly
- Have reams of slides without any order or flow
- Be a slave to PowerPoint - other solutions are available
- Be vague about what you want and how the investor is going to make a return
- Make unsubstantiated claims, worse still, lie!
Remember, in many cases, less is more. The objective of your presentation deck is to get your investor to the table so that detailed discussions can take place. A decision to invest is not going to be made on your deck alone, but a decision to decline might be!
Want to see how other people do it, not all perfectly? There are some examples of pitch decks here, including early pitches by AirBnB, Uber and LinkedIn.
For help with the content and design of your investor deck, please contact us.