Normally, we would start this article by telling you how important the pitch deck is, how it’s the first impression you make for an investor, and how hard you need to work on it.
But you know all that already, you’ve been working on your own pitch deck for weeks or even months, refining it, getting feedback from friends, founders, and even some investors. Or you haven’t started working on it yet but you’ve been doing your research on best practices and templates.
You’re proud of it, and already sent it to potential investors. You’re checking your email every few hours now, waiting for that positive answer.
All that for an investor to look at it no longer than a little over two minutes. That’s about 10 seconds per slide. And all you get is a “Thanks, X, let’s discuss again at a later stage”
How investors read pitch decks
It’s not that investors are malevolent. After all, their job is to find the best companies that will return their portfolio and it would be a shame to pass on such a fantastic money-making opportunity, like the one you just presented them.
It’s just that investors are busy, and although they read thousands of pitch decks, they also have some other tasks to take care of.
So they developed a test. The flick-through test. It goes like this:
If an investor passes on your opportunity, it’s not always a reflection of its quality. Often, it’s because founders don’t align their pitch decks with how investors evaluate them.
Below we’re going to give you a 12-slide template for a winning pitch deck along with some tips on how to catch investors’ attention quickly so you can land that next meeting.
The 12-slide template
The template is based on Sequoia Capital’s template with a few extra slides. Sequoia invested in companies like Apple, Google, YouTube, Instagram, Linkedin, PayPal, Airbnb, and many other companies that you definitely heard about. Airbnb even used this exact template to raise their seed round in 2008.
Let’s see what each slide needs to contain:
How to make it better: Don’t talk about your vision or your mission as these things usually are vague and sometimes stretch over a timeframe that is too long. Try to include a short, snappy tagline that helps people understand what you do, even if they are unfamiliar with the industry or product.
A nice, clear formula is – “The {solution} that helps {audience} solve {problem} without {objection}.
How to make it better: Just like with the other slides, you need to think of it from a marketing perspective. You also need to make sure that investors understand the problem and its depth, even if they are not familiar with the industry.
You can use a formula like “X% of {audience} struggles with{problem}” or you can go deeper and tell a personal story of your persona. Give them a name – “X is one of the many {persona} that struggle daily with {problem}.” For a good example of this, you can check out Tinder’s original pitch deck.
Only after, you can introduce numbers if you have many. How many people struggle with that problem? What does it cost them? Time? Money? Health?
How to make it better: Make sure the solution addresses the exact pain points mentioned in the previous slide. How much time or money is your audience saving? How does their life look after using your solution? Maybe they spend more time with their family or they spend half the time they used to on a specific task.
How to make it better: Think about the investors here. Create a sense of urgency about why now is the perfect opportunity for them to invest in your solution.
How to make it better: Investors want to see your thought process more than the numbers themselves in this slide. Of course, they want you to address a big enough market for your company to reach billions in revenue, but just throwing down some numbers from some reports won’t be enough to convince them.
Instead of the top-down approach, try to use the bottom-up one because your market size is not a vague dollar amount. It’s the number of customers that you can realistically reach who will actually pay for your product. You can best articulate that through bottom-up market sizing.
With the bottom-up approach, you should be able to articulate your market sizing like this: (Example from Underscore.VC)
We’re going to sell our product to doctors in hospitals that use this specific critical care application, starting in New England. There are about 175 hospitals with roughly 80 doctors currently using this kind of application. The average selling price will be $3,500 per doctor per year. That gives us a $50M market to begin with, with the opportunity to expand regionally.”
How to make it better: First of all, don’t say you have no competitors. You will always compete with some sort of similar solution, even if it doesn’t use the same technology, for example. Investors want to see that you’ve done your research and you understand the market you are going to enter.
In this slide, you should also aim to highlight why your product is better than your competition’s in a way that relates to the problems that your audience is facing. Basically, you need to show why your product solves those problems in ways that the competition can’t.
How to make it better: Don’t just list features on this slide and don’t go too deep into the technical aspects. Try to relate the features with the problems that your audience faces. If you’re entering a saturated market, try to highlight to investors why your product stands out from the competition and how hard it is for them to replicate your solution.
How to make it better: Try to be as realistic and specific as possible. Investors spend the most time on this slide so you need to have a clear way to make them understand how your company will be profitable. Include everything from your price points to estimated revenue and longer-term projections.
How to make it better: This slide is not just a fancy way to put photos of the founding members and cute, short bios. It should tell investors why each member of the team is the most suited to solve problems in your market and scale your company successfully. Investors want to see Founder-Market fit as well.
Try to include any relevant expertise of each member, related to the market or the customers’ problems.
This slide proves to investors that you already have some sort of traction.
How to make it better: Even at the earliest stages, you must show some traction. If you have any revenue, that’s amazing. If not, provide metrics that prove some sort of Product-Market Fit such as letters of intent, testimonials, customer pipeline, or even product feedback.
How to make it better: Here, you need to highlight that your spending decisions have been strategic and brought good returns over time. If you have any, include documents like the P&L, Balance Sheet, or Cash Flow.
How to make it better: Try to involve the investor in this part of your pitch and show what their role is in building and scaling your company. Be as specific as possible in detailing how much money you need and for what. Adapt this to specific milestones of your company’s journey.
Conclusion
By this time you should be ready to create a great pitch deck for your early-stage start-up that will pass the flick-through test and get investors interested in meeting with you. You should understand exactly what goes on each slide and how to present the information to keep investors engaged.
If you’re looking to raise a pre-seed or seed round and you are in Healthcare, Manufacturing, Energy, FinTech, and any other related industries, send your newly created pitch deck our way.
At Fortech Investments, we work with start-up founders as strategic partners, meaning that we offer added support beyond the capital that we invest. We provide founders with our own entrepreneurial networking, allowing them to connect with other founders, investors key players in their industries, potential clients, and all sorts of experts. If you’re an early-stage start-up in Healthcare, Manufacturing, Automotive, Fintech and Energy reach out to us here or at contact@fortechinvestments.ro