The basis of discussions with investors in most startup funding rounds is the investor presentation. When done well, this document distils the upside elements of the equity story down into a compelling investor proposition. There is a consensus over which topics should be addressed, and they are outlined in turn below.
But first, answers to some of the most frequently asked questions on investor presentations:
Contentious point, the accurate but unhelpful answer is ‘no longer than it needs to be’. The more informative response is between 8 and 12 slides, with an appendix if required. Investors will typically spend no more than a minute or two with the pitch deck of a new company so it is important that the key points are upfront and that the narrative in your presentation follows a logical structure.
A pitch deck is very much a marketing document and, as such, should use clear and punchy slides – each with a single message for the reader. Detail is required to substantiate the key merits of the investment case, but should be used sparingly. This is particularly true with earlier stage, pre-seed round or seed round companies, where there will be limited (if any) traction data.
It is sensible to prepare two versions of your pitch deck, one with less detail and clearer slides to be presented, and another with more on-page detail to be read by investors separately (i.e. without your guidance).
While a thorough understanding of the various risks to the execution of your business plan is essential, this should be demonstrated through your proposed solution rather than being stated explicitly on the page. Evidence of your understanding should be included when outlining the merits of your solution, the go to market approach and your competitive differentiation.
That said, you should expect the diligence points to be addressed in subsequent interactions and prepare for these. Our teams can help you pinpoint and address these concerns if required.
There are various approaches to producing a pitchdeck, and it certainly isn’t a one-style-fits-all sort of thing. That said, the best investor pitch decks will cover the following topics:
An overview of what the business provides, to who and why. This frames the discussion and helps the investor to easily understand the scope of the opportunity. Nobody wants to get half way through and still not understand what the company does.
A visual representation of the problem that the business is solving. This should reference who it impacts and how. This is a great opportunity to demonstrate a detailed understanding of your target market, but remember that investors may not have the same level of familiarity with the topic as you do. As with every page, clarity of message should come ahead of making yourself look smart.
Of particular interest here is the scale of the potential opportunity. This is typically addressed through the TAM / SAM / SOM methodology, as outlined here.
The approach taken by the business to solve the problem outlined above. This is the point at which you should demonstrate your understanding of your business’ operation and, specifically, how it will address the market’s demand. It can often be helpful to engage expert support here to assist with the planning of the roadmap.
Alongside their interest in the company’s operations at the time of the meeting, investors will be keen to understand how the market offering will develop over time. They will be considering whether they agree with the strategic rationale, but also assessing the capability of the founders / management team to deliver it.
Near the top of most investors’ lists when assessing an investment opportunity is ‘founder market fit’. This is an assessment of the suitability of a founding team to address this specific problem. A positive FMF assessment might be made if, for example, the founder has a unique perspective on the problem gained through prior experience. This extends beyond the founder(s) and into the core team, where the investor will want to be assured that the skills required to deliver the solution reside.
A unique perspective on a problem, which contributes into an innovative solution, can be a real differentiator for a business as will be less easy for competitors to imitate. This insight is often held by the founding team but can also be supported by the expertise of carefully appointed board advisors. Our experts can help you develop your board, as well as other corporate governance procedures, ahead of funding round.
If your product/service has launched in some form, then evidence of adoption by your user base will be very helpful for investors. Any degree of interest is positive but it is certainly the case that additional weight is given to the activity of paying customers, with free services less effective at evidencing monetisable demand.
Revenue performance is often front and centre, but other performance indicators are also important for different business models. For example, SaaS businesses have a monthly revenue stream from each paying user until they unsubscribe. The average length of time between a user joining and leaving is a key metric, and often analysed in the context of user cohorts. Here users are grouped together depending on the date on which they joined, the performance of this group as a whole is then tracked over time. Investors would like to see that the retention rates in each cohort increasing, demonstrating the growing appeal of the product. More details on KPIs here.
Your ’go to market’, or GTM, is the approach through which you will develop your business to meet its objectives. Often the big picture goal is divided into specific milestones, and each of these are addressed in turn.
A milestone may, for example, be to have 10,000 paying users by the end of the year. A plan is then developed on how this will be achieved. Which resources of the business will be deployed to do so, and how will they operate. A sales strategy may sub-divide into individual strategies targeting corporate-partnerships and retail users separately. Each will likely need a slightly different marketing approach and sales style, and this is reflected in the GTM.
Our experts are matched to clients based on sector expertise and, as such, can work with you to develop and then present the GTM for your business. This is especially important as your GTM drives your cash burn rate and therefore runway length – a key topic never far from a founder’s mind.
An overview of the competitive landscape is often helpful for investors. This will help them to understand the dynamics of the market in which your business operates and, particularly, how your business will sit within it.
Your competitor universe can vary significantly depending on perspective. Businesses offering the same or similar goods / services are your immediate competitors, but you should also consider the different options a consumer has through their decision-making journey. A provider of an alternative product in an adjacent market can impact the dynamics within your own market. Experts can help you map out your position among your competitors, articulating it in the right way for investors.
Finally, it is helpful to now is the right time to deploy our solution. Great ideas can fail to get off the ground if the timing is wrong. Did you know that Scottish inventor, Robert Anderson, was credited with inventing the very first electric vehicle in the 1830s using a horse carriage and a non-rechargeable battery.
Presentation materials naturally evolve after several rounds of delivery and feedback, you will refine your message to ease delivery and land better with your audience. our team can rapidly accelerate this process as drawing on opinions from experts with different backgrounds can offer unique perspectives. This critical appraisal can also help you to prepare for diligence questions.
In summary, the guiding principle for investor presentations should be ‘brief and punchy’. Investors may only have a minute or two to spare to review your materials for the first time, it is important that these are well used and capture their interest.
Finally, below are links to some of the early pitch decks of companies that have become household names (and unicorns) - in case you are looking for some inspiration.
AirBNB
APPNEXUS
BUZZFEED
.svg)
.svg)