Tom Hicks, a “leveraged-buyout businessman” and former owner of the Texas Rangers, knows a thing or two about both business and baseball. He wisely said: “As any pitcher in the MBA will tell you, practice makes perfect.” This holds equally true for start-ups in the pitching phase — which is always! As any entrepreneur trying to get funding for his start-up will tell you, practice makes perfect.
Investors hear thousands of pitches. Truth be told: most of them are pretty weak. If you want your pitch to stand out and get results, it’s essential that you keep pitching and pitching until you ultimately hone your pitch down to the most effective message: the most interesting case you can make for your business.
Elements of a Pitch Deck
Regardless of who you are pitching to, or what you are pitching, there are certain key rules to follow:
1. Cover what the investor wants to know. First things first: research who you are pitching to and customize your pitch for this particular audience. Why would this organization be interested in your start-up? What is of greatest importance and value to them? If you use these questions as the foundation from which you build your pitch deck, you’ll already be a step ahead.
2. Slides should hit the high points. With every slide, you should be trying to evoke a response from your potential investor — no dud or filler slides. To do this, you need to create a compelling and inspirational story that acknowledges and directly addresses the “so what” question.
3. No more than 10 slides. It’s a tough target to hit, but really try for just 10 slides. And by 10 slides, I don’t mean 10 slides crammed with unreadable text. I’m talking about 10 clean, simple slides. Clearly it’s impossible to communicate everything about your business in one pitch deck … and honestly, why would you want to try? Even if you overshoot the goal of 10 slides, just having that guideline in place will help you to be a relentless editor, cutting away all the non-essential content. Remember: all you’re looking to do with your pitch deck is to hit those highlights and stimulate some interest.
4. Maximum 10–15 minute time limit. In a pitch presentation, you will typically have only 10–15 minutes to make your case. You need to be able to discuss all the assumptions and points made in the deck within this time-frame. If you are pitching to a VC, they will typically give you an hour, but it’s still a good rule of thumb to be able to discuss all the assumptions and points made in the deck within the 10–15 minute time frame. This will leave you plenty of much-needed time for discussion and give you the ability to go deep on certain topics, as needed. Even if your pitch is perfectly crafted, shorter is still better. Better to leave your audience wanting more and asking questions out of genuine interest than to overload them with too much information they can’t process or hold on to.
Key Slides in Your Pitch Deck
Depending on your product/business, here are the elements that you need to cover on in your pitch deck (note that not all of these will be relevant for all kinds of companies). Introduction — This is the very first thing investors want to know: “Who are you?” More specifically, investors are looking to hear the quick summary of what you do and why. Don’t waste time telling your entire autobiography or the detailed genesis story of how you got inspired to start your company. In just one minute, you simply need to get across the point of what your organization is about.
Venture Concept or Problem to Be Solved — This gets at the “so what” issue. So you’ve introduced your organization and told what you do — now you need to move focus to the “why.” Here’s where you want to highlight the pain point that you are specifically alleviating. Make sure to address:
– What is the problem to be solved or market opportunity?
– Can you demonstrate customer need?
– What is your solution or value proposition?
Market Opportunity — Here’s where you can drill down on the market opportunity. Without getting too bogged down in details, you’ll want to address the following key questions: – What is the structure, and what are the characteristics of, your industry/market? – What is the size: dollars/units? – What is the growth potential? – Who are the customers?
Market Strategy — Here too you can dig in to the nitty-gritty of your market strategy and business model. To explain how you make money (or intent to make money), you may want to consider addressing the following set of questions:
– What are the sales channels?
– What are the distribution channels?
– Will there be strategic partnerships, and with whom?
– What is the market penetration potential?
Competitive Advantages and Risks — Without dissing your competitors, you want to provide a summary of the competitive landscape. Give an honest appraisal grounded in real competitive analysis. Address these key questions: – What is your market niche? – Do you have unique technology? – Are there barriers to entry? – What are the important risks? – What are the key success factors?
Technology — If you’ve got something truly state-of-the-art to promote, here’s where you want to show them what you’ve got. Tell your audience — or, better yet, show them — the technology that’s powering your business. Remember though that your audience may not be as knowledgeable of, or excited about, technology as you are. Without going on and on, make sure you detail: – What is proprietary? – Is the technology protected (patented)? – What is the state-of-art in this technology? – What will future technology changes be?
Manufacturing/Production — This is a more practical and less inspirational part of your pitch deck, but equally crucial. If your business is in production, you need to demonstrate that you have worked through potential issues of manufacturing and production, such as: – Will you manufacture in-house or out-source? – What are your current and future capital equipment requirements. – Will you face regulatory, environmental, or compliance issues?
Management Team — The meet and greet portion of your pitch deck isn’t a mere formality. Who you are is as important as what you do. Don’t worry if there are some gaps in your team — investors understand that this is the case in many start-ups. As long as you are upfront about your gaps, investors will see that you know your business. Tell them: – Who are the key players? – What have they done before? – Are there any gaps in the team?
Financials — You want to let your audience see the assumptions built into your financial forecast. In addition to key metrics, you’ll want to forecast for the following:
– What are your revenue projections for the next 5 years?
– What are your gross margins? – What will your return be to your investors?
– What is your anticipated exit strategy?
Funding Requirements — And here you get to the crux of this pitch meeting: you need money and hopefully your audience is being convinced to give it to you. Be precise in addressing the following:
– How much money do you need?
– What do you need it for?
– What is your timing?
– Do you anticipate future rounds of financing?
If you’re an entrepreneur, you’re no stranger to the art of the pitch: you’re pitching all the time. But instead of throwing wild curve balls or fast balls or any ball you can get your hands on, follow these tips to finesse your pitch. Pitching does make perfect.
Recommended Reading: The Art of The Start, by Guy Kawasaki
David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides early-stage companies with accounting, finance, tax, valuation, and corporate governance services and support. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.
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