How to Create a Winning Series A Pitch DeckBusiness Advice & Research
Sometimes called a startup deck or slide deck, a pitch deck is a presentation that founders use to showcase their startups to investors when looking to raise money.
Putting together a sleek and impressive pitch deck is an absolutely essential part of the process for any startup that’s looking to raise funding. It’s especially important for startups raising Series A funding, simply because the business is still young and relatively unproven.
Receiving funding is becoming an increasingly important factor of small business success. One in four businesses surveyed by the National Small Business Association (NSBA) claim that they experienced limited business growth because they were not able to receive the funding they required.
In this interview, Marc Andreessen – a founding partner of venture capital firm Andreessen Horowitz – said that of the 4,000 startups that are looking for funding each year from his VC, his team takes a look at about 3,000 of them. Of those 3,000, they look at about 200 very seriously and end up investing in about 20 startups a year.
That means that only 0.7% of the startups that pitch to Andreessen Horowitz end up receiving funding. That’s why putting serious time and effort into the preparation of your pitch deck and your accompanying presentation is an absolute must in today’s highly competitive startup ecosystem.
In recent blog posts, we talked about how to prepare your startup for the fundraising process and how to find the right venture capital firms to target for your Series A funding. Once you’ve narrowed down your list of VC firms and piqued their interest, preparing a stellar pitch is the next step you need to take towards securing an investment.
While the pitch deck alone is not going to seal the deal, it’s an important element that’s used to spark interest in your company; one that will hopefully lead to more detailed discussions. As a founder pitching your startup, you want this presentation to take you to the next step in your journey and secure more intense and detailed meetings with investors that will hopefully lead to closing your Series A round of funding.
In this blog post we’re going to take a detailed look at the entire process and discuss the following key points of putting together a great Series A pitch deck:
- Defining the purpose of your pitch deck.
- Understanding what key information your pitch deck should include.
- Securing important supporting documents you’ll need to have.
- Giving the best presentation possible.
Defining the Purpose Behind Your Series A Pitch Deck
Some might say that the purpose of a Series A pitch deck should be to explain to investors why they should give your business money. In reality, the true purpose of a pitch is to show investors why they should want to learn more about your startup.
When you’re pitching to an investor, everyone is aware of the fact that your startup would like funding. However, it’s important to make sure that money isn’t the primary angle and purpose of your pitch.
Another important distinction that founders need to make is the one between pitching to customers and pitching to investors. You’re not trying to sell your product or service, you’re trying to explain what sets your startup apart from others.
Naturally, explaining to investors what problems your product or service solves for customers will be a key component of your pitch, but that shouldn’t be the primary focus. Your company and its people should be as big a part of your pitch as your product or service.
The contents of your pitch deck should give a clear and concise overview of your business, there’s no need to get incredibly granular. Remember, your goal is to spark an interest that can lead to more detailed discussions with the investor at a later time. Think of it more like a date that could lead to a relationship instead of a sales meeting where you’re trying to close a deal. Make sure that there are plenty of interesting talking points left for later discussions.
In its most distilled and focused form, your pitch deck should be able to present a clear and concise vision of the following:
- What you’ve already accomplished.
- What you’re planning on doing.
- How funding can help you achieve your future goals.
What Should Your Pitch Deck Include?
According to marketing specialist and Silicon Valley venture capitalist Guy Kawasaki, a pitch deck should have a maximum of ten slides, and the pitch itself should last no more than 20 minutes.
How are you going to explain where your business has been, where it’s headed, and how funding can help you in 20 minutes? Creating a quality pitch is all about being very careful and diligent about the information you choose to present and making sure that every single slide has value and purpose; which is easier said than done.
Knowing what characteristics of your business you need to talk about in your pitch is fairly obvious. What makes this process difficult is the fact that there are many of them. This is why most of the work that goes into putting together a pitch deck is related to finding a way to present all your primary, high-level business data as concisely and with as little unnecessary fluff as possible.
The Value Proposition
Getting your value proposition right will be a good exercise for the rest of the pitch deck slides because it literally needs to be a one-sentence thing. The value proposition gives a quick and succinct overview of what your business does. It needs to be short and easy to understand.
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Before settling on a value proposition, be sure to get a good amount of feedback from partners, peers, and even colleagues. Do they understand it? Is it clear enough? Does it genuinely explain what it is that your company does?
Market and Opportunity
According to CB Insights, 42% of VC-backed startup founders list failure to find market fit as a reason for failure.
How big is your startup’s market? Investors want to know this in order to get a sense of the opportunity that exists in the market which your startup occupies. Obviously, they also want to know how your company positions itself in this market and how large your potential audience and customer base can be.
Investors want to know the scope and scale of your startup’s offer in order to gauge your product or service’s potential reach.
It’s important to note that not all investors are focused on the size of the market, meaning that the market doesn’t have to be enormous for it to be attractive to VCs. Having a specific and reachable market tends to be a lot more appealing to investors than hearing about general opportunities in a larger market. Defining your market as specifically as possible also helps keep your pitch deck focused.
The Problem and How You’re Solving It
While, in essence, you are talking about the problem that your product or service solves, it’s important to make sure that your customers are at the center of your pitch, not your company.
Make the problem and solution clearly identifiable by providing real-life context through a customer journey. Describe how your customers use your product or service and, most importantly, how it benefits their lives.
Product or Service
Now that you’ve clearly defined what your product or service does and how it impacts your customers, it’s now time to explain how it works. This is a good time to feature short tutorial videos or screenshots and demos of your product or service in order to show it in action and give potential investors a better understanding of what it is you’re making.
This is also a very good place to add some testimonials from customers who love to use your product or service.
Business traction refers to the momentum that your startup builds up while it’s growing. While there is no one way to measure this, most startups will usually point to two things; the way their customers are responding to their product or service and the amount of money they are making.
Traction is really about framing and highlighting the success that you have had thus far. That’s why testimonials and words of praise about your product could provide a good transition into this slide because you’re trying to demonstrate that your product or service is truly needed and loved by people.
Investors will want to see proof that validates your startup’s goals and plans. They might not be expecting huge numbers from you, but they’d like to see that your product or service is clicking with your target audience.
Depending on the type of startup you’re running, you might not even need to be making money to prove that you have business traction. In some business models, showing investors that you have a large user base that is engaged with your product or service in any way is just as important, even if you haven’t found a way to monetize that engagement just yet.
Highlight milestones that you have achieved in this slide as well. Again, these milestones don’t have to be financial in nature, they could be any achievement you believe demonstrates meaningful growth and progress.
Obviously, you’re not going to hand out the biographies of everyone on your team, but if you do have team members that are exceptional (especially ones that have had significant success in other, similar startups) be sure to highlight those individuals.
How are you making money now and how do you plan on making money in the future? Do customers buy your service or product once or is it a monthly subscription model?
It’s also a good idea to talk about your pricing model a bit, as well as your customer acquisition cost (CAC) to give a good idea of what your business model looks like and will look like in the future.
Every startup has competition. Even if your product or service is completely unique (which is very rare), you still have competition since your would-be customers are currently using an alternative product or service to solve the problem that you are trying to solve in a better way.
You’ve already described and defined your market at the beginning of your pitch deck, now it’s time to talk about your competition and how you compare to them and fit into the competitive landscape of the market.
How are you different from your competition? What advantages does your product or service offer compared to the solutions offered by your competitors? These are the questions that your would-be investors want to have answered.
Marketing and Sales
While discussing your startup’s traction, you’ve already showcased some of the wins you’ve garnered along the way. Investors want to know how you are going to not just sustain that growth, but also increase it exponentially.
Talk about your marketing strategies and how you plan on getting the attention of your prospective customers. How are you going to differentiate yourself from your competitors? And once you do get their attention, how are you going to convert them into paying customers?
According to a study performed by TechCrunch, investors spend the most time viewing three slides; your financials, your team, and your competition.
By and large, they spend the most time with your financials. And while your pitch deck shouldn’t include pages of detailed financial spreadsheets, it should be able to give investors a quick and concise overview of your current financial situation. They’ll want to see your income statements. They’ll want to see your sales forecasts. They’ll want to know what your cash flow situation looks like and, if you have Seed investment money, how quickly you’ve been burning through it.
Investors will want to know what your key expense drivers are and what your projections look like before wanting to hear about what you plan to do with their money.
The final slide of your financial plan should give an indication of how much money you are looking to raise without being overly specific. As mentioned earlier, these types of discussions will take on a more detailed and specific form later if the investors’ interest is piqued and they do decide to enter negotiations with your startup.
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Important Documents That Should Accompany Your Pitch Deck
While your Series A pitch deck is a very integral part of your journey towards securing funding, investors are going to want to see more detailed documents as well that they will be able to take with them, analyze, and get expert opinions on in order to decide whether your startup is truly worth investing in.
Let’s take a look at some of the most crucial planning documentation that should accompany your pitch deck.
Executive Summary: An executive summary basically sums up everything that was covered in your Series A pitch deck but in a more detailed, written form. Potential investors will often show this document to their partners and other trusted advisors whose opinions they consider important.
Detailed Financials and Market Research: You’ve already provided an overview of your financials and your market research in your pitch deck, but be prepared to offer more detailed documentation if the investor wants to see it. Most VCs will want to see very detailed financial forecasts for at least three years into the future. Startups can give wild predictions and projections in their pitch decks; investors will want to vet the data and see whether the predictions are realistic. They might not always ask for details about your target market and market opportunity, but you should have that information ready and available if they are interested in taking a closer look.
Technical Documents: If you’re a tech startup, potential investors will want to see technical documents related to your company that they can forward to experts. Not all venture capitalists come from a technical background, even if they predominantly deal with tech startups. But they certainly know a lot of experts and will be sure to send them your technical documents to get an opinion on them.
Giving the Best Pitch Possible
Even if you’re not pitching to investors on a regular basis just yet, you should already have a solid “elevator pitch” at your disposal; most founders do.
You’ve probably already gotten good at talking up your startup to peers while discussing partnerships or when trying to hire top talent. If you think about it, you’re probably already pretty good at it, which means that there’s really no need to be stressed about pitching your ideas to investors, regardless of the fact that the stakes might be significantly higher.
Here are some things to keep in mind when putting together your presentation that should help you make a good impression on investors without having to jump through hoops to impress them.
Your Deck Shouldn’t Need You to Explain It
According to a recent study performed by Docusend, investors spend an average of three minutes and 44 seconds looking at a single pitch deck (if you’re not presenting it to them).
That’s why it’s so important to make sure that your deck can stand alone and can tell the story of your startup even without a presentation. Some founders make the mistake of using the pitch deck as support for their presentation when they really should be doing the opposite.
Your presentation should serve to enhance your pitch deck. Remember, there’s a good chance that investors will want to take another look at your pitch deck after you’ve presented it. Make sure that it tells a good story even when you’re not around to support it.
Keep the Presentation Short and Simple
The obvious reason for keeping your pitch short is that you don’t want to bore your audience or lose their attention. The other reason is that you want to make sure that you leave time for questions and discussions. You’re most likely going to get an hour-long meeting with an investor. Make sure that your presentation doesn’t take more than 30 minutes to make.
Simplicity is another key factor for nailing your pitch. Investors know that you’re very familiar with the details, but they don’t need to hear them right away. Your presentation needs to be able to clearly and effectively convey high-level ideas in a short amount of time.
Don’t clutter your pitch deck with bullet points and paragraphs of small text. If the idea was relegated to a bullet point, then it’s probably not interesting enough to share at this time.
Balance Good Storytelling with Data
It’s important to strike a balance between being a good storyteller and being an expert; highlighting the facts and keeping the presentation interesting and light.
One of the best storytelling methods for funding pitches is to use customer examples. Tell a story of how your startup has solved a problem for your customer so that your investors will have a better understanding of how your product or service works and helps people in the real world.
Balance the storytelling element of your presentation with your expertise and your knowledge of all the key numbers. You obviously don’t have to memorize every data point related to your startup, but the best CEOs will be able to rattle off their company’s key numbers in their sleep.
There are vital numbers that investors will want to know and if they weren’t included in your pitch deck and there’s a good chance that someone will ask you about them at some point in the presentation or directly after. Knowing the key numbers like the back of your hand demonstrates your readiness and competence in leading your company.
Even if you’re used to seeing charismatic and well-spoken founders in the media and on your social media feeds every day, know that most of them weren’t born that way and that a lot of training and practice goes into becoming a natural and confident presenter.
Practice your presentation with colleagues and peers in order to iron out the kinks and become comfortable with it. Practice with people from outside of your company and let them ask you questions about your presentation. These types of exercises can go a long way towards polishing up your pitch deck and perfecting your presentation and public speaking skills.
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