How to Prepare a Startup Pitch Deck?
One of they key parts of raising capital is presenting a compelling Startup Pitch Deck to investors…
and often times a lot of the financial parts of your pitch deck fall under the responsibility of FP&A.
Today, we’re going to do a deep dive on how to put together a compelling pitch deck for investors.
An overview of the fundraising process
If you’re a startup…there’s one thing you’ll need to do every 18-24 months…
raise capital from investors.
But the fundraising process can be daunting, especially in today's economy.
The general idea is that investors look at the following areas when assessing whether to invest in a company:
Let’s now do a deep dive through each one.
This part of your pitch deck in essence summarizes what is wrong with the world.
Before you can showcase the strength of your solution…
you need to first define the problem.
Here are a few examples of problems that other startups have solved:
Uber → Finding a cab is difficult
AirBnB → Booking a vacation is limited to hotels
Tesla → gas is expensive and detrimental to our planet
Once you have these problems defined, you can then present the solution
Now that you’ve defined the problem, it’s time to summarize how your product / service fixes this
Here is where you explain what exactly your startup does, and how it will sole this problem.
This is a key thing to communicate early on in your presentation!
You’ll also want to answer a number of questions, such as
How defensible is what you’re doing?
How far are you in development?
Do you feel that you already have product market fit?
Once you’ve defined your solution, it’s time to start discussing the opportunity
OK…you’ve defined the problem…you’ve presented your solution…
now we get to an important question to answer:
How big is the market / opportunity?
Many investors specialize in a specific market and have extensive information about that market.
A common request is your Total Addressable Market (TAM).
Investors want to make sure that the market you are in is big enough to generate the ROI they are interested in!
Now we get to what may be the biggest reason that investors invest…
See…the problem…the solution…the market…
these are all important things.
But one of the biggest indicators of success once you have all of those in place is the team behind the startup.
If a team has experience running a prior startup, it will be infinitely better positioned to navigate the treacherous storms that come along with the journey ahead.
Now we get to another important part in the recipe for success…
Investors LOVE companies that have a strong competitive moat…
meaning a company that is able to defend itself from competition.
Often times, startups are able to create a competitive moat with access to resources, patents, and intellectual property.
Another thing to note however is that competition is not a bad thing…in fact, it’s a strong sign that there’s a ripe market!
Now we get to the section where we shine as FP&A professionals…
Financials will often include both historical AND projected figures…
investors want to see where you’ve been…as well as where you’re going.
It’s here that you’ll want to ensure that you have a strong robust financial model in place that can answer any question that get thrown your way.
PS: If you’re looking to create a financial model, I’d love to work with you - you can learn more over here
OK…now comes the most important part.
Here you’ll want to clearly explain why you are asking for this amount, and the reason for why you feel that your valuation is justified.
Startups are difficult to value in the early stages, since there is often times little to no traction at first.
For that reason, it’s common to start off with convertible debt rather than straight equity
Raising capital can be difficult…
and in today's economy, the competition & access to capital has made things more and more challenging.
But with the right startup pitch deck and business model, you can raise capital in even the toughest of times.