The Ultimate Guide to Crafting a Winning Investor Pitch Deck
Last Updated: 12/17/2023
For an entrepreneur, your business is your baby. There’s a moment when your baby is a newborn and you have been all alone feeding him and nurturing him until he has grown to a stage where you can now present him to the entire world. For babies, this is known as the end of the quarantine. For businesses, it is an investor’s pitch.
This article is designed for both new and experienced entrepreneurs and includes a comprehensive look at:
- What is an investor pitch deck?
- What common formats are they in and what is typically included?
- Pro tips from our experienced team of pitch deck consultants
- Commonly asked questions designed to help you raise funding
To help you in this endeavor of presenting your ‘baby’ to investors, here’s the Ultimate Guide to Crafting a Winning Investor Pitch Deck.
What’s an Investor Pitch Deck?
A pitch deck (slide deck or investor deck) is a tool that entrepreneurs employ to present their businesses to those who are looking to invest in it, often a shorter version of a business plan, your own pitch deck can be assembled through a sophisticated platform or it could just be a simple PowerPoint presentation.
The most important feature of a good pitch deck is that it has to communicate exactly what your business is, where is it going and why do you need money to make it a successful venture.
A pitch deck, or slide deck, is a comprehensive presentation that includes several key details of your business. These details will communicate the most important information about your business to those who are looking to invest money in it.
The ultimate goal of an initial pitch deck is not necessarily persuasion, but to some extent yes, you do want to persuade your audience, but not through fancy words or exaggerated statements, instead, you’ll use hard facts and well-researched data to prove your business is worthy of their money.
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What’s the Common Structure of a Pitch Deck?
There are generally two common pitch deck structures, what is referred to the Sequoia Model (recommended structure by the venture capital firm) and Kawasaki Model (recommended by VC investor Guy Kawasaki). Both are considered acceptable and they are very similar to one another. In this guide, we will be explaining the Sequoia Model.
Sequoia Model Structure
- Company Purpose
- Problem
- Solution
- Why Now
- Market Size
- Competition
- Product
- Business Model
- Team
- Financials
1. Company Purpose (Executive Summary)
The company purpose slide is designed to captivate your audience members. What is your company setting out to do? It is kind of like the cover flap of a book you may read to determine if you’re interested in opening it and arguably, it’s the most important slide in your entire deck.
Pro Tips:
-) Be concise and captivate people to continue leading or listening
-) Explain your vision or mission in a way that communicates your passion
2. Problem (Opportunity)
In this portion of your startup deck you’ll answer, which need is your product or service looking to fulfill? Not all startups necessarily fill a need per-se, so in this case, one explains the overall opportunity in the market. Hence, some pitch decks refer to this as the ‘Market Problem’ whereas others the ‘Opportunity’.
The problem you are looking to solve is most important because this is how investors will determine your ‘product-market fit’. In other words, how important is the problem you are solving to customers and is it worth building a business around?
Pro Tips:
- ) If you are solving many problems, try focusing on the most important one, if there are several, try picking no more than three.
-) Interview your customers by doing ‘customer discovery’ to validate that this is a problem worth solving they’re willing to pay for.
2. Solution
This is not necessarily the point where you introduce your product or service. Instead, the ‘solution’ section is a statement that summarizes how do you think the problem you described above should be solved by your business idea. However, it should tie into your business model and lay the foundation to your business idea.
Pro Tips:
-) The solution should relate to the problem you are solving and be the optimal way to solve it, so choose carefully.
- ) Validate with your target customer that this is the solution they are seeking, in other words, test your ‘product-market fit’.
4. Why Now?
Why now is an important slide unique to the Sequoia pitch deck model. There is a saying that there is not such thing as a bad startup, only bad market timing and this is the basis of the Why Now slide.
An example of this is virtual reality, which only started to become mainstream in 2020 after many failed attempts over prior decades, what changed was advancements in technology and entertainment making such technology practical to consumers.
Pro Tips:
- )Think deeply about this and consider what has changed in the competitive landscape, market environment, cultural behaviors, political landscape, or other factors that make this the perfect market timing.
-) It is unlikely that someone didn’t already try your business idea without something changing to make it good timing, so if not, you may want to search further for the ‘Why Now’ if one does not immediately come to mind.
5. Market Size
The market size is important to many venture capital firms because if the market is too small, then you may not have the ability to scale large enough even if you are wildly successful. For instance, the market for an obscure niche item may be a total of $100 M, so if investors are interest in only companies that can reach $500 M or more in valuation, then even in a best-case scenario of market dominance, it’s not possible.
Many techniques in good pitch decks are to show multiple markets and their potential size. For instance, a company’s products may apply best for Customer A, but Customer B may also be interested and possibly more broadly Customer C. In each case, the market size increases if the company can expand into the new market. Size here is referred to how much potential customers there are and how much they spend on your product on service category.
Pro Tips:
- ) Be careful to now show a limited market, but at the same time, show a market that is relevant enough to be applicable. Zooming out too far to show large numbers may not be applicable.
- ) Prepare yourself to defend your sources, research, and logic because many times entrepreneurs use unreliable information that is not defensible and called into question.
5. Competition (Competitive Advantage)
Even though most entrepreneurs think that nobody else is doing what they are, this is commonly not a true statement and is why the competition slide is so crucial. In a globalized market, there’s commonly at least one company doing or intending to do what you are doing. Therefore, you should research your current or potential competition as much as humanly possible to assure your future investors that you know who they are and you have a strategy to beat them.
What makes your product or service stand out in the competitive landscape?
If your investor deck can’t offer an answer your investors expect this question you’ll probably lose a significant portion of their interest. In this section, an entrepreneur must identify the key elements that make the product or service they intend to bring the market unique and relevant. You should be able to explain why a customer will be willing to buy what you sell over what others are offering.
Pro Tips:
- ) One approach here is to use what is referred to as a blue ocean strategy, which is designed to show that all competitors are irrelevant by either being outdated and ripe for disruption, or targeting a different market.
- ) Every company has competitors, do not forget this, therefore this slide appeals to everyone. If you don’t have competition directly, then show those in the closest market, also be sure to include other startups at the same stage.
6. Product
This is where everything in your prior slides begins to come together. How does your product address the solution you presented earlier? This should be both a simple and technical explanation covering high level functionality, as well as how it works.
Many startups use buzzwords like AI or Blockchain, but investors often want to know the underlying technologies used such as which specific AI Models or Blockchain Protocols. If you are deep tech, be sure to back-up why these technologies are crucial.
Also, providing a technical roadmap can help investors understand what features will be in the MVP, Beta launch, and when your product will be fully commercialized.
Pro Tips:
- ) Keep in mind many startups build as they grow and layer on features according to customer feedback, so being too detailed here may come across as inexperienced in some cases.
- ) Make your development timeline realistic
- ) Do not use buzzwords like AI or Blockchain without supporting it with underlying explanations as to why you chose those technologies and the specific models, algorithms, or protocols used.
6. Business Model
For most tech companies, this section answers the question of: How do you plan to make money out of this?
A business model is a description of the way your company brings money in. Whether you plan to sell the product online, at retail stores or if your model is subscription-based, you have to explain to your potential investors the pricing details, the available alternatives your customers will have and how you plan to acquire those customers profitably.
A winning pitch deck demonstrates that this is not just ‘an idea’. It is a business with a concrete plan to make money.
Pro Tips:
- ) The business model should be easy to follow and understand, try to pick a business model that already exists and is familiar (E.g. Freemium SaaS, In-App Purchases), rather than reinventing business models.
- ) Have customer surveys, waitlists, or other evidence, to demonstrate the viability of the business model. If you claim customers will pay $10 / month for your service, make sure you generate this from first hand information.
7. Team
This is arguably the most important, and one of the most neglected slides in many pitch decks. Having a strong team is instrumental for startup companies at every stage, more so for some than others.
Venture capitalists tend to look for founders that have experience working for very successful companies or attended top universities, as these tend to be conduits for capital allocation. If these don’t apply to you, this slide is even more important and you must convince them that you are the ‘right’ person to navigate your business idea into a multi-billion dollar company.
Pro Tips:
- ) A common pitch deck trend is to show the logos the founders previously worked and the schools they attended.
- ) Many startups are found to be more successful with 2–3 CoFounders, investors know this and are more likely to invest in startups that have them. Make sure your team is well balanced with technical, marketing, and leadership skills.
- ) It is important to have a strong advisory team and/or board.
8. Financial Projections
This is perhaps one of the most technical portions of the pitch deck and also, the one your investors are probably going to look at very carefully. Keep in mind your investors are probably business-savvy and finance-savvy, they made money somehow and that usually gives them the experience to assess detailed financial forecasts with an expert eye.
Financial Projections: This section includes forecasts of the next 12 months or even 3 years ,depending on how mature your business is, and here you’ll outline the financial future of your business based on several associated to how much you plan to sell and key expense drivers. The usual pitch deck contains a projection of the company’s main financial statements (Balance Sheet, P&L, and Cash Flow Statement).
Use of Funds: How much money you are raising for the round and where it is allocated. Generally broken down my category, see example below:
Amount Raised: $10,000,000
- Marketing: 20%
- Research & Development (R&D): 10%
- Operations: 70%
Pro Tips:
- ) Do not show unrealistic growth or profit margins, there is a fine line between being aggressively optimistic and unrealistic. Some investors like to see optimistic projections, but founders can lose credibility by being illogical.
- ) Support your financial assumptions with research based on third-party data around market size and create a logical flow in your financial model that shows the customer acquisition cost and lifetime value in a clean and logical way.
- ) Be prepared to answer tough questions and defend your logic, so understand your model and assumptions inside and out. What took you hours to build can take an experienced venture capitalist or angel investor minutes to poke holes into.
Appendices
In addition to your core content, it is also advisable to create additional slides that are more informative to investors and help you better prepare for questions they have:
Traction: The key component of this deck is to show the venture capital firm the traction your startup has achieved so far. For pre-revenue companies this could be qualitative things like arranging your management team or R&D milestones, but the further along you are the more performance or financial metrics it is based on.
Technical : This may include additional technical information outlining your technology stack, models, frameworks, and other components that demonstrate the technical robustness of your product.
Market Research: What are the key metrics for your industry? Who are your potential customers? Are they willing to spend on this? These are some of the questions you’ll be looking to answer in this section, in order to provide assumptions based on hard data (well-researched information coming from reliable sources) to assure investors that there’s an active market or niche ready to buy what you are selling.
Go To Market Strategy:For early stage startups, often pre-revenue seeking prospective investors for the first time — this slide outlines how the company will gain initial market share. It is important to be concise, they don’t need a complete narrative, but rather key highlights.
Want help preparing your pitch deck? Schedule a Meeting Here
Pitch Deck Examples
Below are some of the best pitch deck examples used by unicorn companies in their very early stages.
Commonly Asked Questions
How long should a pitch deck be?
Generally, pitch decks are using to spark interest, not raise money by themselves. Hence, they are generally only 10–15 slides and more detailed documentation is prepared to accommodate them either in the Appendices or a separate business plan.
When actually pitching to investors, not sending the deck, the presentation should be no more than 20 minutes generally, the shorter the better so you have ample time for questions.
Should I use a pitch deck template?
There are pros and cons to creating a custom slide deck or using an existing pitch deck template. The advantage of using a pitch deck templates is obviously saving time and resources and ensuring the structure is correct, such as using the common Sequoia or Kawasaki structure. However, pitch deck templates may fall short at representing the company’s unique branding and may not exactly apply to your unique business model.
Should I hire someone to do my pitch deck? If so, how much does a pitch deck cost?
If you really want a great pitch deck, it may be worthwhile to hire a pitch deck consultant. However, a top agency can cost anywhere from $6,000–15,000 depending on the stage of the company and its complexity. The only challenge with hiring someone is sometimes you lose the founder’s passion in the slides, so if you do hire someone, make sure they can reflect this.
What makes a good pitch deck?
There are several factors that make an impressive pitch deck. In general you should focus on these:
- Be concise and spend more time communicating less information
- Be visual and say more with images, graphs, and bullet points
- Cover the most important elements and key points
- Don’t spend too much time on a single area, briefly touch on all key elements - keep your pitch deck focused
- Be prepared for questions, have slides prepared in advance for questions you anticipate
How do I raise funding?
Generally, pitch decks are used to raise funding from angel investors (seed funding) or venture capitalists. If you are interested in further reading on how to raise funding, you can read our full guide on angel investors.If you are later stage, we also have a guide available for Series A and Series B funding. There are also alternative solutions like startup accelerators if you’re not interested in capital injection.
How do I value my startup?
Here’s the part where you throw a number. How much is your business worth and how much of it are you looking to sell? This means that you’ll present your investors with some alternatives regarding how they can come on board, either as common shareholders or through some other arrangement that may include a combination of debt and equity.
The valuation of your business is really important and you should be able to explain to your potential investors why your valuation is accurate and what are the financial fundamentals backing that number. A winning pitch deck will provide a data-backed valuation figure. For a detailed explanation on startup valuations, see this article, but as a general rule of thumb for early stage companies, you can refer to the chart below:
When should I send the pitch deck to an investor?
Generally, when they ask for it. Before you send a deck you should prepared to explain your startup in one to two sentences to gain initial interest. For an investor pitched by dozens of startups per week or more, them spending time reviewing even a brief deck is a big commitment. Therefore, it’s best for them to ask.
What do I offer my investors?
This depends on your company’s stage, earlier companies prior to a Series A round typically prepare a SAFE or Convertible Note. The advantage of these is that you are not actually putting an immediate valuation on your business. For later stage companies Series A and beyond, the valuations are generally done based on several valuation methods referred to in the ‘How do I value my startup?’ question response.
Should I make my investor deck interactive?
Investors are not typically persuaded by fancy design or graphics by themselves, but rather the underlying logic and research. Having a good design can actually hurt you in some cases by discrediting your emphasis on the more important elements they care about.
Pro Business Plans has helped 1,000s of entrepreneurs create and perfect their pitch decks and business plans for nearly 10 years from seed stage companies to Fortune 50 and NASDAQ listed companies. It has been recognized as the top business plan writers by Wimgo in 2021. Visit us to learn more and schedule a free consultation.
