One of the instruments you need to raise capital is the startup funding pitch deck. Simply speaking, it’s the presentation of all the business fundamentals that gives the investors the very first impression about you so that they can decide whether to give you their money.
It’s easy to find an outline for pitch decks on the Internet, but they are often unnecessarily complicated, whereas the key content is pretty simple. In this article, we will delve into the common structure of all pitch decks, demonstrated with examples from Uber and AirBnB (courtesy of Slidebean).
Basically, there are three sections in a startup pitch deck: the introduction, the ‘why you should invest’, and the fundraising information sections.
The Intro Section in a Startup Funding Pitch Deck
This is where you present the problem, the premise, and your proposed solution. A good intro is the one that captures the investor’s attention immediately so that they may follow you throughout the rest of your presentation.
1. The problem
Let’s see how clear Uber wrote in this slide:
Uber emphasizes the pitfalls of 2008’s transportation landscape where technologies were dated and the taxi monopolies downgraded the service quality. These had been the two pain points in the market, and Uber wanted to solve them.
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How about AirBnB?
AirBnB’s premise could be a model for all startup pitch deck’s problem slides because the way AirBnB put it is straightforward, down-to-earth, and very concise with only three sentences: Price is important to travelers. Hotels are bubbles. There’s no way to book a room with a local or to host a spare room in your apartment. This was the reality in 2009. Although we had Craigslist and CouchSurfing, neither of them was a pleasant user experience.
Remember, in presenting the problem, your premise must be solid and undebatable. It’s great if you can create empathy with your investors if you can address the problems that they also had before.
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2. The solution
It’s time to show how your product solves the problem. Showcase the core functions of your product, and explain how those functions eliminate the pain points. Do not use technical jargon because not every investor can understand your ‘language’.
Take a look at the solution slides of Uber and AirBnB:
3. The product demo
There are two scenarios of how you show your product demo:
- You will be pitching on stage or in a meeting room with a couple of audiences. In this case, you better ascertain that the product works smoothly, lest your presentation turns out to be a shame. If your product has not yet been fully developed, try screening a video of the demo instead.
- You will share your startup pitch deck with the investors via email. And thus, your product demo can only be an attached video file. If possible, provide them the link to your website, so that they can check out the product themselves.
In either case, don’t forget to have a hook within the first 30 seconds. It’s something that wows the viewers.
The ‘Why You Should Invest’ Section
If the first part of your presentation goes well enough, and the investors are willing to move on to the details of your business, particularly how you make them rich. This is where you convince them of the feasibility of your startup idea.
Remember, the key reason why investors give you money is not how passionate you are about the product, or how they care about the social influences your product might make (although it seems that they always appear to advocate social progress). What they care about is the market opportunity, the scale potential, and the sizable return on investment.
1. The market size slide:
As you may know, the addressable market size is one of the variables of startup valuation. It reflects how big your company can become. There are two approaches to tackling the market size:
Top-down analysis: Based on the estimation of your share of the market. If you sell rubber ducks to people in your area (whose population is around 500,000), for example, even with 5% of the market, you can make at least 25,000 sales.
Bottom-up analysis: By studying the existing market, the consumption of similar products, and the slice of current sales you can carve out, you can tell the estimated number of total sales.
Uber adopted the top-down approach. They started out in New York and San Francisco, which already made $1.3B/year. They then expanded to LA, Chicago, Houston, Pennsylvania, and Dallas, which already made up 50% of the US taxi market. With this vision, they estimated three scenarios:
Only with 5% of the market share in the top 5 cities, Uber can get a profit of $20-30M. And the best-case scenario is that they become the market leader with $1B/year in revenue.
2. The business model slide
This part is usually the subject matter of several questions from the investors, and whether your whole startup pitch deck is regarded as realistic or too dreamy depends on it. It’s about how and how much the revenue is generated.
AirBnB made it quite clear in their pitch deck when they say that they take a 10% commission on each transaction.
Sometimes, the percentage issued is relatively small, but given the scalable potential, the total profit from, let’s say, 500 million services, could make a huge fortune. And you see, AirBnB projected that only with 15% of the addressable market, they could get $200M worth of revenue in the first three years.
3. The competition slide
A grid approach is a good option for this slide because it makes obvious all the differences between your product and competitors’ products.
AirBnB used the grid approach in presenting this slide. This practice has been widely adopted since the day Steve Jobs used it to contrast iPhone and other comparable products at a time.
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4. The underlying magic
The underlying magic or the competitive advantage slide is where you explain the technologies and patents you have developed to make your product or service distinctive. This slide is supposed to be technical. Let’s see how Uber put it:
5. The Go-to-Market plan
This part shows how you are going to launch your products and acquire a mass audience. The common problem that most startups face is they have no idea whether the go-to-market plan works unless they have already tried it out. And thus, in order to optimize this slide, you need to try and fail and keep trying with various marketing ideas until you are certain that it’s the way to go.
Here’s how AirBnB made it:
6. The team slide
Right here, you can mention the founders and convince the investors that your team is the right people to grow this company. For example, in a biotech startup, apart from a founder who masters entrepreneurship, people often expect to see another founder with a technical background, like coming from academia, because that person will know what is going on in the R&D department.
An ideal team typically consists of three key members: a CEO who is good at selling the company and working with the investors, a CTO who can lead the product development team for the first few years, and a CMO who manages the company’s brand and marketing activities.
Even if you have mentors, you do not need to mention them because they are not wholeheartedly dedicated to your company.
7. Traction and milestones
Business traction refers to the progress of your company, demonstrated by the data on revenue, profit, and customer satisfaction. This is the key driver of every startup funding. If your company has already generated sales and witnessed an increase in customer subscriptions, it’s great to show it to the investors so that they could place their faith in your idea.
The Fundraising Information
In this section, you will elaborate on how much money you are raising, together with related aspects of startup funding.
If you have public pitching in front of various audiences, it is recommended not to include this part in the presentation file. Only have it when you send the startup funding pitch deck privately to the venture capitalists. This is because some financial data are confidential, according to the regulations of the Securities and Exchange Commission (SEC).
Now, in order to pull the above sections together, you can use traditional presentation software like PowerPoint, online tools like Prezi, or advanced desktop apps like Adobe Illustrator. Make sure that the ‘looks’ of your startup funding pitch deck are optimal.
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