WHAT DO INVESTORS LOOK FOR IN AN EFFECTIVE PITCH DECK?

Pitching a business idea can be a daunting task for any business owner, even the most seasoned entrepreneurs. You’re given just a few minutes to get a group of strangers as enthused as you are about an idea that you’ve poured your heart and soul into over months, maybe even years, and that can be intimidating.

A good pitch, though, can be a defining moment for a business at any stage of funding.  If you’re able to communicate your ideas effectively and demonstrate that you understand the market you’re seeking to enter, you stand a good chance of securing that all important capital. 

That’s why every startup needs to have a good pitch deck at hand that conveys the principal ideas and goals of the business clearly, accurately and concisely. But what exactly do investors look for in an effective pitch deck?   

What is the problem and how are you solving it?

Not having a clear vision is one of the most deadly fundraising sins. Nobody is going to invest their money, or the money of their clients, in a business they don’t understand, so it’s important to first clearly define your company’s market opportunity and product. This problem-solution structure should form the core of your pitch deck’s narrative.

Start with a problem – ideally something relatable, perhaps something that the investors you’re pitching to have experienced themselves or an issue that relates specifically to their field of expertise – and then outline what your business will do to solve it. If investors can relate to the problem, they’re more likely to understand your business, and are therefore more likely to invest.

Once you’ve taken time to outline the purpose of your venture, investors want to see that you understand the sector you’re looking to break into. Try to provide an idea of the size of your market opportunity, what kind of returns investors might expect, and provide some more detail on how your business will operate. 

Who wants your product and why should they choose yours?

It’s a simple fact that your business isn’t going generate much interest if it doesn’t offer a product or a service that people want. Investors need to know that there’s a market for what you’re selling, and that there are going to be customers willing to part with their hard-earned cash.

In an effective pitch deck, investors want to see that you have a clear idea of where your business will sit within an existing market, or if it will occupy space in a newly-created space in the marketplace. They want to know the market segment, or segments, to which you’ll be tailoring your solutions, what kinds of customers you’ll be serving within those segments, and how each customer segment will benefit from your offerings. 

But, it’s not just your customer base that investors are interested in. It’s just as important to paint a clear picture of the businesses you will be competing with for market share. After all, if your idea is worthwhile, there’s a good chance that somebody has already thought of it.

Giving an accurate and honest analysis of your competitors will help investors to understand the unique value provided by your business, why clients might be attracted to your solution over others, and what momentum your business already has behind it. Using the business model canvas formula is good way to present this information.

Who will they be investing in?

It won’t matter how good your business concept is if you can’t convince investors that the team behind it is capable, disciplined, and determined. After all, it’s not the business they’ll be backing, it’s you.

It’s important to dedicate a few slides in your pitch deck to introducing the individuals that will be running your company. Investors need to see that your team collectively possesses the right mix of skills, experience, and drive to put your plans into effect. In short, you need to convince them that you’re the right people drive your concept forward. 

Try to earn the trust of investors by highlighting the individual strengths of each of your key team members, noting any previous achievements that are relevant to executing your business plan, and outlining any goals or important milestones you’ve already met.

What will you do with their money?

When putting up substantial capital, it’s understandable that investors will want to know where their money is going and how it’s going to be spent. You need to demonstrate that you have a well-thought-out plan in place that puts their funds to good use.

Offer some assurance by showing that you have a solid appreciation for the funds you’re raising, and the value that these funds will add to your business, and can demonstrate that you have a clear plan of how you intend to bring your solution to market and capture market share without breaking the bank.  This can include information on which marketing channels you intend to employ – whether it be social media, paid search, television and radio, or email marketing –  and how you might later scale the business.

For a little extra credibility, if possible, you should provide some considered projections for future cost and revenue figures, to show that you understand how your business is likely to operate and perform.

How is your pitch presented?

While it’s true that investors value substance over style, a thorough and accurate pitch deck isn’t much use if the people you’re pitching to can’t read the slides you’ve prepared. Back in 2015 Tech Crunch reported that investors spend an average of just 3 minutes and 44 seconds looking at pitch decks, you must make that time count.

At the least, your pitch deck should be written in a font that is large and clear enough for those at the back of the room to read. You should also make sure that your slides are uncluttered and concise, and are organised into a sensible, comprehensible structure. Make your presentation engaging, but not over stylised and ensure that you have consistent, confident tone throughout.

Of course, investors will want to see some relevant data and figures that backs up what you’re saying, but they don’t want to wade through slide after slide of charts and tables. Try to be selective. Only include data that contributes to the overall narrative of your presentation and supports the key points you’re trying to drive home.

CONCLUSION

Creating an effective pitch deck doesn’t have to be overly complicated. Investors want to be presented with a business that they can be confident will offer a return on their investment, has an effective solution with a clear path to market, and is driven by a competent and committed team. If you’re able to demonstrate these values and present investors with an engaging narrative, you stand a good chance of securing the funding you need.

Thank you,

Martin Luenendonk


Martin is a 2x entrepreneur and former VC manager and investment banker who helped startups raise millions in venture capital. He blogs on roadtofunding.com.

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