What Makes A Good Deck?
Definition: A pitch deck is a brief presentation, often created using PowerPoint, Keynote or Prezi, used to provide your audience with a quick overview of your business plan. You will usually use your pitch deck during face-to-face or online meetings with potential investors, customers, partners, and co-founders.
If you need to raise funding from Angels or VCs for your startup, the first step is to create a pitch deck. A pitch deck is a brief presentation that provides investors with an overview of your business, whether it’s showcasing your product, sharing your business model, explaining your monetisation strategy, and introducing your team.
A pitch deck is an essential fundraising tool, whether you’re looking to raise £50,000, £500,000 or £50 million.
Despite the brevity of the presentations, which usually run for 10 slides or less, creating a pitch deck that wins investment is no easy task. If you’ve never done it before and you’re a first-time entrepreneur, it can be incredibly daunting.
To help you with this daunting task, we’ve taken cues from top startups who’ve raised money from angel investors and VCs with effective pitch decks. We’ve laid out below a few examples of the best startup pitch decks to serve as inspiration:
Airbnb is a platform that allows people to list, find, and rent lodging. This company is one of the greatest startup success stories of our time. Airbnb’s pitch deck has become a favourite reference for entrepreneurs around the world.
Key takeaway: The biggest takeaway from Airbnb is the intro. It’s all about hooking your audience. You need to describe your business using as few words as possible. Imagine telling a 5-year-old what your business is about. If you can’t do that, it’s time to rethink your intro to your investors.
Buffer is a social media scheduling platform that helps you schedule content to Facebook, Twitter, Linkedin and Pinterest. The startup pitch deck that Buffer used to raise half a million dollars is a popular deck because of Buffer’s transparency. The founder decided to put it up to help other startups to raise funds.
Key takeaway: Similar to Facebook, the deck was based on solid numbers from Buffer’s users (e.g. 800 users, $150,000 annual revenue run rate, etc.)
Square is a company that allows merchants to accept mobile credit card payments via a dongle.
Key takeaway: Social proof! It doesn’t hurt to promote the management team if they’ve been with Twitter, Google, Linkedin, Paypal, and more. This detailed pitch deck outlines Square’s business model and a simple financial model that portrays their annual revenue and five-year growth rate.
Founded in 2002, LinkedIn is the top business-oriented social networking platform. The company’s pitch talks a great deal about company vales, the value the network brings, and how it’s different than other social networks.
Key takeaway: The deck also provides an extensive analogy to showcase to investors what LinkedIn is. For example, it talks about “Web 1.0” vs. “Web 2.0”: Alta Vista was “Search 1.0”, and Google was “Search 2.0”. The deck talks about how LinkedIn is “Networking for Businesses 2.0”.
As of today, BuzzFeed has managed to raise over $240 million.
Key takeaway: SOCIAL PROOF! It doesn’t hurt to start a pitch with big numbers the company has, like the millions of users visiting the website on a monthly basis and quotations from large organizations such as CNN.
To sum up, a strong pitch deck not only serves to reinforce your brand to investors. It also demonstrates that you understand what your business is and who your customers are.
Look at the takeaways from these startup pitch decks as a guide to help you in your quest to raise funds for your own startup. Here are some of the main ideas:
- Decks don’t have to be formal or beautiful.
- Provide an impactful intro or slogan.
- Keep your deck short (less than 20 pages).
- Use analogies to back up the points that you’re making.
We also recommend that your deck should:
- Start with a strong intro / vision
- Show problems and offer solutions
- Identify market opportunities
- Showcase product / services clearly
- Digest your business model
- Highlight financials
- Add social proof / case studies
- Differentiate from competition
- Show an experienced management team
If you’re looking for additional information, DocSend shared lessons they provide learning from 200 startups who raised $360 million.
Investment Value Proposition
Definition: Investment Value proposition refers to a set of business statements that a company uses to summarise why an investor should take part in the investment offering – which can be in the form of an elevator pitch.
These statements convince a potential investor that their investment product will provide greater value than other similar offerings. The statement would usually focus on the monetary value, how funds will be used, and the expected result. The value may be derived from non-financial gains, such as sustainable, responsible and ethical aspects. Whereas in some cases the proposition can be obvious, such as a secured loan or a B2B financial product, with private equity investments, it’s sometimes not so clear.
“An investor looks for a great entrepreneur, the business comes after that. For instance, [say I met you and] you’re a great entrepreneur but I’m not interested in investing in your sector, then I would be happy to introduce you to my colleague or another investor who might have an interest in this sector. We look for bright, passionate, experienced businesses owners with a track record of achievements.”
- CEO of the UKBAA, Jenny Tooth OBE
Below are 6 themes which all contribute to a good value proposition
A Well-Defined Business Model & Business Plan
Having a complete, credible and clear business model is important for any startup as every investor believes that any startup without a concrete business model is on the path to failure. Having a well-defined business model demonstrates that the entrepreneur knows about the market and is ready to take the leap forward. Market research, idea validation, building a prototype, validating that prototype, and testing the model in a sample market is essential to validate the business model.
A business plan is a strategic plan for the business’s future. It states the future goals and the routes the business will take to achieve those goals. An investor always wants the most out their investment and invests only in a startup which has its priorities straight and a business plan in line.
Team’s Capabilities & Experience
Building a capable and experienced team is one of the most crucial tasks of a startup. Investors believe the investment carries less risk if your team has strong managerial skills, a good chemistry, and a decent level of experience in your sector.
“My criteria to invest are the founders. So, I won’t check any business plans, any economic projections, spreadsheets; but (instead) I focus on the founder’s mindset (and) passion.” – Taizo Son, a successful investor in startups
Market matters as it signifies growth. Investors want to have a deeper look at your market. They want to see the potential of growth in the existing market and if your startup has the resources to accommodate a new growing market.
Dave McClure, founder of 500 Startups says:
“Market size matters because most investors want to know that you’ve got a big business. Bigger is generally better.”
The Level of Commercial Traction
Quantitative evidence of market demand is always preferred over a prediction. Showing the investors that you and your team have already taken action to build upon your business idea and the business has some clearly identifiable momentum and progress, will not only motivate them to invest in your startup, but also make negotiations easy for you.
If the Month on Month (MoM) or Year on Year (YoY) progress is steady, it is seen as a sign that the startup is performing well. Mark Cuban, an investor in Dallas Mavericks, says:
“When it comes to business, there is a simple scorecard. Are you making money or are you not making money? Are you succeeding or are you not? So, when you go to raise money, always, always catch yourself and eliminate the backstory.”
Investors look at how much you can convince them to take a leap of faith. Empathy based on similar educational or career background, trusted co-investors, instinct or even impressions can prompt investors to think about the investing decisions. The best way you can pass this is by being truthful and confident while having a good knowledge of the background to the investors. A startup might not be on a par with other businesses but sometimes the X-factor could make a difference.
Jack Ma of Alibaba investing in Paytm is one such example of the investor-founder connection as the founder considered Jack Ma as his role-model.
People often misunderstand the term ‘Exit Strategy’. The ‘exit’ in exit strategy refers to the money and not at the exit of the entrepreneurs. This means that the startup brings in the money and the investors get the money out. Therefore, every investor looks into the exit strategy of the startup. The returns are provided by the exit.
The exiting of the investors usually happens in two ways. A bigger company acquires the startup for enough money to give the investors the invested amount or the startup develops and flourishes enough to sell shares of stock to the buying public over a public stock market – as happened with Facebook in 2012 and Twitter in 2013.