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The pitch deck is your essential tool if you are an entrepreneur ready to fundraise for your startup. Fundraising is not an easy process. It has lots of stress and requires a sales mindset. You will pitch to many VCs and get many NOs before you get one YES.
Early in my startup, I hated fundraising. But with a good and structured pitch deck, I was more effective and enjoyed the process.
Here are the eight slides that you must have in your pitch deck for effective
fundraising:
The Opportunity
The opportunity explains what is happening in the market and why now. You need to demonstrate
An explosive market. VCs want to jump on fast-growing opportunities. It is hard to build a large company in a market that is not growing or changing rapidly.
Confusion or ambiguity in the market. You want to demonstrate that even if there are significant players, they are missing the change or confused about some market dynamics.
Thoroughness. Drive confidence in your understanding of the opportunity with a thorough description of what’s going on in the market you are tackling.
Key questions you need to answer in this slide
What trends is the startup riding? Any changes in demographics, economic power, and the mood of your target customers from that trend.
How big is the market? This should be measured in dollar value broken down to how much a typical customer would spend to solve the problem you are after.
How big can your company be? This is not an explicit number to include in this slide. But your audience should easily conclude that you can build a billion-dollar company.
The Problem
The problem slide explains what you are trying to solve. It digs into your customer’s specific needs and challenges that they face every day. You should demonstrate
A critical problem in a big market. We all have problems and inconveniences. You must demonstrate that what you are solving is a problem that users will pay to solve. Many entrepreneurs overestimate the importance of the problem they are solving. Show some evidence in this slide.
Deep understanding of the problem. Use your own experience or some serious experiments to validate your hypothesis and understanding of the problem.
A specific persona. Personalize the problem. Making it too generic that it is hard to direct your marketing and sales effort to a well-define persona turns savvy VCs off.
Questions you need to answer
What is the problem? Make it clear in one sentence. Don’t use jargon. Don’t talk yet about HOW you are going to fix it.
How big or critical is the problem? It must be a problem that users are willing to stop whatever they are doing and fix that problem, such as a broken water heater at your house.
Why does the problem exist? Show the roots of the problem to demonstrate how critical it is to your users. For example, the lack of good services and enough taxi cars in San Francisco were an opportunity for Uber founders.
The Solution
The solution slide explains how you will solve the problem you explained in the previous slide. You need to demonstrate
Beautiful solution. Demonstrate innovation and creativity. Your startup should be a new bread of existing solutions or creating a new category altogether.
Repeatable and scalable. You won’t be able to scale your business without cheap and innovative ways to scale the reach and usage of your product. Using a sound model is critical. For example, A SaaS solution is more innovative, in most cases, than downloadable software.
Solving something painful. Reiterate how you will make your customers’ lives better. Compare how they are now solving the problem and how your solution will solve it more effectively.
Questions you need to answer in this slide.
Does it solve customers’ problems like magic? Avoid any buzz technology words. You should demonstrate the value that your target users will get.
Is the customer going to crave this product? Are they going to use it over and over? Or is going to be needed only once?
How are you going to pull this off? Showing some high-level how you will build it, drives more confidence in this slide.
The Business Model
The business model slide explains how you are going to make money. You need to demonstrate.
Industry knowledge. Show the rules that you are going to break and the ones that you can’t break. For example, for inexpensive B2B products, you will need sales teams almost all the time. If you decide to break that role, you must demonstrate an understanding of your target users' decision-making.
Differentiation. You might break some rules to help you grow faster than your competition. Be clear about it and demonstrate why you believe it will work. For example, the open source model broke the conventional closed source typical downloadable software. SaaS broke the roles of software versioning and the typical installation process.
Sober judgment. Demonstrate your understanding of the business models and how businesses can become successful with the model you decided to have. Why, for example, are you going to make your product subscription-based rather than a licensing model?
Key Questions to answer
Are you faster, cheaper, and better? Demonstrate in numbers as much as possible how your business model will deliver value faster than before with more convenience and superior product features.
Do you displace commonly used companies? This must be almost always the case. Show how your model will make it easier for your customers to favor you with well-established solutions or companies.
How do you disrupt the competitive landscape? What’s the twist in your business model that will make competition irrelevant to their customers? How will your business model strategically put you ahead of your competition?
Go-To-Market (GTM) Strategy
Go-to-market strategy slide explains how your customers will find you most efficiently. It is connected to your business model. For example, if you are a SaaS software, you must invest heavily in online presence and creating product-led growth. You should demonstrate
Understanding of your user decision-making process. How do users come across the problem you are solving? What key factors will impact their decision to adopt a solution?
Understanding the stages of solution adoption. Show a deep understanding of your user’s behavior. For example, software developers don’t like to be sold to. But they like to collaborate on solutions. Therefore, open-source software is the best way to get them to adopt your tool and get them through the customer acquisition funnel.
Key questions to answer in this slide
How is my business going to be structured? As I mentioned, your GTM should be integrated with your business model and product. If you are looking for product usage virality, your product should have the necessary features to drive initial adoption and use the network effect.
How will I make it easy for my customers to discover us? Show your bets on how your customers will see you before your competition.
Total Addressable Market (TAM)
The total addressable market shows that you are after a huge market, or how many could buy your services or product. You should demonstrate
Huge but accessible market. Don’t say that the whole world is your market. Demonstrate that you have a large enough market that you can effectively reach out and serve.
Questions that you should answer:
Who do you plan to serve? This is your served addressable market(SAM) it is smaller than the TAM. You demonstrate how you are narrowing down your customers with more filtering criteria.
What are you selling to First? Your beachhead market is your initial market.
Traction
The traction slide shows your progress in getting paid customers or users of your solution. You should demonstrate
A pattern of fast-growing product adoption. Ideally, it should be in the form of paid customers. But if you don’t have any, demonstrate other strong indicators of interest in your solution or product.
Clarity around metrics that matter to you and your business at that stage. You may not be looking for paying customers because you look after fast growth and high adoption before monetizing your product. Be explicit about it in this slide.
Key questions to answer in this slide
Is there a significant growth in your startup metrics?
What hypothesis do you have about adoption that is proven true?
What is your strategy to reach more paying customers? Or at least some projections.
The Ask
Finally, The Ask slide is about how much you are asking for and what you will use the money for. You should demonstrate
Clarity about how you are going to use the fund to build and grow the business.
Concrete milestones by showing what you will achieve before running out of money.
Key questions to answer:
What size and type of investment are you looking for?
How or where are you going to spend the money?
What are you going to achieve by the end of this funding round?
These were the slides to cover the key investors' questions and to fundraise effectively. You probably need more slides that may answer other investors’ questions, such as your board, key customers, vision, mission, etc.
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