Breaking down a fundraising pitch deck

TL;DR

Pitch decks are one of the most important documents for fundraising. It is important to have a clear and concise structure to it so that it is comprehensive for the investors.

This article presents an analysis of early-stage pitch decks of top companies and recommends an ideal pitch deck structure based on it.

Why is a pitch deck so important?

Pitch decks are 19 pages long on an average and an investor spends a little under 4 minutes in reviewing it. So, 19 pages and 4 minutes of attention is all you have to impress an investor and get them on a call. Typically, less than 2% pitch deck emails receive an investor response, most of which are negative responses. To set some perspective here, an average match rate on Tinder is 3.25%. So, if you thought getting a match on Tinder is difficult, raising funds for your startup is much more cumbersome. Now, there are multiple factors that account for a final investment decision by an investor like the operational sector or industry of the startup, the company’s stage in terms of revenue and traction and most importantly, whether the investor has funds in the first place or not. We will take care of these factors in the coming articles, but let’s see what a pitch deck should be like to get that date with an investor.

Taking the Tinder analogy forward, the first thing the other person sees about you are your photos and a preliminary decision is made right then and there. Similarly, a pitch deck is a window into your business for any stakeholder, especially investors.

Our analysis and recommended structure

To get the structure and layout of this important document right, we analyzed early-stage pitch decks of 26 “billion-dollar” US startups from before they became a unicorn. These startups, now industry leaders, cover a diverse set of sectors and were in their pre-seed or seed stage of fundraising when they used the pitch decks we analyzed as part of this study.

First things first, keep your pitch documents short, clear, and concise. Investors do not spend a lot of time reading up hundreds of pitch requests they get every week. The companies we analyzed had an average of 21.3 slides in their decks.

We further went on to study the contents of the document. A good pitch should primarily have the following 10 sections:

1. Problem: The problem slide is often taken for granted by most founders and is one of the most overlooked slides in a deck. This section is the “gap” in the industry that you are trying to solve. A good “Problem” slide should have a clear and concise problem statement quantified by data points that depict the scale of the problem.

2. Solution: The solution should be directly linked to the problem statement and convey how you plan to bridge the gap mentioned earlier. Another slide mentioning the available solutions is always a good reference point for understanding the problem and solution at greater depth. Add a note on why your solution is feasible at that point in time and you are all set. Your value proposition should be crystal clear to the investor after going through this section.

3. Market & Opportunity: This one single slide can determine whether you can ever be a unicorn or not. Founders have a hard time in clearly defining the market size for their business and that’s primarily because of multiple ways to define the market size. A complete market and opportunity slide should have the following things: a. Total Available Market (TAM), which is the total market demand for a product or service. b. Serviceable Available Market (SAM), which is the segment of the TAM which is in your geographical reach. c. Serviceable Obtainable Market (SOM), is the portion of SAM that you can capture, considering other players in the industry.

4. Business Model: This section is the core of your pitch deck and determines whether your proposed solution can actually make money or not. You might have a really nice solution, which is aesthetically pleasing, but whether it is practical and feasible is determined by the business model you come up with. It should convey the implementable plan that you have for the proposed solution including, but not limited to, pricing, customer personas, and that X-factor your business will have.

5. Product: You must be thinking, that you described what the solution is and then you even put a business model around it, now what goes into the product section of the deck. This actually is typically the longest section of the pitch. Consider the product as the driving engine behind the business model. It should cover some specifications around the product in terms of the technology being used, the way users will interact with it, and most importantly, a well-defined roadmap.

6. Traction: There are often questions around what exactly should be put under traction. Should it be users, customers, partners, or a combination of them? The quick settlement for that argument is that the traction needs to cover all stakeholders. This slide should convey the acceptance of your product or service in the intended market.

7. Go-to-market Strategy: A good go-to-market strategy should depict the initial customer acquisition plan. It should be represented in a timeline format with the geographies that will be covered, the channels that will be used, the budget allotted for each channel, and the target number of users that will be acquired in each phase.

8. Competitive Landscape: Having a competitive landscape in your deck indicates that you have an in-depth understanding of the market and competition. There are multiple ways to represent competition, but the most important aspect here is how you position yourself against them.

9. Team: This slide tells the investors whether all the things mentioned up till now in the deck are doable or not. Typically, this section of the deck has some pretty faces with some fancy institutional names. But, the most critical piece of information on this slide should be why these pretty faces and fancy degrees will be able to implement the mammoth of a solution for an imaginary problem, typically.

10. Financial Projections and Ask: The last section of the deck requires the most work. Founders spend a lot of time and effort by working on endless spreadsheets, which occasionally crash your browser and numbers with a lot of zeros in them. This slide should give a good overview of a 3 to 5-year plan in terms of a basic P&L statement and justify the amount of funds you are asking for.

Once you have these sections aced, you are ready to go to investors. Happy pitching!