HOW TO BUILD AN EFFECTIVE BUSINESS PITCH DECK FOR FUNDRAISING
Raising funds and convincing investors are essential aspects of a startup’s success. Raising capital from investors is difficult and time-consuming. Therefore, a startup must create a great investor pitch deck by articulating a compelling and interesting story. The fundraising pitch is essential for connecting with investors and communicating the company’s goals and vision effectively.
What is a pitch deck?
A pitch deck offers a short yet thorough summary of the company. It should outline the essentials of the company plan as well as products and services. Additionally, it has to include broad financial estimates and outline suggested financing requirements.
Structure of an effective business pitch deck for fundraising
An effective investment pitch should focus on Problem, Solution, Market, Traction, and Team. Here are the key components/ sections in an investment pitch for fundraising.
- Company Overview
The company overview slide should be the first slide in a pitch deck and should include a brief description of firm’s operations as well as the benefits it offers to its clients. It should have a clear layout with the name, logo, and objective of the business. Company vision should define the value proposition of the business and its impact on the people
- Outline the problem and the solution
In this section, the Company will define the problem that their products intend to solve by creating a relatable story to help the investors to understand the company’s objectives. After stating the problem, the pitch deck should include the solutions that the company provides. “The Solution” section of the investor pitch deck should articulate proposed solution and why it’s better than other solutions in the market. The solutions should describe the uniqueness of the product or service and demonstrate to the investors why the company’s solution is better than those offered by competitors.
- Target Audience
A company should provide in-depth information on ideal customers and divide the target market into TAM (Total Addressable/Available Market), SAM (Serviceable Available Market), and SOM (Service Obtainable Market). In addition, the company can describe the market size that applies to their product and how they fit into the competitive landscape.
- Market Opportunity
In market opportunity investors are interested to understand the market potential of the goods or services offered by the company. Investors are drawn to businesses that offer goods or services that have sizable and reachable marketplaces for potential customers. While illustrating numbers, the company should use data visualizations like graphs and bar/pie charts to make it more appealing. Investors want to invest in big opportunities with large addressable markets.
- Business and Revenue Model
Investors can determine the viability of the idea from a defined business model. This slide includes the details of how businesses will generate revenue, pricing information, marketing strategy, and strategy to attract and retain customers. It must demonstrate the projected earnings, revenues, and profits to create a company strategy. It should answer the following questions:
- How much will it cost to produce or maintain a good or service?
- What will the price of the product or service in terms of marketing, acquisition costs, distribution, providing a service, and completing the sale?
- What is the long-term value of a customer?
- Traction
Investors have a favorable view of a company that has gained some sort of early traction. This is an opportunity to show the accomplishments in terms of product sales, contract signed, new product launches and so on. When company has achieved some traction, it demonstrates to investors that they have validated some element of their business model and that the solution works. Furthermore, the slide can include the company or product plan that outlines the important milestones which will be useful to attract investors’ attention.
- Competition
Investors are keen to know the competitive landscape and value proposition of the company. One should be able to understand its competitors in order to understand the market. The slide should provide a clear picture of the competitors, how different are you from the competitors and the available alternatives. It should highlight and emphasis on the strengths and competitive advantage.
- Marketing/ Sales Plan
To attract customers, company need to have a strong marketing strategy. On this slide, company will outline their marketing and sales strategy. The strategies used to make the products/solutions to reach the target audience must be explained in detail. The slide will include the sales channels that are being used or planning to use, also emphasizing marketing and sales strategy that differs from the rivals. In addition, mention the platform that the company wants to utilize to advertise goods or services to potential clients.
- Company’s Financials
Investors will want to understand the company’s current financial situation and proposed future “burn” rate (monthly or yearly cash loss while the company is developing and marketing its product).
Investors will be interested in the company’s sales projection, income statement or profit and loss statement, and cash flow prediction, as well as the company’s current financial status. This further includes information related to the assumptions used to determine the sales targets, key expense drivers, and profits. With this, the company will be able to convey reliability to the investors by being aware of its current situation and realistic about the funding needs.
- The Team
The objective of the section is to show that the company has considered or recognized the talents required to establish, manage, and grow the company. The deck will highlight the team members, their expertise and the role that they have played in the expansion and development of the company. Investors will be interested to know the expertise of the team as it will build more confidence in the company as many investors believe that a company’s team is the most important determinant of whether or not to invest.
- Investment and use of funds
This section explains what the company expects from investors and what they will deliver in return. The amount of the fund and how it will be used to support growth must be specified. In addition, information about current investors and the reasons for their investment must be disclosed. Other specifics such as the requirement to raise extra funds in more than one round or the type of investment required can also be included in the deck.
For Instance, Tealet, an online farmers’ market for tea has a clear and simple-to-read investor pitch deck that matches the aesthetic of its product offerings.
A well-designed, detailed pitch deck is critical for persuading investors that the firm has huge growth potential and obtaining the resources the firm needs to succeed. Tealet’s Pitch Deck provides a clear picture to the problem and solution and creates a narrative that engages the investors. The pitch gives easy-to-read information about the company, its offerings, market size, profitability, team, and the reasons for funding.
Conclusion
The primary objective of the pitch deck is to tell a compelling narrative about the business and generate investors’ interest. An effective pitch deck can make obtaining financing for the startup much more likely. It would give a clear view of the problems and solutions, competitive landscape, funding need, skilled team, marketing and financing strategy, value proposition, and market opportunity.
