A pitch deck is a short series of slides designed to help the reader understand the key information about the proposed business nature of the business to be carried on. Pitch decks can be used for a variety of purposes: to explain the business idea to potential co-founders and advisors; to entice investors into investing; and to support an application to HMRC for advance assurance for SEIS/EIS. Understanding the target audience is vital.
Every pitch deck should include the following:
• the introduction: the nature of the business, the sector in which it operates and the nature of the problem it is solving;
• an explanation of the business to be carried on;
• an introduction to the founders and key employees;
• an explanation of the strategy of the business, including any challenges and how they will be overcome;
• details of expansion plans, including the funds required to execute and how those funds will be spent;
• route to market and marketing plan;
• accurate and realistic financial forecasts; and
• some thoughts on exit.
Each of these elements will be considered in brief, below.
The pitch deck should be simple and informative. Detailed analysis should be included in a business plan or supporting documentation. The purpose of the pitch deck is to provide an easy to understand overview of the business. Remember, many investors look at hundreds of pitch decks – they don’t have time to read hundreds of pages of text.
Include a few basic facts about the business, what industry it operates in, the problem it is solving and a sense of progress to date. Keep this section brief.
The business to be carried on
Set out what the business will do. What products/services does it intend to sell? If it is a technical product, explain in simple terms what it will do.
How is the business/product different to those already in the market? Why does the market need this business/product? Often founders include a competitor quadrant here.
Give a sense of how big the potential market is, and the market share you believe the business can achieve. Make sure you demonstrate the research you’ve done on other competitors in the market, including both incumbents and startups who have raised money.
By the end of this section, the reader must understand what the business does. Many pitch decks don’t achieve this objective.
Founders and key employees
Investors will want to know a little about the background and expertise of the founders of the Company and key staff. Briefly outline relevant qualifications and experience, and any household names they may have worked for.
The best ideas can fail because of poor execution. You need to persuade your audience that your team has the ability to deliver on the business plan.
Strategy of the business
You’ve got your idea, but how are you going to implement it? What challenges are involved and how do you intend to overcome them? What are the key opportunities?
Be upbeat about the Company’s prospects, but be realistic. Most investors will have seen plenty of pitch decks in their time, from all kinds of different industries, and you don’t want to invite scepticism with silly numbers.
Be clear about how you intend to generate revenue and any prospects for profitability going forward.
Be clear about how much money you are looking to raise, and what you intend to do with it.
Investors will want a detailed breakdown of how you’re going to spend their money. They won’t necessarily be looking for profitability in the near term, but they will be looking for traction. Ultimately, investors want returns in the long-term. Explain to them how the expenditure of their money will achieve this.
Route to market and marketing plan
In order to be successful, your business will need to win users. There are numerous route to market and unlimited ways to drive customers to your business. Your audience needs to know that you have identified what these are, when your marketing strategy will kick in and what metrics you are able to attribute to measure success.
Investors, prospective co-founders and HMRC want to know how you will spend investment money to deliver the business plan. This section is crucial.
Make sure that your financial predictions are backed up by a sound methodology that can survive investor scrutiny. Nothing is going to put investors off more than numbers pulled out of nowhere.
For the predicted future growth of the business, some choose to include base line and best case scenarios, which we think is a sound approach. Still, it certainly isn’t essential and, ultimately, it’s a decision for you.
Also remember the importance of classifying expenditure in the correct way, particularly when presenting financials for HMRC. Simply using incorrect wording to describe a category of expenditure can result in advance assurance being refused.
Although exit is generally a long way away, investors want to feel that the founders have some initial ideas about exit, what it will look like, how it will be achieved and in what timeframe.
Pitch decks must look good: you are asking investors to part with sizeable sums of money. At the very least, they should be branded, follow a coherent format and colour scheme and be free of spelling, punctuation and grammar errors.
If you would like some help with preparing your pitch deck, or more generally on your launch strategy, contact Michael Buckworth through the contact page.