Table of contents
- The Art of Pitching
- When You're Done Reading
- The Problem With Startup Pitches
- Resources To Help You Understand Investors
- The Million-Dollar Structure
- Finding An Investor In A Huge Market
- Is Your Startup Worth The Money
- Know What You Are Asking Investors
- Real-Life Examples
- Useful Tools For Creating Great Looking Pitch Decks
The Art Of Startup Pitching🎨
Pitching to investors is one of the most important, most nerve wrecking and most rewarding things you will do in your entrepreneurial career.
It takes courage to introduce the idea you so profoundly believe in to someone, who can basically make or break its future.
To become great at pitching, you need to understand your audience. Your pitch should inform them, excite them and set you apart from all the other hopeful, investment-hungering startups demanding their attention.
A winning pitch communicates the most important parts of your business with razor sharp precision and is coated in the secret sauce of any good presentation: The story.
The art of storytelling in investor pitches is tricky. Do too much and you’ll cover up what’s really important. Do too little and by the end of your 20 minute speech you’ll have everyone sound asleep. But keep reading, and we will show you how to do it.
Are you a busy bee? 🐝 You can check out this slide deck to get the whole thing in a few minutes!
When You're Done Reading, You'll Know
- How to use storytelling to get people excited
- What information investors are looking for when you pitch
- How to structure your pitch clearly
- How to present traction in your pitch
- Who the young founder we introduced in the beginning is - and if she ever got funded
The Problem With Startup Pitches
Investors turn down 90% of the startups that pitch to them. To make it through, you have to present them with the right information in the right way. Knowing how to do that is difficult, but we’re here to help.
So how do you become one of the 10% that succeed?
A common mistake in pitching is focusing too much on what you want to say, rather than what your audience needs to hear. But that will get you nowhere.
Your pitch should first and foremost present your business in a way that leaves your listeners excited and convinced that you, your idea and your business are worth investing in.
The Solution? Wrap The right Information In A Great story
So you need to know exactly what makes investors tick - and how to present it right. Let’s start with the latter. After all, a pitch is a presentation - so you need to know how to master that.
All great presentations tell a story. They have a beginning, a middle and an end. They spark emotion, build curiosity and teach the audience something about themselves or the world around them, they didn’t know before. And they hook people from the very beginning until you say “the end”.
Wrapping your startup pitch in an intriguing package is just as important as the information you give in itself. And if you manage to do both, you’re bound to leave an impression.
What information should you give?
When investors are listening to your pitch, they are looking for two very specific things: Return and risk.
They want to know how much your business can potentially grow - that is, how much money they can expect to get in return on their investment.
And they want to know how big the risk is that they will never get that - or any of their money back. The main risk factors they are looking for are product risks, market risks and execution risks. So focus on lowering all three. If you've done your business planning right, you will have your arguments right there.
In other words your job is to dollar-excite them - then give them peace of mind about it.
So, What's The Story?
So how do you build up a great pitch? One that has it all? You need a storyline, a structure and some traction.
We’ll start with the story, so let's go back to the young founder, we introduced in the first few lines. Her pitch story was an ambition to change an entire industry - and she wasn’t afraid to say it. Although it drove some investors away, who didn’t share her vision, she believed that it would draw the attention of those who believed in the same thing she did. That it was time for a change. Even through all the no’s, she didn’t stop believing in the vision - and she didn't stopped pitching.
When finding and telling your story, don’t be afraid to paint the bigger picture. Go back to why you started your business. How did you come up with the idea? Why is it important? Who’s lives will it change? Turn that into a story.
Start with a basic storyline, then work on making it shine.
Want to find out more about what investors are looking for and how to engage and excite them? Here are some pretty cool resources.
Resources To Help You Understand Startup Investors
The Million-Dollar Structure 💰
All good stories have a clear structure, and your pitch is no exception. The structure of an investor pitch is pretty widely agreed upon, although you will meet variations out there - again, it’s all about the audience, so make sure you are aware who you are pitching to.
We would suggest you go for this structure:
A concise introduction. Have it include your name, role, and company name. Make your opening catchy and let it draw your audience in. But don’t overdo it with something too flashy or too humorous. Keep it sober yet exciting. It can be your company vision statement (if you feel it is strong enough) or a slogan/payoff that functions as a layup to the ‘problem’ you are about to open up. If you were Nike, you could rightfully use “just do it.” It doesn't reveal too much, yet it is still intriguing, mystical, and will compel the listener and make them tune in to the bomb that is about to hit them.
Even though the introduction needs to be minimalistic, it is crucial to get it right. What happens if the first 10 minutes of a movie doesn’t catch your attention? The likelihood is that you’ll probably are going to find something else to watch. If you don’t catch your listeners’ interest from the get-go, you might have lost them–– forever.
2. The problem
Make it clear what ‘problem’ and gap you have identified in the market. You must add some ‘flavor’ and a little bit of pathos and ‘flashiness’ here. The listener needs to feel the problem deep down in their gut. You need them to raise an internal question: “Wow, are that many puppies living with glaucoma? That is so sad”. It should be an ‘eye-opening’ moment that provides the audience with some brutal facts about your company’s focus area. Remember, as a startup; you are equally branding/attracting attention to the ‘problem’ and your ‘solution’–– they are two sides of the same coin. An antithesis, if you will.
Remember that context is key. Saying:
“People all over the world don’t know how to fit the pizza box in the fridge.”
… That statement doesn’t say anything. You need to translate the ‘problem’ into something with a commercial angle, like:
“1 million people in the USA are daily unpacking their pizza into smaller compartments and wasting valuable time because they cant fit the pizza box into the fridge”.
It gives a better picture of the problem at hand and opens up possible angles from which you can address it. You need to Identify all relevant pain points in layman's terms so that even your grandma would understand it. The audience needs to know why it is a problem!
3. The Solution
A concise statement of the value your solution offers. Write one or two sentences addressing each pain point from the 'Problem' section above. Claim the effect of your solution.
“We can make sure that no puppy will ever suffer from glaucoma again”.
Do not explain how it works. Explaining comes a bit later in the pitch. It's perfect if you leave your audience in a state of
"How the hell do they do that..?".
4. Market Opportunity
You need to convince investors of your company's immediate potential as well as the potential over time. What's the market here? Is it going to be big? How does the market develop? Can you pan out to other markets later on? Whom do you sell to, and how will you make it big (your go-to-market plan)? How does your timeline look? How much money are you going to make?
Include a competition matrix to show how you are unique. A competition matrix describes your uniqueness and informs investors that you are aware of the competition. Convince the investor that they will be making lots of money with you.
5. The Product
Now for your solution's deep dive description, including its works for your customers, use-case style. Describe why it works and include a few hints on what lies 'under-the-hood' tech-wise.
“We have developed this pill out of wood chips that under trial has proven to eliminate the symptoms of glaucoma in newborn puppies!”
Please help us understand the process your happy customers go through. Keep also this section to the point. Avoid 'selling' and 'marketeering.'
6. Business model
A brief and to-the-point description of how you make money. BtC? BtB? BtG? SaaS? Per-event? Include price points and profit. Investors are particularly interested in your customer acquisition cost, as this is a key growth-inhibitor and can even kill a startup.
7. Competitive advantage
Whether you have found an undiscovered niche or are challenging an exciting market, how you compare to competitors should be a vital part of your pitch deck. How does your business differ from direct competition? What are your specific advantages? It’s necessary to paint a picture that showcases your strengths. Without some significant competitive advantages, it’s impossible to have a strong business case.
Explain clearly how you will grow your business. Growth is an important part of being a startup business. Why? Well without the growth of your business it is very unlikely that any investor will find your business case intriguing. Forecasting your sales can help you and investors to understand how your business advances economically. Investors are not just interested in those numbers, but also how you arrived at them.
Show them why your startup is already worth betting on. Present the main results you’ve already made. Dress to impress - but be honest about it. Any validation to confirm that others love your product/service as much as you do. Ideally, it's sales, but it can be Letters of Intent (LoI's), sign-ups, or something similar. Keep this section completely sober. Avoid 'selling' and 'marketeering': just the facts, ma'am. Your investors will want to know that your startup has real potential and a viable customer base. Show that your business is going to places and can repeatedly attract customers to grow profit. Therefore you should ‘hockey stick’ your investors. Image the inside, the up-going curve of a hockey stick: This exponential growth of your business should be reflected in your traction. How do you plan to target a customer base that increases growth over time? This is the very heart of the startup business. Show investors why your startup is already worth betting on. Impress them with your results and remember to be honest.
Present your startup’s current financial situation and forecast the next 2-3 years.
Support your plans of growth and traction with the right financial numbers and charts. What are the key drivers of your expenses? What is the forecasting of your sales? Relying on the numbers from your traction will be extremely useful. Use it to convince investors that you have control of your finances. When presenting your finances, the best way to do it is to mix equal amounts of modesty and ambition.
Introduce your team, their skills, and why they are exactly the right people for your startup.
The founding team is crucial, especially to early-stage startups. Who are the members of your startup ‘Justice League’ and why are they right? What skills, education, and merits of each founder help realize your company's vision and ambitions. Key partners can also be named here. Employees and advisors are usually of minor importance as investors invest in the founding team.
If you are Superman flying solo, you still have to plan for the positions that your business expects to hire in the future.
12. The Ask
How much are you asking for? This section is perhaps the most important, and if you haven't created a convincing and moderated narrative till now, this component is bound to fail. It is time to ask for the money. Getting investment is the whole point of doing the pitch deck. So, address the elephant in the room.
In the last section of your investor pitch deck, you will need to tell them two things:
How much money you needWhat you plan to do with that money.
You will need to present a figure that encompasses and considers all your requirements. Based on your business model, it must be sufficient to take care of the expenses that can take your product from the lab to the market. You can expect that your investors will want to know how you are putting their money to good use to drive revenue.
It is crucial here that you deliver a detailed breakdown of how you intend to allocate the resources that you will gain. Most often, this flow is redistributed based on the experience of the investor in later negotiations.
13. Finishing touches
Summarize the most important highlights of your pitch once more and finish on a high note.
Oh, and one more thing. While it's important that your slide deck makes the structure clear, don't forget about the power of headlines! Name your slides in an engaging way to grab and hold on to the attention of your audience.
This section isn't essential, but adding a finishing touch to the whole pitch can be excellent. In this section, you can include a few key metrics that further increase confidence in your plan. This can include:
- Market Analytics etc.
These metrics will solidify the ground you have gained and allow your investor to have a complete picture from start to finish of your product journey and its eventual performance in the market.
Finding An Investor In A Huge Market
Although there are a lot of startups out there seeking funding, there are also a lot of investors dreaming of getting their hands on the next Airbnb.
In fact, Crunchbase projects that around 295 billion dollars of VC capital went into startup investments in 2019 alone. So while getting funded is hard, the investor market is huge. And there’s always someone out there you haven’t talked to yet.Experienced investors know that to find that one needle in a huge stack of hay, they will have to take the risk of investing in businesses, before they know the outcome. They also know that smaller scale startups can be very profitable assets to their portfolio - if the idea, the team and the business model is good enough.
With that in mind, here are two things to help you find an investor in a huge investor market.
Find an investor that suits your business - and you
In a large market, there will always be those (okay, probably many), who don’t understand the fuss about your idea. But there will also be someone who does - again, if you have the most essential parts down.
So like with your target audience, try to find your target investor. That person will not only be more likely to invest, but will also be a much better advisor and ally to your startup.
Are you still in the early stages of your startup journey? Read this course to learn more about how and where to get seed capital.
Although the relationship between startups and investors can feel very unequal, since they have something you need, remember that your business has the potential to be their next gold mine. Show confidence (without being cocky). If you don’t, then fat chance they will.
Stand out from the crowd
Even if you find the right investors to target, you will have to compete for their attention. This means you have to set your business apart from the masses and show how and why you are different and better than the rest of them.
It takes effort! But then again, when has anything worth having ever come easy?
The essence of being investable is to have a great idea, backed up by traction and a team ready to execute, even when things get tough. Combine this with excellent presentation and communication skills, and you have what it takes to stand out in a truly crowded space.
We can’t do much to help you with the first part. That’s on you. But we can help you with those presentation skills. Here are four steps to delivering a dressed-to-impress pitch:
- Get to the point - and be clear about it.Don’t talk too much, for too long about things that aren’t relevant. Instead, keep it simple, short and relevant.
- Take the room, be confident and engage your audience.
- Know your numbers - Not just the ones you want to present. All of them.
And one more tip, free of charge: When you start pitching, people will start asking questions. Improve your pitch by adding answers to all the important questions you got in previous pitches before anyone asks. That way you'll eventually impress even the toughest crowd 💪🏼
Is Your Startup Worth The Money?
Like we said in the beginning of this course, investors are looking for ROI. The bigger, the better. One way of showing that is to be super clear about how you will grow the business.
Be very specific about your growth strategies and answer these three questions:
- How will you acquire new customers?
- How will you work with customer retention?
- How is your product development team going to keep improving and developing the product to satisfy customers?
Keep it concise and back your strategies with numbers like:
- How much does it cost to get a new customer? (CAC)
- What is the lifetime value of a customer? (LTV)
- How long is the payback period? How long do customers have to stay with you, before they’ve paid back their own CAC?
And speaking of numbers...
Traction attracts attention
If storytelling is the secret sauce of your pitch, then traction is the roux.
The better your traction, the stronger your pitch. And while there’s an actual slide dedicated to traction, it should be the foundation on which you build your entire pitch. Great traction proves that you can deliver a strong ROI at minimal risk - the exact two things investors are looking for.
If you can, present updated numbers an acquisition, retention, engagement and revenue.These numbers will lower the risk of investing by showing that there’s a market for your product and that your product is competitive.
If your startup is at a very early stage and you don’t have these numbers yet, there’s other traction to look for. Focus on proving the concept and show that you and your team have what it takes to make the business a profitable reality.
Present major milestones you have reached and how you will reach even more of them. Do you have an MVP? Signups from early adopters? Have you made key hires? Or secured additional funding? Although still risky, presenting these things well will lower the risks of investing in your business case.
From traction to future
When you’ve presented your current numbers and traction, it’s time to project the future. As best as you can, present your current financial situation and the forecasts for the next 1-3-5 years. The important thing here is to show that you have a good sense of your financial situation and the future of it.
Present numbers such as how much you burn, how much you earn, when you expect to break even, how long your runway is and how that changes if you get the investment you're about to ask for. Your forecasts should be believable (not so incredible they are unlikely) and show that you expect a reasonable cash flow over time.
Need help with your financial forecasts? Cuttles makes it simple to do budgets and forecasts.
Sign up right here and get started 🐙
Present your team of execution superheroes
The only way to lower execution risks is to present a team that are both motivated, skilled and hard-working enough to get things done. So naturally, your pitch should include a convincing presentation of your squad of superheroes, including their roles, responsibilities, skills and main experience.For the young founder, who set out to change her industry, setting the right team was a main challenge for getting funded. In fact, the lack of a technical co-founder was the very reason her first pitch didn’t put money in her bank account.Setting the right team is another story (one that we’ve actually already written: Hiring for skills will kill your startup).
We’ll tell you this much: You need people on your team who truly believe in your vision, who are prepared to do the work and who compliment your skill set - not people who look like you.
Know What You Are Asking Investors
You are almost there. Now it’s time to get what you came for. The cash.If there’s one thing that can punch a big fat hole in the excitement balloon you just spent 20 minutes blowing up, it’s not being specific about what you’re asking. So don’t go sloppy on us now.
In reality, too many founders just give investors the ballpark when asked how much money they need. This happens for one of two reasons: Either they are afraid to ask for too much - and not getting anything at all. Or they are afraid to ask for too little - and not getting as much as they could have.
But just throwing a random-ish number out there gives the wrong impression. It shows a founder, who doesn’t have a clear picture of the financial situation or what needs to be done to scale the startup properly. Worst case, you will come off as too lazy to bother making the calculations - and no one wants to invest in laziness.
On the other hand, knowing exactly how much money you need shows business skills, a sense of realism and ambition. So… How much exactly do you need? Ask for that.
Finishing Touches ✨
A great pitch has some of everything. It realistically skyrockets potential ROI and lowers any risk of investing by presenting your idea and traction in a relatable, exciting and air-tightly structured story - and it’s delivered with the confidence, ambition and communication skills of a true CEO.
This is a lot to ask of anyone. Which is why more than anything, becoming great at pitching takes practice. Prepare for shut doors, prepare for no’s, prepare for frustration, prepare to get back up and prepare to do everything again. And each time, find out how you can do better.
That’s what Melanie Perkins did. She is the young woman whose story we told throughout this course. Eventually, she got there. In fact, she went from endless numbers of pitches to building a unicorn at the age of 30. Today, Canva is worth 3.2 billion dollars and they’ve only just begun scratching the surface of her vision to change the industry.
So go on, start pitching your story. You will get there. Eventually.
If you liked this course, we think you will get a kick out of this one too: How to start a startup from scratch - 32 steps from idea to growth
Real-life Examples of Startup Pitches
Facebook is perhaps considered one of the most successful startups to grace the entrepreneurial world. Its original pitch deck, displayed above, contained this short, concise, and to-the-point introduction of the company to familiarize viewers with the essence of the mission and operations.
This problem statement by Airbnb serves as the perfect example! It is short, clear, and leaves no room for uncertainty. The problem statement presents the case in a smart manner. It lets the viewers judge the direction of the project, creating curiosity about how the business plans to solve these problems they have mentioned. One point to note is that the problem statement contains RELATABLE points, and that is the greatest strength of any pitch deck!
This solution statement from Dwolla, the payment management startup, is a great example. It presents a solution to the problems that many people face in their daily lives and tackles the need for a unified payment portal that connects to, well, everything!
This slide from Square presents an excellent idea – it details the benefits that users will reap by using the product. Directly documenting your product’s or service's benefits is a perfect way to convince potential investors of the applicability of your idea.
This slide from the company MapMe presents a unique take to the standard pitch. It shows a format of the product that is already in the works. Therefore it convinces the viewer of the final outlook and attraction of the product. Designing your pitch deck to reflect your product's progress with each component is a great idea to familiarize the viewers with the layout and presentation of your product or service.