Congratulations. You have decided to start a company and are looking to grow through investors using external funds (outside capital). As part of the exercise you will need to develop your “story” through a presentation that you will be giving to potential investors, known as a “pitch deck”. The investor pitch deck is one of the most important parts of a nascent company, and a critical tool to garnering “buy-in” both internally and externally. There are a number of items that need to be considered/answered and critical information to include when you are using an investor pitch deck.
Prior considerations before seeking investors
- Who is your intended audience?
- How much money are you trying to raise?
- Do you have a business plan?
- What is your “burn rate” (i.e., how much money are you using monthly)
- How far along are you in the development of your product or service (prototype, finished product, concept only, etc.) or company?
- Do you currently have customers and if so, what is your monthly revenue from them?
- Have you exhausted other ways to raise cash (friends and family, self-funded, crowd funding, bank, etc.)
Building an investor pitch deck
Once you have addressed some or all of these considerations, you can start with the process of developing your presentation. This will be used for convincing investors that your product or service is worthy of giving you money, in exchange for partial ownership of your company. So the goal is to be more convincing than the dozens of other companies who are trying to do the same. It is important to be as clear and concise about the business side as it is about the product or service. You will need to succinctly address multiple facets of your company in order to allay most investor’s concerns.
Be brief without sacrificing key content
Therefore, it is critical that your pitch deck covers as much as possible within the fewest amount of slides and without unnecessary detail. Some others advise more slides. But be aware that you will have perhaps fifteen minutes and that you will likely have interruptions for questions and business case assumptions (which I’ve experience firsthand), so it may be helpful to practice with others ahead of time. Assuming you will spend 2-3 minutes per slide, your deck should only include 6-8 slides of relevant content.
Know your audience
Depending upon who you are approaching to get funds will determine how your pitch deck will be developed, but generally the content will be the same, more or less. Banks will look at the financials, seed funders will look at the concept, and angel investors as well as venture capitalists will want more understanding of the “momentum” that your company is developing, along with the business case. Keep in mind that there are investors looking to provide money to companies with specific profiles (tech, biotech, finance, industrial automation, etc.), so match your fund-seeking with their investment strategies.
Breaking down investor fund expectations
It’s not a hard rule, but you can probably expect investors to fall into the following categories:
|Type of investor||Amount of funds initially invested ($)|
|Angel||100,000 to 500,000|
The difference between these, aside from the amount of money they invest, is how early they invest (risk) and the percentage of the company they will ultimately own (through shares of stock). Very early investors will receive founder’s shares that can later be converted into common shares (depending on how it is originally structured).
Angel investors generally come in later, provide more capital and then “dilute out” when more investors are added in even later investment stages and the company’s valuation gets larger. Angel investors are taking on higher risk at an earlier stage but less monetary investment proportionally than someone who provides millions of dollars later on but with less risk. The latter are the venture capitalists (VCs). After initially funding, each VC investment round thereafter will offer more funds to maintain their percentage ownership. So VCs are committed to each stage until their “exit” (initial public offering, buy out by another firm, etc.). Seed and angel investors are mostly a one-time transaction.
The Investor Pitch Deck Components
Prior to the presentation, investors should receive a “one-pager” to prime them for questions and understand what will be discussed in the investor pitch deck. If this isn’t requested, you should provide one for them anyway, as it will save time and reinforce your story. Plus it’s good to have one on hand for other interested parties. This should contain the condensed version of the slide deck content.