Startups might need external investment for a variety of reasons.
For example, purchasing new assets, recruiting top level talents, expanding the office premises, opening a new branch, entering a foreign market or to gain strategic partnerships.
Feel free to check out our recent article on the 4 questions that founders should consider before selling their startup!
Whatever the reason, if a startup is seeking to engage a new investor, the founders will need to clearly identify why the business is a suitable proposition for investment.
The traditional method of pitching to a potential investor is through the development and presentation of an Investor Pitch Deck.
In this article, we explain the primary use of an Investor Pitch Deck and identify the key items of information that every Pitch Deck should include!
What is a Pitch Deck?
A Pitch Deck is a snapshot presentation outlining the key elements of a business. A Pitch Deck is generally utilized for the purpose of triggering the interest of an investor and enticing them to invest in a startup (or other form of business).
In short, the Pitch Deck can be considered the company’s calling card when seeking new investment. It should contain the key information that founders and owners want an investor to understand about their business.
While an investor will not base an investment decision solely on the information contained in an Investor Pitch Deck, it will at least help them to make a decision on whether or not its worth exploring a potential investment further.
For more information on a common category of investor, VC, check out our article on Venture Capital: Considerations for Startups and SMEs
Key Points of Information to Include in Your Pitch Deck
Whatever the size, type, business model, sector or industry of your business, a Pitch Deck will usually contain a number of common topics or areas under which the business will be presented.
Below, we have outlined 10 key items of information to consider including in your Investor Pitch Deck.
1. Basic Company Information
A Pitch Deck should always include the basic information details about the business.
This includes the company name, logo, tagline and registered address. Remember – the Pitch Deck may be the first interaction that a potential investor might have with the business. So make sure it’s engaging. There is no room for typos or errors!
The contact details (phone, email, etc) of the founders/owners should also be included.
Remember, the objective is for the potential investor to contact you after the presentation of the Pitch Deck to commence discussions around a possible investment.
So make it as easy as possible for the investor to contact you!
2. The “About Us” Section
The Pitch Deck should include a clear background and history of the company.
When did it start? Where did it start? How was it founded? What has the journey been so far? What are the key dates, milestones and accomplishments?
In short – how did the business come to be where it is today?
While investors are technically investing in the startup, in many cases, they are also very much investing in the people behind the business – i.e. the founders or owners.
So make sure to identify the founding team. Explain why the investor should bet on you and your partners. Outline why you are the right people to build and grow the startup. Provide details of experiences and achievements.
You might also include one or two key staff members who you believe add real value to both the business and the team. Show potential investors that you are aware of how they add value.
Remember – if you have a team of employees, don’t forget to consider the mandatory payroll deductions and contributions that must be applied in the Philippines!
3. The Problem
Identify the problem you are solving or trying to solve with your startup.
Ideally, try and tell a relatable story in which you define the problem and identify the solution. The more you show a real understanding of the problem, the easier your investors can understand the position of your business in the market.
What is the total market size? How are you positioning the business in the market? Rely on key data to illustrate the scope and scale of the problem you are attempting to solve.
4. The Challenges
Every startup has a challenge. Correction – every startup has numerous challenges!
You need to identify and highlight the key challenges that your business faces. Failing to do so will indicate a level of naivety and a lack of awareness.
An example of a current challenge affecting almost all businesses in the Philippines is the COVID-19 pandemic. Here are 7 measures that startups and SMEs in the Philippines can take to ensure business continuity during COVID!
Be clear on how your startup fits into the competitive landscape and how you are offering something different than your competitors.
Don’t forget to address how exactly your startup business is going to overcome these challenges!
5. The Value Proposition
Having highlighted the problem and defined the market landscape, you are now in a position to discuss the opportunities!
Make sure to explain the key opportunities for the business in detail and illustrate clearly how your startup can leverage these opportunities to build a sustainable business.
The opportunities may vary depending on the business model, the target market, the specific country and many other factors. If you have made it the length of exploring an investment for your business, you should already be clear on the available opportunities for that business!
6. Revenue Model
A potential investor will always want to understand how a startup makes money or intends to make money. In other words, what is the revenue model?
Describe your revenue channels, your sales pipeline, your method of increasing market share. Why do customers select your business? Is it a seasonal business? Can it continue to derive revenue on a sustainable basis? Does this revenue model work in other jurisdictions? Where does your pricing fit in relation to your market?
This is a key area of interest for investors. Make sure you have the data and supporting evidence. Expect many questions on this particular area.
7. Marketing and Sales Strategy
How do you attract customers? What are your sales channels? How is your brand portrayed? What do your marketing efforts involve? What strategies and tactics have you implemented and which of these have yielded positive returns?
Two key questions in this area are:
- How do you find and engage new customers?
- How do you retain existing customers (i.e. how do you avoid churn)?
For more progressive industries such as tech, e-commerce, retail and digital services, identify what innovative sales and marketing techniques you are utilising. Why are you different from other companies in this particular area?
Do you already have a minimum viable product (MVP)? Have you already reached market? Are sales increasing? What do early adopters actually think of your product or service?
Investors will want to understand the viability of the product or service that the startup is offering. Any evidence that validates the ability of your business to grow in a sustainable manner will be very beneficial.
A potential investor will also be interested in your milestones. What major objectives have you achieved to date? What are the key next steps you plan to take and what will be the impact? A product or company roadmap that clearly defines historic milestones and future objectives can provide a clear idea here.
9. The Financials
The financials section is an area that investors will spend a lot of time trying to understand!
For example, a potential investor will want to understand your sales margins, analyse your cash flow activities and discuss the various financial risks that might affect your business model.
For more information on what investors might be looking for on the finance side, check out our previous article which outlines what investors want to know about your accounts and finances!
Many businesses are experiencing issues managing their finances during the COVID-19 crisis. We recently wrote about the benefits of leveraging cloud accounting during a crisis – check it out!
10. Investment Purpose
One question: What are you going to do with the money?
Outline why you need the money, how it will support your business, what impact it will have on the company and what the ultimate objective will be when using the funds.
Remember – investors want to ensure that their money is being used to generate a positive return at the end of the day!
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Working with CloudCfo means that when the time comes to explore an investment, your accounts, books and finances are in shape and up to date! A key consideration for any new investor!
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