Why you should use a pitch deck
They say the most successful entrepreneurs are the best planners, to the smallest details. That’s true, but if you want your start-up to attract the attention of an angel investor, you must know how to synthesize all the above details in a simple and clear formula. The document that contains that formula has been known in recent years as pitch deck. Since I’m perceived as an investor, I receive financing proposals on a weekly basis at least, both on Octavianpatrascu.com and on LinkedIn. Some of them are very attractive. However, I’ve noticed that startup entrepreneurs could earn a lot if they offered information in appropriate dosages and in an optimal sequence. And the pitch deck is exactly that: a short but relevant PowerPoint presentation, that takes you to the next level of the conversation, the one that refers to the money itself.
What is the content of a pitch deck and how the pitch deck should look
If you visit Slidebean, you can find famous pitch decks from companies like Airbnb, Facebook or Uber. You will notice right away that this kind of presentations have around 10 to 20 slides and generally answer the next questions:
- Problem and solution. There is no business without a real need on the market (the problem), and the solution is the business you want to launch.
- Description of the market. Even innovative businesses are connected to an existing market. Let’s say we’re considering a TV landscape like the years 2,000, where there is no Video-on-Demand. The consumer’s problem would be that he wants to watch movies whenever he wants, having a broader choice than his own DVD collection. Your solution is disruptive: an online platform. But the market where you’re starting from exists: it’s the one of classical televisions and of DVDs rentals. By the way, maybe you know – Netflix started as a DVD rental company.
- Defining the product. No more than two or three slides, but try to depict your vision using mock-ups and other visual means.
- The competitive advantage. We know from the Economics manuals that a successful business must have a competitive advantage in front of the businesses that already exist on the market. In the Video-on-Demand example, there are several: large offer, ease of use, accessibility (from anywhere), reduced price.
- Your history. It’s risky to search for investors without being able to show some background or previous steps. From the establishment of the company to a proof of concept, such assets are welcome and show that you have the capacity to build.
- An augmented projection of growth. It will have to include both the market segment and data referring to incomes and expenses are mandatory. Again, you can’t keep someone’s attention with more than a few slides, so detailed budgets should be saved for the business plan, which may be a discussion topic in the next stage.
If you study the examples at the above link, you will see that pitch decks don’t always follow this sequence. Still, in my opinion, they should answer all the above questions in a convincing manner.
Speaking of the graphic aspect, I won’t get into details, but you probably know the rule that you need to avoid slides that contain only text and fill your presentation with as many graphics and visuals as possible. If you don’t have any special graphic skills, avoid fonts and paginations that are too fancy. PowerPoint, from MS Office, is a pretty good presentation software, if you don’t wish to spoil the templates they offer. An alternative such as Keynote (for Apple), Google Slides (Google Docs) or Prezi (online presentations) offers a slightly different look & feel, with more personality. Take care, however, at the portability of the file, because you’ll have to send it to others.
How to use the document
There are two scenarios in which a pitch deck is useful. The first involves a form of interaction, either face to face (presentation rooms, 1:1 meeting), either online (a platform like Slack, Skype etc). In this case, you have more freedom in the pitch deck, as the slides don’t have to match exactly with what you’re saying – and you’ll be able to avoid the text excesses easily.
The second form of presentation is unilateral: the file is sent – usually, by email. In this case, it will have to be self-explanatory, without somebody’s verbal help.
Plan the material or adapt the one you have, according to the situation. And, why not, according to the investor you are contacting, whose track record you should study.
What you can win
Several years ago, Microsoft was stirring up the communication world with a study in which it stated that the attention span of the average American is 8 seconds. An angel investor will listen, usually, more, but as he has experience he will have a very sensitive bullshit meter. Remember that the first contact with a potential investor is crucial for the (un)success you will have and that his availability is limited. Let’s say the first step is easy: anyone will listen to your first words at least out of courtesy – and an investor must listen since it is his job description. But in the next seconds or minutes (of investor attention, if not actual) you’ll be able use all the help you can get and a pitch deck is essential.
And, finally, pitch decks have a huge quality: they help you clarify and learn how to phrase your ideas in a concise manner, that can also be understood by potential partners. Which is a different kind of help for the entrepreneurs who are at the start of their careers.
A Romanian version of this story appeared in the Capital business magazine.