How to Create an Effective Pitch Deck
When it comes to raising money for their business, owners and entrepreneurs often focus a lot of time and attention on drafting a solid business plan. While a business plan is important, a pitch deck might be even more critical as a fundraising tool.
Yes, the business plan offers a blueprint for the organization’s ongoing success and includes all the details investors need to make an educated decision about whether to invest money in the business. Yet creating an effective pitch deck will engage investors in conversation about your business and help get them excited about investing in your venture.
Most importantly, a great pitch deck will grab investors’ attention by giving them a high-level view of your business from a conceptual standpoint.
Pitch Deck Misconceptions
There are lots of misconceptions among business owners and entrepreneurs when it comes to creating a pitch deck. For example, many believe that pitch decks should contain dozens of pages or slides and lots of charts and graphs. The best pitch decks contain about 12 slides and very few, if any, charts and graphs. In fact, I recommend avoiding pie charts altogether because these are usually difficult for investors to interpret and understand, especially if they’re viewing a slide presentation.
Instead of lots of charts and graphs, use plenty of bullet points in your pages or slides. This will make it easier for you to focus investors’ attention on the most important points you want to emphasize. Also, be sure to use large type on your pages or slides so it’s easy for investors to read — I recommend at least 36-point type.
Here’s another thing to remember about pitch decks: Your goal in creating a pitch deck isn’t necessarily to raise money for your business. Rather, your goal should be to spark enough interest among investors in your business to secure the next meeting. Investors rarely if ever invest money after a single meeting, and since you will likely be presenting your pitch deck early in the fundraising process, the most realistic expectation for a great pitch deck is to generate sufficient investor interest to line up the next meeting.
What Should Your Pitch Deck Include?
While every business and industry are different, there are a few pages or slides that should be contained in practically every pitch deck. These include the following:
- Your vision for the business — Investors will want to understand your big-picture vision for your business. In other words, what is the company’s overarching reason for existing? Most successful businesses have a vision that goes beyond selling products and services and earning a profit.
- The business’ unique selling proposition (or USP) — What is it about your company that sets you apart from other similar businesses? Without a strong USP, it may be difficult to convince investors that your company can rise above a crowded field of competitors and be successful.
- The business opportunity —Is there an unfilled need in the marketplace for what your company offers? Or are there unsolved problems that your products or services can help solve? These are the kinds of business opportunities investors tend to look for before investing in companies.
- Your target market — Investors will also want to see details on the size and makeup of your target market to help them gauge the scope of your business opportunity. For example, who specifically are you selling to? How much disposable income do your target customers have? And where are your potential customers located? It’s usually better to identify a narrow niche market than a broad one because this makes it easier to target customers with your sales and marketing efforts.
- The financial model — Of course, potential investors will be very interested in how your company is going to generate revenue and earn profits. This page or slide should include a broad overview of your revenue model — for example, projected sales, expenses, revenue and profits. Don’t go into too much detail here; instead, focus on the big picture and bottom-line numbers. You can flesh out the details later in spreadsheets and pro formas.
- Your sales and marketing strategy — Companies with great products and services have failed because they were unable to generate enough sales. So, you need to show potential investors that you have a solid sales and marketing plan. This should include optimal sales channels — for example, online, in-person or telephone sales? — and marketing vehicles and tactics that are most likely to reach your target market.
- Your management team — These are the key individuals who will ultimately spell success or failure for your business. Briefly highlight the relevant background and experience of your key managers and executives to give investors familiarity with and confidence in the management team they will be working with.
- The use of investment funds — Not surprisingly, investors are going to want to know how you plan to use the money they invest in your business. You should be specific in explaining the use of investment funds. For example, you might want to use funds to expand the business by hiring more employees, purchasing more equipment, investing in R&D or acquiring more land and buildings.
While a business plan is an important tool for raising capital, a pitch deck is often even more critical. Creating an effective pitch deck will engage investors in conversation and help get them excited about investing in your venture. Most importantly, a great pitch deck will grab investors’ attention by giving them a high-level view of your business from a conceptual standpoint. An outsourced CFO services provider can help you create an effective pitch deck for your fundraising efforts.
Arthur F. Rothberg, Managing Director, CFO Edge, LLC