There comes a time in the lives of many start-ups when they need to tap investors for funds to grow.
They may need to bring on board expertise they haven’t had by hiring new talent, buy equipment or move out of the garage and into office space.
Whatever the reasons, they need to pitch their business to investors and outline why they should part with their money and take a slice of the company.
A critical part of any pitch is the pitch deck, a slide show that outlines the essential details of what the business is about.
For Gavin Appel from venture capital firm Square Peg Capital, it’s important that entrepreneurs look professional without going over the top with information overload when it comes to pitch decks.
“A simple slide deck outlining the key points that investors want to see will lead to sparks of interest and engagement in a conversation to learn more,” he tells StartupSmart.
We asked three leading venture capital investors, Appel, Anne-Marie Birkill from OneVentures, and Benjamin Chong from Right Click Capital, what are the key things they want to see in any pitch deck. Here are their responses.
Problem
Appel says a key question is what is the specific problem a business is looking to solve?
“What makes them unique in their approach, how defensible is it, and what does the competitive landscape look like.”
Chong says investors wants to know whether the problem is real.
“Investors want to know if the problem you’re solving is a big one. They want to know if it’s a large market. They want to know who your customer is. Some investors are very keen to know if it’s a global problem you’re solving.”
Solution
Birkill says investors want to know how an entrepreneur’s solution will meet a market need.
“It is important that the company has a solution that stands well ahead of its competitors to give it the best chance of capturing market share,” she says. “We also need to have a realistic understanding of the state of readiness of the product, as obviously this impacts on the capital requirements of the company.”
Birkill also says she wants to see how the solution sits alongside competitive solutions.
“I like to see a simple matrix that compares the solution against competitors based on key characteristics that are important to future customers,” she says.
Chong says investors want to know if a solution will really solve the problem and if it’ll be difficult for competitors to replicate it.
Market size
How big is the market opportunity?
Birkill says answering how big the market opportunity is, why it is unmet and what portion of the total market a business can address should be part of a pitch deck.
“We aren’t interested in investing to address niche markets – we want to know there is a significant market opportunity and that this has been validated through thorough market research,” she says.
“We don’t want to hear motherhood statements like `the market opportunity is $1 billion and if we just get 2% of that …’ We want evidence that there has been a thorough and considered evaluation of the market to give us confidence that the opportunity is significant.”
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