How to create an investor deck
Every startup in seed stage needs, sooner or later, funding. Investing in startups implies a risk, and investors know it. Statistically, 9 out of 10 do not make it past their fourth year of life. Therefore, it is very important to raise investment at the right time and, for this, among other documents, we need to have a good deck. This must be able to convey the value of the project, which is vital when seeking financing and, even more so, to convince the best investors.
The investor deck is a presentation that entrepreneurs prepare when they are in the process of raising financing rounds. It serves to present key information about the company to people who may be interested. To simplify, it is the presentation letter of your project or company.
Usually, this deck is accompanied (or replaced) by the one pager, which is a very useful tool that allows investors to build a quick picture of the business opportunity.
What is the structure of a good deck?
1. Cover page
At a glance it should be easy to understand what your company is about. The cover page should be as clean as possible.
What is the real problem you are trying to solve? Why are existing solutions not effective? How relevant is it? Is it a global problem? Is it a "must have" or a "nice to have"? Most likely, whoever is listening to the project is not experiencing first-hand the problem that is being raised during the presentation. Therefore, appealing to feelings will help future investors put themselves in the target audience's shoes and understand the need for the proposed solution.
Explain what problem your target customer has and how your company solves it. Also, describe what gaps you have detected and why your project can be a business opportunity. Specify the niche you are targeting and the problem detected in that specific market segment.
Is your startup capable of solving the existing problem? How do you do it? Why does your solution best solve the problem? What other solutions exist to solve the problem you have detected? What is the differential value of your proposal? At this point it is important not to forget to mention the name of the product and to include, as far as possible, testimonials that validate the value that the proposed solution brings to the customer.
Quantify the benefits of your solution:
- How much money does your customer save because of your solution?
- How much more does your customer earn?
- How much time does the customer gain?
4. Business model:
Does the project generate enough value for the customer? How will revenue be generated? Explain in a simple way the monetization and pricing model.
If there are several business models, for example SaaS and transactional, indicate what percentage of revenue comes from each model
5. Traction and KPI's:
What has the company achieved so far? Is there any validation from the market? Does it have traction? Sales are a key metric that will allow future investors to assess the status of the project.
In case it is in the pre-revenue phase, market validation can be demonstrated through other metrics such as pre-orders, website traffic, etc.
6. Market size:
What is the size of the market where the company operates? What is the size of the market in those countries where the company intends to internationalize in the near future?
Start by quantifying your target market and then, depending on your growth plan, other markets. Make it clear that you have a focus and that you are not going to divide your efforts in several markets.
Who is the direct and indirect competition? Why is your project going to be the winner in this market? What is the competitive advantage? Explain why your solution is better and why your company is the best of all. How are your customers solving the problem right now?
Describe an unfair advantage that makes you better than your competition and why in your market this unfair advantage is so important, even in sectors with a lot of competition.
Why are you the right team to carry out the project? What value does each member bring to the table? The investor wants to know if you have a team with the main roles covered. Also, that they are complementary and above all he has to understand that they will be able to take the company to the next level.
9. Road map:
Is it ambitious enough, how will the project's growth strategy be structured, what are the key objectives the company wants to achieve? Set out in the roadmap what you are going to achieve at different levels. For example:
- Evolution of the main metric
- Number of customers
- Efficiency metrics
- Product improvements
- Equipment evolution
- Funding required
Is the time right, why should they invest now? Being able to convey a clear message at this point will be key to creating the FOMO (Fear Of Missing Out) syndrome, which will prevent the round from dragging on indefinitely.
You have to convince the investor that it is a good time to invest in your project by creating a compelling story.
11. Financial plan:
How are the main financial metrics expected to evolve over the next 3 to 5 years? It is advisable to go for simplicity and be realistic in order to avoid creating false expectations for future investors.
12. Characteristics of the round and use of funds:
How much financing is needed and for what? What role will the investor play in the company? At this point it is not so important to explain in detail what the raised capital will be invested in, but to make clear what goals are intended to be achieved through it.
Tips to keep in mind
- Adapt the content to the interest of the audience.
- Provide realistic and objective information. To defend the message it is important to have sources of information. Cite them.
- Create storytelling around the project.
- Avoid including information that is not relevant or does not add any value.
- Opt for a presentation with an attractive design to capture attention from the first moment.
- Accompanied by visuals to guide the reader through the presentation.
What you should NOT do
- Not having established or communicating the reason for the project.
- Focus on the specific features of the product or service rather than the problem being solved.
- Ignore both existing competition and potential risks.
- Not having a clear Call To Action.
- Do not indicate what you are going to use the funds for and what milestones will allow you to raise the next round of investment.
- Not having support information ready to provide in case investors want to resolve specific questions.