Before even thinking about a safe note financing, it is critical to understand where the financials are included in a pitch deck, you need to understand how each slide follows the next. The financials are the big finale – the money maker. So let's go through the slide list and examine each one:
Slide 1: The Introduction
The first slide is your value proposition. Introduce your products and why you are unique. Why are you better than the competition? Introduce your tagline and a quick 'elevator pitch' of the startup.
Slide 2: The Problem
Introduce the problem that consumers are facing in the current market. You can increase engagement by including the investors in this conversation by asking them if they have faced the same issues. Investors need to know that you have done your research, and it allows you to engage in storytelling about the consumer and your product.
Slide 3: The Solution
Implement your story into the solution slide. How does your product solve the consumer's problem? Walk them through the whole experience. How have you reached the consumer, and what is the consumer's engagement with your products? You can use infographics and bullet points with all relevant imagery so the investors have a clear image of your products.
Slide 4: Market Opportunity
Slide 4 is where you can show the size of the market, competitor market share, and opportunity for growth. Show who the target market is and how you are trying to reach them. How much of the market is untapped, and what is their spending power? This is also an area you shouldn't exaggerate in. If you have targeted investors that know the market, they will challenge your data.
Slide 5: Traction
Slide 5 is all about showing the company's current growth trends and projections for the future. If you have a customer list, state how many subscribers you have and revenue. Use line graphs, images, and data tables to give investors a visualization of the company's traction. You will also include the company's key performance indicators. The KPIs are your website traffic, process performance metrics, customer metrics, and churn rate.
If your startup has not launched yet and there is no traction or revenue to show, then present a product prototype. If you have consumers who pre-ordered or have created buzz in the market for your product, show that. Since you don't have hard data to present, you need to rely on creativity and extensive research to prove to investors that this is a viable business headed for success.
Slide 6: Marketing Strategy
How do you plan on reaching the consumer? What are your current marketing strategies and the strategies for the future to capture leads? You can include all your social media accounts, Google ads, distribution partners, and the amount of money you are investing in each sales channel. Investors need to know that you are spending their money wisely.
At this point in the pitch deck, investors will get a clear picture of their ROI in the future. Validate their high risk with accurate research and data on the profitability.
Slide 7: Competition
The competition slide is to show investors who you are up against and prove that the market you are entering exists. Show who the big players are and that the market isn't overcrowded. When you can successfully differentiate your business from the competitors and have a solid plan to take market share, your startup looks more attractive.
The competition slide will name the competitors and their weaknesses. How does your product fill the needs of the consumer above the competition? There are numerous ways you can communicate your competition slide:
- 4 quadrant mapping: It consists of a competitive analysis map that'll divide the market into four pieces of a pie to indicate the various companies in the same market and their position.
- Petal diagram: Steve Blank developed the petal diagram concept where the startup is placed in the center of the "flower" and the competitors in the petals representing different market segments.
Slide 8: Business Model
The business model slide is when you start getting technical. It will include information on how your business operates and generates income. Its main purpose is to inform investors of the startup's functions and business model. You will list all the key:
- Cost structure
- Revenue streams
Slide 9: Financials
Slide 9 is all about diving deep into your current and future financial plan. You will present your earnings before interest and taxes (EBIT), income statements, and the balance sheet. Your finances will also show your projections for the future. Investors are most interested in this slide for the following reasons:
- To determine if the startup will be profitable
- How do you use your money and what are your costs
- The future viability of the business
If you have previous income and expenses data, you will show your growth. Make sure you answer the following: How much capital do you need to raise? How do you plan to use their money? What are you going to achieve with the raised capital?
Slide 10: The Team
Early startups with no revenue or consumer base have two things going for them – the product and the team. As much time as you have spent working on the other slides, so should you put time and effort into your team slide. When you don't have the income and consumer base to flash before investors, they are essentially investing in you and your team.
Is your team capable of taking the startup to the next level? Can they handle the development of the business in the future? The team slide should showcase the founders and people who will be operating the company. These credentials should include:
- Noteworthy accomplishments
Where to put financials in a pitch deck
Seeing each slide flow from one to another should give you a better idea of the best ways to include financials in a pitch deck. A pitch deck consists of 10-20 slides, and the financials are included near the end of the presentation.
Presenting a 3 – 5 year forecast
If you don't have enough financials to convince investors of a track record, the best thing you can do is talk about potential traction. It would need to be based on key assumptions and to form the best predictions you can.
When forecasting, the number of years will depend on where your startup is at that moment in time. Are you a startup with no revenue, or do you have a year or two of traction to show? When making forecasts, it is important to plan for the long-term to show how serious you are and care about its future success. On the other hand, forecasting too far will increase the investor's risk because it becomes less accurate the further you go. For early-stage startups, specifically pre-revenue, forecasting 3 years is appropriate. Startups in a later stage of operating, post-revenue, should present a 5-year financial model.
This is an exciting time for you and the startup you have worked so hard for. Your financials can make or break the deal, so ensure that all data and projections are well planned out and presented with images, graphs, and text.
Include the financials near the end of the presentation. It all starts with your story and creating excitement around your business, followed by the financials. For example, if you have a 10 slide pitch deck, add it somewhere between slides 7 and 10, depending on the design and flow of the content. Increase your chances of funding and show your investors the company's financial health with a pitch deck that sells.
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and NYU Stern School of Business.
Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.