The Investor Pitch: Part 1: Creating an Effective Investor Presentation Based on Your Business Plan
Delivering an effective business plan presentation takes about 17 to 20 minutes tops. Properly preparing that successful business plan presentation usually takes months.
Tell Investors What They Want to Know by Telling the Story of Your Startup’s Business Plan
Investors in early-stage companies have three top-line questions. How much do I have to invest? What is my expected return, and how long will it take to get my money back?
From elevator pitch to exit potential, those questions can be answered in about 14 slides. Entrepreneurs can find all types of pitch outlines on the Internet. Here are sample templates from the Rev1 toolkit library for pre-seed and seed-stage presentations.
Match the format of your presentation to the format of your business plan. With this framework and discipline, an entrepreneur can navigate any presentation with serious investors.
- Title Slide: Allocate one minute. State your name, your title, the company name, and a one-sentence version of the elevator pitch. It’s easy to spend too much time on this slide.
- Market Problem: If you’ve targeted the right potential investors, your audience may understand your market and customer personas —but they may be less familiar with the specific problem that you are solving. Describing the problem and the pain it creates for your customers is the foundation of the rest of the pitch.
- Your Solution: How does your solution solve the problem you just described? Build credibility by sharing the experience you gained from personally talking with customers. Describe the customers’ payback when the problem is solved. At this stage, investors will likely accept the hypothesis that your solution works. They will eventually drill down during due diligence, but your first task at hand is to first convince them that you can solve a problem significant enough that customers will pay for your solution—that it’s vital to the tactical or strategy sense of the business—not just a nice to have.
- Business Model and Sales: Describe how your company’s product or service generates revenue. The more simplistic the business model, the better. How do you plan to reach customers? Do you have to build your own sales organization, or are there existing channels that fit? How do strategic partners fit in?
- Market Demand: Characterize the customer personas and market segments that you have validated. Who are the early adopters? Are they potential development partners? What data makes you believe that the market is going to grow, and by how much?
- Competition: If you don’t have competition, you don’t have a business. If you do have competition, present an easy-to-follow comparison chart so the audience can see the competitive landscape at a glance. Speak to your company’s strongest barriers to competition, whether from speed-to-market or intellectual property protection. Customer inertia is always the tiger in the room. What can your business do to convince customers to change what they are doing now and take action to implement your solution?
- Growth Opportunity: Investors are looking for companies that can scale. How will you grow market share in three to five years? Support market projections with data in your backup deck.
- Management Team: Investors invest in people first and products second. Show how strong you and your co-founders or senior leaders are individually and as a team. Describe business and technical advisors and mentors. If any team member has been on a founding team, whether the company succeeded or failed, mention it now. Prior experience can always be a benefit.
- Financial Projections, Use of Funds, Company Milestones: Use at-a-glance charts and graphs to illustrate how the company expects to spend the investment. Which milestones will the company accomplish as a result? What is the burn rate? How long until break-eve? How will you make cash last?
- Capitalization Table, Valuation Chart, Risk Assessment, Exit Strategy: List all investors and percent of ownership. If the company hasn’t received equity capital, the Cap Table will list founders, friends, and family. Be prepared for tough questioning on the valuation chart. Nothing is likelier to make an investor walk away than a pre-money valuation that exceeds market norms. Demonstrate that while your goal is to build and operate a viable business, you recognize that investors are looking for an exit and returns.
The Thoughtful and Well-rehearsed Pitch Educates and Sells
The best presentations balance the best aspects of your business with a pragmatic reflection of the challenges.
Investors are looking for advanced technology businesses with high-growth potential driven by unique solutions and realistic plans. The first and best opportunity to make the cut is the business plan presentation.
~~~
More Fast Reads on “The Pitch from Rev1’s Toolkit Library:
How to Develop the Perfect Startup Pitch
The Top 10 Things to Never Say in An Investor Pitch
Nailing Your Investor Pitch – Part 1
Nailing Your Investor Pitch – Part 2
