How to Raise Capital: Perfecting the Pitch
Having a great presentation deck can make a huge impact on a business, especially if the presenter is a killer entrepreneur that can sell the room. However, the act of making a great deck itself is not that difficult, and you can create a great pitch deck by keeping just a few pointers in mind.
First, it’s important to know that the final deck is always going to be updated with current financials and numbers as well as new strategies, but the underlying format of the pitch stays the same. This way, entrepreneurs can keep building and keep raising capital simultaneously, two jobs that are sometimes competing for the founders’ limited time.
Here is a format for a deck that is simple and straightforward. It is meant to be used for pitching angel investors, venture capitalists, and it is also the backbone of a great equity crowdfunding campaign.
Slide #1: Logo and Mission
The logo is an expression of how people feel about the brand. It does not need to be complicated or be designed by the top agency in town. If you have trouble creating the logo yourself or finding a local designer to do the work, you can also turn to freelance platforms, such as 99designs, Behance or Toptal to hire a remote designer to accomplish the work you need.
Once you feel good about the design, try using the logo with different variations on a very inexpensive Google Adwords campaign to test consumer response to different logos and company names. This process can help refine your logo into a form that is ready for market, and this can make your opening slide pop. After all, who doesn’t want a great first slide with a killer logo and name?
The mission is more complicated. Most entrepreneurs think their company’s mission explains what the company does. For example, a coffee company’s mission is “give people the best coffee ever.” However, a mission has nothing to do with the actual company strategy or product.
At StartEngine, our mission is to “help entrepreneurs achieve their dreams.” That mission is bigger than the company. Yes, we help entrepreneurs raise capital for their companies, and by doing so can help them with their dreams, but our mission is unassociated with our business itself. Make your mission one you can never accomplish. Ours is large and bold, and we will never be done with our mission. Find your mission, and test it with people to see if it resonates with them.
Slide #2: People
Why would you put the people slide up front before ever talking about the idea? It is simple: investors care about people the most. They know that if the initial idea does not work, the team will pivot and try something else until they succeed. This way the investor feels more protected because when founders quit, the chance of a company becoming successful is ZERO.
On the slide, put photos of each executive team member in the same size and style. Add their names, titles and the logos of their schools, as well as one or two companies each person worked for.
Slide #3: The Idea
This slide is probably the easiest, and yet many times entrepreneurs have a tough time explaining what they do. Throwing acronyms and buzzwords is annoying to most investors unless they are first-time investors (or not particularly smart ones).
Instead, explain your solution to a problem you are solving in simple, concise language. Use a few choice words as well as graphics or photos on the slide to articulate what your company is doing.
Slide #4: The Size of the Market
This is where entrepreneurs often go a little crazy. They talk about their company within the context of the entire US economy. Come on. In reality, this is not really an addressable marketplace for a single business.
If your solution solves the delivery of food and you take the entire restaurant marketplace as a baseline for your future growth, then you will lose your pitch. Instead, be very narrow and clear and make any statements about the size of the market as accurate as possible. If your solution is food delivery, then perhaps discuss the market size of the city you are launching in as opposed to the entire country.
If the marketplace is brand new, then you can estimate it based on reasonable comparison to other markets. The larger you claim the market to be does not translate to a greater sum invested in you or a larger number of investors.
Be practical and put yourself in the shoes of the investor. Make your projections simple, and show where you got your numbers and sources from in a footnote with a link.
Slide #5: Go-To Market Strategy
This slide is probably the one you will spend the most time discussing during your presentation. Investors love founders who are marketing oriented and have a clear sense of who the customer is and what they expect, and just as importantly, what they want.
This slides needs to demonstrate an acumen for, and awareness of, the customer and how the company is going to reach them. Tell the story of how the business will reach the target audience and what strategies will be used.
Slide #6: Business Model
This is where your math skills come into play. A business model is not a financial projection. Rather, it is a demonstration of the viability of the business at scale.
What I mean by scale is the point at which the company has enough customers and revenue to pay for the fixed costs of running the business. This slide demonstrates that at the time the company has matured, it will be profitable.
To demonstrate this, show the top line revenue as 100% with the costs of good sold as a percentage of that total. What is left in the rest of that 100% are the fixed costs and the profit. Show each of those remaining two as percentages to give investors a complete sense of the business model.
Slide #7: Competition
This slide will require you to know who your competitors are. Do not get blindsided by investors who know more than you do. Make sure you do your homework: research and find those competitors and display their logos on this slide.
You can then talk through each of them and why you believe your business model will crush them. You can also create a table with check marks here, but that kind of table usually comes off as cheesy because of course your company has all of the checks.
Slide #8: Timeline
This is an important slide where you show the big milestones you’ve already accomplished as well provide an understanding of when you will be delivering key services and updates to the company in the coming year.
The ideal format is to have a horizontal line with dates, such as Q1 2018, Q3 2018, Q2 2019, etc., with boxes connecting to each time with the event that occurred and a brief description.
Slide #9: Contact Information
This is the last slide of the pitch, and it is also the simplest. This slide just needs to give your audience an easy way to reach you. Your name, email and cell phone are all you need here. If you are active on other channels, you can include WhatsApp, Twitter, or wherever investors can find you.
Converting Your Pitch Deck to an Equity Crowdfunding page
The final step is converting your pitch deck into an equity crowdfunding page. With this outline, most of what you need for a great equity crowdfunding offering is already in place, but you will need to reorder the information of the slides to craft a narrative around your company. You will also need to add a few components to create a successful campaign page.
First, you should include an “Investor Snapshot” at the top of your campaign page that includes the elevator pitch of what you do (a few sentences about the company and a three-five bulleted highlights) as well as what you are selling (price per share, valuation, minimum investment, etc). This section gives investors everything they need to know at a high level, so they can quickly determine whether they are interested enough in an offering to continue reading.
You will also need a high quality video 1-2 minutes in length to feature on your campaign. This video should feature your product, an interview with the founder, as well as testimonials from your clients or users.
After the snapshot, include social proof, an integral part of a successful campaign. This can be a press section with the most noteworthy articles about your business. Feature those publications’ logos to show that your business is newsworthy. Similarly, adding quotes from your most loyal and enthusiastic users or previous investors is another great way to illustrate the power of your community as well.
From there, dive into the market problem, how you are addressing it, and then your business model, in that order. Then include sections for both important milestones for your business and future plans before showcasing the team at the end. Using this order, you can craft a narrative around your business that readers can easily follow.
With these slides in place, you’ve established a framework for a great pitch (and a great campaign page). The rest is up to you and practice. Rehearsing what you want to say is crucial to ensuring that the pitch goes smoothly.