Best practices for B2B software startups
How to create the perfect pitchdeck?
Tips for startups on how to build a pitch deck that will attract venture capital
Someone recently asked me what the perfect pitch deck should look like. I’ve been in the venture capital industry since 1997, but have never really thought about it. So in this article, I suggest a structure that I think works. Hopefully entrepreneurs will find it helpful.
Remember, the content is what matters. It’s nice if the deck looks good, but don’t spend money on graphic designers. Don’t make it too long. Keep the content short and precise!
Page 1: Introduction. Company name, location and basic info about the company. What does the company offer? Who are its potential customers? How much funding are you looking for? When do you need it? And how do you intend to use it?
Page 2: Vision, mission and corporate ambition. We invest in future market leaders. So it’s important for us to see your long-term view of what the world, the market and technology will look like 5 to 10 years from now. Your mission statement tells us what role you want to play in this. In describing your ambition, you need to be specific: what do you want to achieve in (let's say) the next 5 years, in terms of sales, number of customers, the area you serve and your market cap. This helps make it clear that you know what you’re talking about.
Page 3: The problem. What problem are you solving? Can you put some numbers on it? If you can include the ‘must-have’/’nice-to-have’ discussion, all the better!
Page 4: The solution. How does the product or service you offer solve the problem? Do you have a product vision and roadmap? How will it evolve over the next few years? We understand that companies are always short on resources and don’t expect you to have a fully-fledged product in your first year.
"Keep the content precise! Include detailed data that makes potential investors sit up and listen. Steer the discussion in the right direction."
Page 5: Product leadership potential. Are you working in an existing product category or creating a new one? Are Gartner or Forrester analysts writing about this category or your company? What’s the stage of the market? Red ocean or blue ocean?
Page 6: Unfair advantage. What makes your product and your team so special? What are entry barriers for others? How can you defend your position?
Page 7: Competition. Since you won’t be the only software vendor out there, it’s good to include a competitive analysis. Show us that you are aware of the field and that your solutions are better than others.
Page 8: Customers. What is your ideal customer profile (ICP)? Where are your customers? Who are the decision makers? Who are the users? How can you influence them? What are their characteristics?
Page 9: Market size. You can estimate the market size based on your
ICP. Include realistic and precise TAM, SAM and SOM estimates. Present a top-down and bottom-up analysis.
Page 10: Market trends. What are the market drivers? What are the magic forces that lead customers your way? If you are confident that it’s good today, but will be great tomorrow, let us know how and why.
Page 11: Traction. Here we want to see data. How many customers do you have? How have revenues, ARR and/or MRR developed in the last (few) year(s)? What are annual contract values? What is the product usage and adoption rate? We’re interested in any SaaS metrics.
Page 12: Business forecasts. What are your projections for profit and loss, bookings and number of customers for the next 36 months? And what are your cash projections? Since no one has a crystal ball that can predict the future, we want to understand the assumptions behind your predictions. The more data points you can provide to underline your hypothesis the better!
Page 13: People. VCs invest in people, and people only. Show us the key team members. Why are these members so utterly brilliant that they can propel the company into market leadership? What is your experience, knowledge, and passion that makes talents irresistible to join your journey?
Page 14: Cap table. The current cap table can be anonymous since maybe in this stage of the funding process you do not want to disclose all shareholders. We in general would like to see if there are VCs already in, or Business Angels, how much stake the founders and current management have, and how much has been invested so far.
Page 15: Use of proceeds. Where are you going to spend the money on? A little more depth than “sales and marketing”, or “Product development”, please. It would be nice if you could provide some themes you’d like to address and how it should pan out in the next 24-36 months. You can also provide a high level business plan to detail out the use of proceeds.
So, yes, a deck is not a simple document. It should be attractive to survive the initial screening. It should contain in depth data that makes the VC sit up and listen. It is also something that should steer and lead the discussions into the right directions. It must be clear that it has been written by a team that knows their business, and believes that this company will be a winner. Make sure that we want to be part of your journey!