Article adapted from Seraf: Portfolio Management for Early-Stage Investors
Deciding whether to invest in a good idea is hard. Even when its potential is clearly explained. Trying to make that evaluation without a solid explanation is an exercise in needless frustration. I’ve talked about the role of a compelling executive summary to get an investor’s initial attention and secure their agreement to take a pitch meeting.
But what should that investor expect out of the ensuing pitch deck? There are so many ways to design and format a visual slide presentation that it is easy to distract the viewer from noticing missing elements. In the face of a superficially convincing story, that it can be hard to critically evaluate what you are being shown right there in the moment. But if you commit to memory a basic checklist of the key building blocks, you will never be taken in by a presentation with more sizzle than steak.
Pitch Deck Building Blocks
What does the deck need to have in it? Your checklist should include the following topics:
1. Customer Problem: description of customer pain and how the company solves it – concept & key elements
2. Product Overview: what the company does, for whom and why it’s compelling
3. Key Players: founders, key team members, and key advisors, with industry backgrounds and expertise
4. Market Opportunity: market size, growth characteristics, segmentation
5. Competitive Landscape: competitors and competitive feature sets, plus your sustainable competitive advantages
6. Go-To-Market Strategy: how the company will sell its product, in detail, including roughly how much it will cost to build that sales engine
7. Stage of Development: product development, customer acquisition, partner relationships
8. Critical Risks & Challenges: what can go wrong and how the company plans to manage it
9. Financial Projections: how much time and money it will take to get to cash flow break-even and five year projections (it is really helpful if entrepreneurs show Yr5 mid-case, worst case and best case with key assumptions)
10. Exit Options: categories of likely buyers, rationales, list of specific likely buyers and comparable with valuation multiples
11. Funding Requirements: how much the company is raising, what the company will use it for, what milestones it expects to hit
That’s about it. Expecting much more from a basic deck is probably not reasonable. Details can be drawn out during subsequent Q&A or during subsequent due diligence. For the initial pass through you should merely focus on whether the basic deck covers all of the key elements. If not, you know what your first few questions need to be.