Building an effective (pre-)seed deck
Oh, pitch decks! Bread-and-butter of startup founders, cornerstone of successful fundraising processes. Even if you are on the very outset of your entrepreneurial journey, you’ve probably already been asked for a pitch deck. Everybody does them; everybody wants them.
Hold on… but what does pitch deck even really stand for?
In the simplest terms, a pitch deck is a short presentation that provides an overview of your business plan. In our context it is most commonly related to fundraising: the sale of shares in a startup to investors. That being said, it can also be used in a variety of other contexts — for example when applying to acceleration programs, building relationships with corporate partners and internally, presenting the strategic goals to the team.
…and in our case?
In any case, it is always a marketing tool. It should be clear, concise, interesting, get the point across and have a business goal. You will be showing it to others because you want to achieve something specific: raise funding, get into an acceleration program, establish a relationship with a partner or get everyone in your team on the same page. Note that the processes mentioned above are all multi-stage. It is your job to identify at which stage of the process the deck is used and what next step it is meant to get you to.
The next sections will address specifically a pitch deck meant for fundraising at an early stage.
The goal of a fundraising deck
The presentation probably won’t secure a funding round by itself. Investors will want to get to know you as a person, ask follow-up questions, negotiate the terms. What the presentation should do, however, is set up the ground for a great meeting. You will get there by:
· providing a business plan overview that answers the most basic questions upfront,
· being very specific about what you want from them,
· drawing the prospective investors’ attention,
· making it clear that you are capable as a business partner.
All this requires is great content and a strong narrative. Sounds good enough?
So what about the content?
Here is a checklist of topics that should be covered:
1. Big vision
4. Business model
9. The ask & round goals
Disclaimer: does it mean 9 slides? Not necessarily, but keep it succinct whenever you can. Anything between 8 and 20 slides is generally considered standard.
Let’s take a look at the details.
1. Big Vision: ‘We want a world in which…
- our elder loved ones are safe by themselves
- you can have access to state-of-art tech without even buying it
- skincare has zero negative impact on environment
- restaurants stop throwing away food
Do these sound incredibly big, maybe over-ambitious?
Have we already invested in startups that successfully tackle these problems?
Absolutely, take a look at what SiDLY, Plenti, GLOV and Foodsi are doing.
All of these are impact-related but there is no need to fake anything. A world where software developers spend 30% less time coding changes to the UX can be just as compelling.
In any case it has to be clear that your product is game-changing in its niche.
Show that it is big. Remember that your investor is most likely less familiar with your niche than you are. Provide 3 key points why this specific problem has to be immediately solved.
This is a love letter to your product. You are building an amazing device / marketplace / SaaS tool / whatever else that has these amazing capabilities and will address the problem and fit within your big vision. Again, it is best to provide 3 killer highlights to show what exactly is so great about your product to form a USP (Unique Selling Point).
4. Business model
Who is paying you how much in what model. That’s it.
· We have two monthly plans: $200 for the basic features and $300 for the total package.
· We charge a flat $1 fee for every transaction
To consider the venture path you need to make sure (and demonstrate) that your market is really big. Most likely you are planning to go global fast, so what you really want is a $1B+ market globally. If you are first launching in a single country, make sure to address that as well.
Remember to show the real market for your product. Say you are building a tool for upmarket restaurants and you intend to charge them $200 / month. Feel free to show the entire restaurant market, worth billions in any country to provide context. But don’t forget to mention that there are 2 thousand such upmarket restaurants, so you can get to $400k of monthly revenue if you work with every single one. These are the concepts of TAM/SAM/SOM — google them if you want. At our stage we just want to make sure that you know your market — and that it’s a big market.
A great market slide will help understand the business model.
This slide is really at the intersection of market, model and solution. You want to show that you have competitors, but within your USP you are really the best choice.
Our personal favorite, especially for early stage startups is the diagram:
It is also common to show a feature comparison table.
At the pre-seed stage all you really want to show here is that there is some initial demand for your product. Probably you are still addressing it with a very simple MVP and doing a lot of processes by hand, but that’s OK. Ideally it can be shown that there are first few paying customers and a lot more in line that cannot really be handled without the money from investors.
This is generally easier to show for software and much more difficult for physical products. We do understand that, but even if you are building a physical product, you have probably done some customer development that proves there is a real need for it to start with. Please show some proof that the market wants your product.
Make sure to tell us who you are and why you are the right people to solve this problem. One of the things that pre-seed investors very specifically look at is the People-Problem fit. Be bold and highlight your prior achievements.
9. The ask & round goals
These always go hand-in-hand. So you need $300k? Great, what’s going to happen in your business if you get that? Set a few ambitious goals like:
· We will launch in 3 major cities in Poland
· We will process 1000 transactions monthly
· We will reach $50k in GMV and $10k in net revenues
· We will ship a product with XYZ features
· We will have the first 100 subscribed clients
· We will reach $20k net revenues
This is clearly business-specific, but we absolutely must get to know what goals you are planning to achieve.
It is also a good practice to include an overview of budgeting (i.e. a pie chart that shows how you are going to spend the money), but that’s actually secondary and something that we can discuss later on. First and foremost, we need to see your goals.
And the narrative?
Remember that you are telling a story. Likely the product or traction by themselves aren’t yet self-explanatory, because the whole startup is at a very early stage. Instead you need to build a projection that will stay with the addressees. It has to give the impression that this is going to be big, you are going to make it, and basically anybody who misses the chance to invest right now will regret.
How about the form?
Consider what your presentation is signaling. If you are building a DTC beauty brand or an arts-focused marketplace it is perhaps a good idea to show it through the design of your slides. Don’t get over-obsessed with that though. As long as the content of your deck is well-organized and clear — that’s fine.
A word of caution regarding file format. PDF is a widely accepted standard. Anything else carries the risk of not being ever opened by the addressee.
Who creates the pitch deck?
The deck is a CEO led document. It has to be, because it encompasses all the vital info combined with the big vision. The CEO will likely be helped (especially at later stages) from their associates, other c-level executives, in particular CFO/COO/CMO, investors and outside consultants. But at the very bottom of the deck there has to be the CEO’s spirit.
We hope that this helps you structure your pitch deck and eventually raise a fantastic funding round. A quick final checklist:
1) Do you have a clear goal in mind for the deck?
2) Do you have all the content in place, especially the round goals?
3) Is the narrative compelling?
4) Is the form clear and organized and signals good things?
5) Does it accurately represent your vision as the CEO?
If the answer is 5x yes and you are planning to raise your first round — make sure to get in touch with us at www.aipseed.com/contact. We are always excited to meet prospective founders!
In the future we are planning to link some case studies of good, effective decks. In the meantime this will be a reminder for us. If there are any more topics related to pitch decks that you would like us to cover, let us know in the comments.
author: Boris Kocot, AIP Seed. Get in touch at Linkedin.