What Emphasis Should You Create In Your Early Stage Pitch Deck?The first thing I do when I get to know a startup and talk to them about their pitch deck, I check which stage the company’s in – idea stage, pre-seed, seed, series A and so on. Everyone of these phases requires its own particular pitch deck. In early stage pitch decks, it’s quite clear that there’s still experience missing and the numbers aren’t quite there yet. These are the gaps that must be identified, prioritized, and filled in step by step.
- Are claims supported with useful data (e.g., market statistics) or being derived realistically? (e.g., through KPIs of competitors).
- Where is the causality between what’s already been done and what’s being planned? (e.g., between traction and ask?)?
- What are absolute focus slides?
- expectations and performance
- challenges and solutions
- failures and learnings
How Should Your Pitch Deck Be Structured?When you structure your pitch deck, there are different approaches for ordering the information. In the USA, there’s a tendency to put the startup team slide at the very beginning. At Vertical.vc in Helsinki, I learned to put the team slide closer to the end, in the vicinity of the Ask. Putting your team front and center might create the impression that your idea is too weak. In reality, it’s a matter of personal preference, or how confident you feel as a founder 🙂 – also, the slide order highly depends on the pitch deck’s purpose. In any case, the team slide is one of the three core slides in every pitch deck, whether it’s at the beginning or at the end. The following set of slides I’ve seen routinely used during my time in Helsinki and Berlin. It has proven reliable for me and the founders I’ve mentored. The set comprises four blocks with three thematically interconnected slides each. Let’s go through the set slide by slide.
1. Pitch Deck CoverThe cover or front slide of your pitch deck has a function that you should not underestimate. People receiving pitch decks must often browse through dozens of decks every day. So, it should be obvious that a well-designed cover helps to create a positive first impression. Apart from design questions, some formal information like name of the recipient (if known), sender (including contact data), and the type of the pitch deck should not be left out. With regard to the company name and logo, you should keep in mind that the name alone often does not allow to draw any conclusions about the specific business or industry sector your startup is engaged in. Which is why it’s useful to add a meaningful sub-headline, such as high level concept, X for Y, or a claim. Some examples:
- Aliens (movie) – “Jaws in space”
- YouTube – “Flickr for video”
- Glassdoor – ““Tripadvisor for jobs”
- Airbnb – “eBay for space”
- Celonis – “process mining”
2. Your Pitch Deck’s Executive SummaryWhen you are preparing a sending deck, it’s useful to place a summary or executive summary right at the start. The summary slides functions like the back cover text of a book and often decides whether your pitch deck is actually read or rather put aside. It’s very simple, the recipients often do not have the time, and probably not the inclination, to go through all of the presentation. I recommend using three thematic blocks as the core structure of your summary.
- Situation – A short deep dive into the market.
- Complication – Which problems do providers and customers have to face and what are the worst consequences?
- Solution – How does your startup solve the problem?; Through technology, expertise, business model …
3. Problem, Solution, Product of Your Pitch Deck
The ProblemThe problem slide is important for a stage pitch audience but also for all recipients who are not as deeply involved in the affected market that they immediately can contextualize the problem and understand its implications. Simply put, the slide is about pointing out the pain points and their consequences. In case of startups working in B2B, the problems are most often not obvious to outsiders since the startup is working in an absolute niche market. It’s different for B2C, where people experience the problems in their daily lives and understand the implications far easier. In any case, I recommend using two blocks:
- Problem description: You can either tell a self-contained story or split the problem into a maximum of three individual problems.
- Tangible numbers: provide numbers and facts, such as 100 million affected users, 30% relevance, 2 billion euros in damages anually etc.
The SolutionNow for the solution which should follow up on the problems you have described before. It makes little sense to make claims about these huge problems but solve completely different ones in your solution slide. Sounds far-fetched, but that’s what I have seen in many decks. A solution is easily recognizable by a lack of interface, by the fact that it approaches a problem at its heart, and, ideally, works in various verticals. The last aspect is a deciding point for many investors since it might mean that the business can be scaled onto other “markets” with relative ease. Consequently, the potential increases massively, even if the original market segment seems small at the start. Often, startups launch in a decently sized vertical where they have specialized expertise or advantages through regional contacts. Posssible solutions are:
- technologies (AI, machine learning, …)
The ProductThe solution demonstrated how the problem is being solved. The product now shows how the users experience the product application. This is about showing the product in action: What are the core features that make the product new and unique? The features are shown by using simple and representative product pictures (e.g., screenshots). If available, testimonials and statements from partners can be placed here.
4, Market, Timing, USP, and Competition In Your Pitch Deck
The MarketIn my opinion, there are three decisive aspects that you should keep in mind when designing the market slide.
Market SizeOne of the important evaluation criteria for a new business idea is the size of the market. This defines whether an investment is profitable or at which amount the investment becomes profitable – if at all. Every startup must conduct research into the market size including its evaluation must be done carefully and early on. This is very first watershed moment for the business idea. There’s an established model for establishing market size for startups: the market categories TAM, SAM, and SOM
TAM – Total Adressable (or Available) MarketTAM includes the full, globally available market seen from the view of a monopolist. The TAM shows what theoretically is possible if you discount all barriers. For startups, the TAM doesn’t have any great importance, especially in their early stages.
SAM – Serviceable Adressable Market or Served Available MarketThe SAM value describes the market share which can be serviced with the current offer and business model. At the same time, the value answers the question which customers will use the proffered solution in the end. In a B2B context, you have to determine the number of potential target customers here. SAM is an important factor for investors, since it demonstrates the medium-term potential of your business idea. For you as a founder, the SAM is important because it defines your target group. The more precise you can define the SAM, the more efficient you will target your target audience.
SOM – Service Obtainable Market or Share of MarketThe SOM is the share of the SAM that can be adressed on short notice. The term “low-hanging fruit” is often used in this context which means nothing else but that you should go for customers with a low access threshold in the early stages of your startup. Especially in the B2B sector, personal connections or being part of an existing network (e.g., other entrepreneurs you met at an Accelerator) is really helpful. Consequently, the SOM is a good indicator for the kind of revenue you can achieve in the first stage of your growth. To precisely calculate the SOM, the following aspects must be factored in:
- Who exactly are you trying to reach and what’s your value proposition?
- Who can be reached with the resources that you have at your disposal in the early stages?
- What is the setup of the local competition?
- What are your own capacities and resources?
Market PotentialApart from the size of the market, every investor is interested in the market’s dynamics, e.g., in which phase or the condition the market currently is in. A huge TAM might imply that the market is already established and no longer grows dynamically. In turn, this might imply that market shares can only be pain-stakingly wrestled from competitors with large financial effort – in contrast to a fast-growing market, where there’s a permanent influx of new customers. Noteworth market activity in terms of investments or mergers & acquisitions can also be good indicator for the potential of a market. There are different options to indicate market growth. Depending on how much data is available, a look into recent years can portray market trends, but also a look into the future using well-respected sources (business institutes, consulting agencies …) can be helpful in that regard.
Why Now? The Right TimingTiming is everything. Launching either too soon or too late can be the main reason why a great business idea fails or why a startup fails to reach the next level. Many innovations we take for granted today have a long history and were well ahead of their time but not very successful at that moment. How much external factors can radically accelerate innovations, offers, and services can be seen at the example of the first COVID lockdown (in Germany and worldwide); or expected in case of cannabis legalization. So, to hit the right timing you need to look for events that happen in the vicinity of the market and might have an impact on existing conditions. These observations should definitely be part of your market potential evaluation. Hugely successful players such as YouTube, AirBnB, or Uber are perfect examples for how good timing is the foundation for a company to become a unicorn (check out Bill Gross’ Ted Talk on the topic of perfect timing on YouTube). A method that might help to analyze whether your startup fits the big picture and can utilize its potential is the PESTEL Analysis (or the shortened version: PEST/STEP Analysis).
The USPThe USP, unique selling point, is THE crucial factor that decides whether a potential customer will take up your offer in the end – or rather your competitor’s. Possible USPs are most often not as obvious to identify as you might think. Finding a USP requires to dive deep into the needs of the customers and develop an intricate understanding for the processes that drive these needs. Many early stage startups struggle with setting themselves apart from the competition. They don’t do it strongly enough and misunderstand that a USP is often the result of a process and hard work. It used to be easier in the past; you just needed an engineer, an invention, and a patent. The use of a product or a service can be split into 3 levels: A. The basic use refers to what your target customers can expect from a certain type of product.
- the detergent makes my clothing clean
- the car gets me from A to B
- the pullover keeps me warm
- the detergent leads to longer fragrance
- the car has an electric motor
- the pullover is made from sustainable materials
- the detergent can really remove all stains
- the car has a new type of battery that lasts twice as long as competitor’s products
- the pullover is made from patented fibers that can change pattern and color.
- social proof
The CompetitionLet’s start with the bad news: I don’t know any good method to improve the design of the competition slide. It is primarily about providing a general overview of your competitors and highlight differences in terms of services and market structure:
- Which weaknesses have you identified? What are you doing better?
- Are there supply gaps that might be useful to seize?
- Is the market old enough and ready to be shaken up by your innovation?
- Coordinate System This version is easily explained – almost all startups who use a coordinate systems to represent the competition situation look the same. Their own startup is in the upper right and all other competitors are somewhere below to the left. Since this version is quite common it’s decently viable for a stage pitch. It’s doubtful, however, that it contributes to a deeper understanding of the market.
- Benchmark This version is also easily explained since the startup in question gets a “Yes” almost everywhere in the feature charts and the competition receives a lot of “Nos”. For a stage situation, this version is rather unsuited since there’s a lot of text to read. It might work in a send deck but only if the points directly relate to the previously stated arguments from the Problem and Solution slides.
- Segmente In this version, the competition situation is concisely represented in segments where every competitor is assigned specific but easily processable characteristics. For the stage, it’s enough to find a suitable icon/symbol/picture for every segment and use one descriptive sentence. For a send deck, you can again use a text block combined with bullet points. This method is also well-suited to a stage pitch, since it can be embedded in a short story block and it enables you to convey information with the appropriate depth.
5. B-Model, Traction and Financials In Your Pitch Deck
The B-ModelThe most common way to design the slide on the business model is by showing feature & service packages. There’s always a free test version with rudimentary features, a moderately priced beginner version, and an enterprise edition with a price on request. There are, of course, other types of versions, like customer-based costs. We know the model well from a customer perspective when we are looking for mobile service or web hosting providers. However, a price tag doesn’t really represent a business model. Especially not in early stage startups where the pricing hasn’t even been properly validated. A good B Model slide should provide the audience with a concise overview of all important stakeholders, their relationship among each other, the service (or product) that is being bought, the payer, the user, the type of revenue stream, and possible external costs which are required to maintain the startup’s offer. Which is also the kind of information you need when you create a business model canvas, by the way. A solid or maybe even innovative B Model can give you a competitive edge.
Traction (Achievements)For investments, the traction slide is another important focus slide. This slide features relevant metrics that are supposed to strengthen all the predictions and assumptions you are currently making. Usually these are: number of paying customers, revenue, and growth figures. The traction slide can also show at which point your startup currently is – at the Problem-Solution-Fit, or already going for the Product-Market Fit, or even further on. Many early stage startups unfortunately don’t have paying customers yet and accordingly no revenue. In such cases, I often re-name the slide to “achievements“ and include alternative milestones for the next planned steps: number of customer calls/meetings/presentations, LOIs and pilots, or even number of users/downloads, activity, retention rate.
The FinancialsIn contrast to business plans or the stage . you don’t need 3 or 5 projections in the early phase of your startup. If there is relevant revenue you should place that information prominently on the slide, preferably in rising curves or bars. Important reference figures are acquisition costs, the so-called CAC (customer acquisition cost) and Lifetime Value (LTV). In simple terms: How much do I need to invest into acquiring an indvidual customer (CAC) and how long are they going to remain customers (LTV) and what am I going to achieve in that period? I’m not a trained business administrator but the relationship between CAC and LTV is roughly a clear indicator how profitable a business model is going to be and what can be expected in terms of required investment. If you just started with customer acquisition you are, of course, missing first-hand experience. For the CAC, you can fairly quickly develop an instinct for how much effort you will require per customer. The LTV is a bit more difficult. Let’s take B2B customers as an example – often these relationships are set for 5 to 10 years. General, you can get information on real values that are common for the market in question through research. If you additionally combine these findings with your competitor’s prices you get a rough estimation in which range the CAC and LTV will be. If you use external numbers on the slide you should definitely mention that. In the first rounds of financing you often have a well-stocked sales funnel. You have structured your sales process and you are already on the verge of progressing towards a deal/pilot with potential customers. The funnel is a great addition to the financials slide. Include the prospective customer’s logos and the amount of customers in the corresponding stages. The sales funnel is directly connected to the CAC since it includes all acquisition activities. You should definitely state how much time the completion of the funnel will take.
6. Team, Ask, and Call To Action
The TeamIt’s all about execution. The team slide is another – if not THE – most important focus slide in your pitch deck. Why? A great startup team can execute a mediocre idea successfully while a bad team can ruin the best ideas. How do you shows that you are one of the greats? Sure, if you’re a serial founder with several exits or someone who has had key positions in other startup, that’s no problem. The good news: Everyone has started somewhere with their startup career. Having faith in the strength of your team is at the end a matter of trust – and that’s something you built step by step. So, what do you put on the slide? First, you should show that all key positions are occupied and the occupants have the expertise for the area they’re responsible for. Logo dropping from past employers, a doctoral degree, or interesting projects that you’ve worked on should be listed just as projects where’ve you already collaborated in the past; everything that might indicate that you make a powerful team. If key positions in your team are still open you should mention that accordingly. Maybe include the hint that you are looking for or already talking to candidates.
The AskThe good thing about the ask or about the investment slide is the fact that you already have found and provided answers to many relevant questions about your startup. The investment is just the next logical step. This is the icing on the cake. Two things are important for this slide – how much money do you want and how do you intend to use the investment? What do you want to achieve? To answer the question “how much money do you want”, you should calculate with precision. If you ask too little you might be able to close the round faster but running out of money too soon won’t help you either and doesn’t inspire trust. Asking for too much is also frowned upon by investors since you aren’t supposed to grow comfortable with the investment. Define a reasonable period of time for which the investment must last. Everything under 9 months will result in stressful tension because common knowledge indicates that you need at least 6 months to close a complete investment round. If you define a period of less than 9 months, you will need to raise money again rather quickly which might distract from important operative duties. But it’s not unsusual to define a certain range in investments. If you do that, you should incorporate flexible positions and goals in relation to the investment range. Next to the size of investment, the split is important. In the early stages the largest share of the investment money is needed for product development, a certain share is needed for sales and/or marketing, and a small share for operative costs (rent, broadband, tax advisor …). This is easy to represent with a pie chart. Since this is about your investor’s money you should always state what concrete goals that you want to use the investment for. These can be milestones of product development, but also revenues, customers, or headcount. Often, a timeline graphic is used to convey that information – which is however more of a visual complication. For the stage, three to four icons and headlines are succificient.
The Call To ActionAt the end of your presentation you should include two elements on the last slide.
- While you for the most part of yor presentation try to portray your startup and your situation as realistcally as possible, you can share some of your visions on the last slide. What are your long-term goals? What do you and your team want to achieve? Feel free to be bold, but don’t exaggerate.
- After the presentation is before the next meeting. You should seize the opportunity to offer a follow-up action and try to stay in the lead.
- investment deck
- date for a demonstration
- additional details for pilot customers
- job offers
Pitch Deck Slide Structure
1. Fonts and Font SizeIt’s important to prioritize information on your slide and define a reading order accordingly. The tools for this purpose are fonts, font sizes, font weights, and colors.
- Primary information like headlines – 70-100 pt
- Secondary information like descriptions – 40-60 pt
- Marginal text like sources and citations – 30-34pt