Everyone begins somewhere, and for most entrepreneurs, that starting point means convincing an investor to believe in their vision. You could have the greatest product or service in the world, but if you don't know how to present it to those with the means to make it a reality, it's not likely to get off the ground.
We'll be walking you through the key elements your investor presentation needs to have and why it needs to be substantially different from a marketing presentation.
The Investor Presentation vs. The Marketing Pitch
Too often, entrepreneurs come forward with presentations crafted for marketing purposes. These, however, may not cut it when it comes to investors. Investors come with experience. They have seen countless pitch decks, evaluated numerous companies, and they're adept at analyzing ambitious projections.
For Example – when you say “our company is projected to make X amount of revenue, “investors may take figure and reduce it by 30% based on their experience. This doesn't mean they aren't interested in your ideas. It just means they're examining the claim with a more critical lens. In many ways, it's a good thing because it helps keep you grounded and realistic about your prospects.
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The Anatomy of an Investor Deck
Now, let's look at the key components a convincing investor presentation needs to have:
1. Problem and Solution Statement: This is probably the first two or three slides of your presentation. They need to clearly articulate what problem you're trying to solve, what your solution is, and most importantly, how your solution is different from everything else in the market.
Ask yourself, "Does my solution solve a real and original problem?" There are hundreds of upstart companies out there, including quite a few "copycat companies." True disruption, however, comes from those who solve real-world issues, not just "first world" problems. For instance, while a better iPhone charger could be a considered a solution to a problem, it’s not as groundbreaking as something an agritech company might bring forward to tackle major agricultural challenges.
2. Industry Size and Potential: Understanding the market you're trying to infiltrate is paramount. Investors will want to know the size and potential of your chosen industry. They will want to understand what percentage of the industry you reasonably project to capture.
3. Market Validation: Are there pre-existing players in your space? If so, use their success as your validation. If you're pioneering a new industry, then use research and data to show how the market could potentially evolve.
4. Financial Projections: Investors want to know how and when they'll see a return on their investment. Detailed financial projections will give them a clear understanding of your revenue streams, operating costs, and profitability timeline.
5. Pitch the team - To gain the investor's trust, you must show the strengths of your team. Show off your team's experience, skills, and qualifications.
6. Exit Strategy: In the seed stage of fundraising, investors will want to know what the exit strategy is for the business: a large company may acquire you; the management might want to buy out the stake, or the business might go public.
It might be challenging to squeeze all this information succinctly into a pitch deck. But remember that the goal isn't to bombard them with every minor detail. Instead, paint a compelling, easy-to-understand picture of why your solution has a market and why you're the best team to bring it to life. The journey toward gaining investor trust may be a challenging one but armed with a solid investor presentation and a realistic outlook, you'll be ready to make an unforgettable mark.
When pitching to investors, what are some common mistakes?
· Don't forget to avoid the following common fundraising pitch pitfalls.
· A lack of understanding of your audience or customers.
· Data that isn't transparent or sources that aren't transparent.
· A lack of time during the meeting for questions.
· After the pitch, not following up with people.
· A failure to listen to investor feedback or not refining your pitch deck after a failed presentation.