If you are new to the world of fundraising, you probably wonder what are the things that you need to show to interested investors. Here are some of the questions that first-time entrepreneurs ask:
- Do I need a pitch deck?
- Two versions of a deck? What are those?
- Executive summary?
- What does an executive summary contain?
- If I have one, why do I need the other?
- What is the main difference between a deck and a summary?
- Do these documents differ for angel investors and institutional venture capitalists?
- Do I need a detailed business plan for the pitch?
- What about the other diligence materials?
As you have probably noticed, the subject is rather complex, but only when one is looking at the details. For the investors to be interested in your highly sophisticated business plan, they will need to be really interested in your slide deck first. This is extremely important to take into account because that is how the human brain works. It optimizes the time needed for evaluation and allows individuals and organizations to go through many offers for a relatively short period of time.
Basic Pitching Documents
The two most important documents that you will need in the beginning are going to be the pitch deck and the executive summary.
Also, need to keep in mind that for the pitch deck you will need two versions of it – one which can be used during presentations and live pitching meetings and will be narrated, and another one that can be read and understood only by itself when sending via email for example. Sending anything more detailed than the deck and the summary will result in you being ignored by the investors (even if he/she was interested before that).
Why Do I Need An Executive Summary If I Have A Pitch Deck?
The executive summary supplements the pitch deck in many ways. Here are several key points why do you need it:
- It shows a summary of the business and helps guide the investor
- The short format in which the executive summary is written provides an entrepreneur a chance to show his/her ability to communicate clearly.
- It allows interested investors to share with peers and seek feedback. This saves their time and increases the chances for investment.
- It shows the essence of the business and provides info to other interested parties (like government agencies).
First-time entrepreneurs underestimate the value of a one-page executive summary, but the truth is that it is of extreme importance. Slide decks and summaries are essential and for good reasons which we will try to describe here:
- The process of preparing the summary will help you clarify your whole endeavor. Condensing your ideas will shed light on their importance and will give you branding ideas.
- It will give the speed readers an overview of your ideas and it can spark their interest in it.
- Having a short presentation of your business offers the interested parties a quick glance over your concept. Since most investors are extremely busy people, they have to use their time appropriately and such a summary will allow them to do that.
Executive Summary Content
The summary should contain almost the same info as in the deck with one big difference: it should be much more tightly packaged. The standard format contains a box on the right with:
- Company name
- Website URL
- Number of employees
- Founding team (key players)
- Main investors
Along the bottom we have to find important financial statistics:
- Financial forecasts
The middle of the one-pager should be reserved for around 400 words of the following topics:
- Short one-liner pitch
- Business overview (structure and management)
- Customer problem (pain point)
- Target market size
- Customer profile
- Sales and Marketing strategy
- Business Model
- Competitors and your advantage over them
The Two Versions Of My Slide Deck
As we mentioned before, the two versions of the pitch deck are for two different situations – narrated presentation and deeper dive read.
This means that you can send the second one if and when people are interested to know more about your project. The first deck needs to be visually stunning and grab the attention of the audience. Think about it as an impressive movie trailer that attracts the public to it.
Essentially, the two decks should be designed to serve the purposes that they are meant for:
- The narrated slide deck should not contain a lot of text, because that will distract the audience. Instead, its focus should be on visual and perhaps audio stimulation. That way the presenter will be able to tell most of the story in a relatively short window of time (10 to 15 minutes).
- The stand-alone deck should contain much more information so the reader will not need somebody to narrate it. Usually, this deck is sent through an email once you fire the flame of interest in the eyes of your public.
However, both of the versions should contain pretty much the same info:
- Customer Pain Points – overview of the problem and how you solve it
- Solution Description – features, technology, specifications, competitive advantage
- Key Stakeholders – founding team, investors, and advisors
- Addressable Market – total size, specifics, segments
- Competition – main competitors and their products/services
- Go-To-Market Strategy – plans for your sales and their cost
- Development Status – your current product development stage, the customer acquisition status, and relationships with partners
- Risks, Challenges, Problems, Weaknesses – This overviews the weak spots of your organization and how your plan can go wrong (and the protocol in that case)
- Financial Forecasts – analysis on future revenue, profit, break-even points, and others. Five-year goals are preferable and should come in three types of assumptions – pessimistic, realistic, and optimistic
- Exit Strategy – potential buyers (industries, sizes, and brands in specific), the potential size of the exit
- Funding Needed – the size of the required investment and the assets for which it will be spent. Milestones expected should also be put here
If you need to add more information (like graphics, charts, curves, and others), you may consider doing that in an appendix. If the presenter (or the reader) needs them, he/she can jump there and review their content. The main part should include the upper mentioned topics with one or two slides per topic. Trying to get more than that will just prove counterproductive.
Making An Amazing Pitch Deck
The human brain assimilates a lot of information via our visual sensors. It is no wonder why one of the most important factors when it comes to building a great deck is its visual attractiveness. If you cannot make it impressive, you can always outsource the activity to another company or a person.
Presenting numerical data should also be done in an innovative and eye grabbing way. To make an impact with your statistics, you should take the time to think about simplifying otherwise complex parts of the pitch.
Do You Need A Detailed Business Plan
As we mentioned before, you will need this only after the investors show an interest in proceeding with due diligence. They will read and review the business plan and you should be grateful for that because that means that they thought that your idea is indeed promising. This is a very specific request and depends on the investor. Sometimes they will request a more detailed business plan, sometimes they will look at you genuinely surprised you even asked about something that was so last century.
Do your research and know your investor. If they need to see a business plan, research more – how big, how detailed, and what they prefer to see in it. Make it easy for them to understand and close to a format that they have already reviewed before.
Research and know your investor, ideally before even pitch your idea to them. Know if they will need Executive summary, business plan, ask how big and detailed you need to make your pitch deck, etc. you expect from your investor to give you (tens or even hundreds of) thousands of dollars – ask yourself are you at the level to receive that amount? Are you showing your investor that you are working hard to get invested in and take their hard-earned money.
Prepare different decks for different situations. You should have more than one versions of your pitch story. Same goes for your pitch deck – it is just another way of sharing your story.
Investors look for people who can execute, tell good stories and work with other people to create, explore and sale. You need to make the ingression that you are exactly that kind of person. The pitch decks, executive summary and business plan are simply your tools to convey all that to your investor.