The startup pitch deck is one of the most important documents required when the startup goes in for fund raising. It is essentially a document giving the audience, usually the investors, a thorough understanding of the business. Of course a detailed due diligence follows, but the pitch deck is qualifier for the investors to get interested and move on to the next stage. Sending the pitch deck is like sending the CV for a job interview. The actual presentation is the interview and the fund raising is getting the job.

Why is there a need for outside funding?

Usually, after the initial sales stages of a startup, when the startup is wanting to enter the growth phase, it needs funds – funds that might not be available through personal savings or family and friends. That is when startups look at raising money from third party investors – either individuals or organisations.

Over the past few years, funding has seen an exponential growth. But that does not mean that every startup that approaches investors for fund raising, gets the funds. In fact, the rejection rates for startups are very high. Inc42 quotes “84% Indian Startups Encountered High Difficulty In Raising Funds This Year” for the year 2023.

Also Nasscomm report says “Indian tech start-ups witness over 30% conversion rate of scaled start-ups post Series B funding, which is amongst the highest globally. This reflects the maturity of the scaled-up start-up ecosystem in the country. However, India has one of the lowest conversion rates in early-stage funding from Seed-stage to Series A, driving the need for greater access to domestic capital.”

There a various reasons why a startup does not get funded.

But if a startup has a good story, the pitch deck is the beginning of story-telling. So, the obvious first step is to have a sound business. But let us discuss some key elements of the story-telling that is the pitch deck.

Startup pitch deck element #1: The Market

The first thing the investors would like know is what is the total addressable market or TAM. How big is the market that the particular startup is wanting to cater to. If the startup is working on a very small niche market, the investors might not be as interested as they would be in addressing a larger TAM with fewer players. 

The second part of this element is the trend or trajectory of the market – is it declining or growing. So if something is a niche today but has a high growth rate, the investors might still be interested. Also, what they would like to know is why is the market behaving in that particular way, what are the key factors that are impacting the market. This also gives them a sense of how will the market behave going forward. 

Startup pitch deck element #2: The Product

Once the investors know about the market, the next step is making them understand the product or service being offered by the startup. What problem is looking to solve? Who are the other key players in the similar space and how big are they? How is the solution different from those of the other players – what is the USP or unique selling proposition? What does the pricing landscape look like?

Very rarely would there be a product that would not have any competitors in the market. In such cases, the valuation and the investor interest is purely dependent on their assessment of how the market would shape up in the coming years. In such cases, with no history to look at, the discussions become tricky and is based more on opinion than facts.

Startup pitch deck element #3: The customer

As with everything to do with business, the customer forms a key pillar in the deck. Starting with a broad classification of B2B, B2C or others and getting into customer personas. The critical aspects that the investors would like to understand here are how well has the startup been able to identify the customers – does it have a focussed approach or they believe in carpet bombing. Also, they would be interested in understanding the strategies for customer acquisition and retention. This can be very well demonstrated with existing customers for startups in the revenue stage. 

Case studies on how the product or service has benefitted the customers, aligning it to the USPs makes a strong case for success in the future. Metric like customer acquisition cost, repeat customer rate, reviews, etc. can also give a deep understanding of the market acceptance for the product.

Startup pitch deck element #4: Milestones

Milestones show the growth in the startup journey. This section would contain both quantifiable and un-quantifiable milestones. While some milestones celebrate successes like first 1000 customers or the first crore in revenue, it is advisable to also have milestones about things like commissioning of new factories or plants, patents filed, any acquisitions along the way, etc. – this is the summary of the journey since the company was incorporated to where it is today. It is not usual, but there could be some projections in this section too. While the business projections forms a separate section, one could include some milestones critical to company’s vision in the next 5 years.

Startup pitch deck element #5: Business Financials

This is the part the investors love the most. This section includes both the actuals for the past few years or since inception if the startup is relatively new and also the projections for the future with detailed assumptions as to why do the founders think the numbers are accurate and achievable. The key metrics here are revenue (top line), cost elements (fixed costs, variable costs broken into raw material, marketing expenses, labour and staff, etc.), profits (bottom line – contribution, EBIDTA, PAT).

There could be other key parameters plotted like number of outlets or customers (typically for B2B startups), production capacity and expansion plans, headcount, etc. to corroborate the financial projections. 

If the investors think the figures for growth or revenue projections are overestimated, they are likely to lose interest in the business case. If, on the other hand, the numbers are lower than the potential, it could impact the valuation and may not be optimal for the fund raising round.

Another important parameter that is included here is the utilisation of funds i.e. what will the investment be utilised for. What challenge will be overcome using the funds? There could be a host of areas for utilisation – capacity expansion, team building, marketing, new product development, etc. This would also flow from earlier elements like the customer acquisition strategy, milestones, growth projections and aspirations and so on. 

Startup pitch deck element #6: Return on Investment

Next part of the deck and the most important for investors is the return on their investment. What is the return they can expect on their investment or ROI? In case the deal is one where there is transfer of equity, the valuation increase is what primarily results in the return on their investments. If it is a deal where the investor is offering the investment as a debt, the total payments returned to the investor over the agreed period is what determines the ROI for them. A combination of debt-equity financing structure would also have returns as a combination of both gain through increase in valuation while returning the part of the debt investment.

It is always a good idea to include this in the pitch deck even before the parties get into negotiations. While it might change over the course of discussions, it establishes a good starting point.

Startup pitch deck element #7: The Team

While the investors would have interacted a few of the key team members over the course of the discussions, it is always a good idea to introduce more team members – the co-founders and core team members to them. A bit of their backgrounds to make sure the investors feel equally confident in the team as they do with the product and the market opportunity.

Usually the actual presentation of the pitch deck will have many question and answers and it is just the beginning of the fund raising interactions. There is a thorough due diligence of every parameter by the investors before funding. It will include all aspects of the pitch deck in far more detail with back up – financial statements from the past, for example forms a key document for this. Any patents or pending applications, trademarks, etc. are verified, physical asset verification and teams are checked for and so on.

If you think this is too big a mountain or you to climb and you would rather focus on running your business, we are here for you. That is exactly what we can do for you – not only create the pitch deck but hand hold you through the entire journey of fundraising.