Every great product starts with a brilliant idea – and searching for people, resources and funds to implement it. How you’ll fund the business venture is the first question that arises once you come up with an idea. You can acquire investments by pitching your project to funding organizations or angel investors.
I know how it feels to stand in front of a group of investors, wondering if they like your product, if they like you, and (most importantly) if they will fund your startup. That’s why I’m going to share my insights on creating a successful investment pitch deck to help you avoid pitfalls and get funding.
The second slide in your presentation must say what your product is (the first one is usually just a project name). Describe the essence of your product, the ideas, and the mission in a nutshell. Don’t forget the rule of the sweet wrapper: Pack your product description in a well-designed, minimalist and concise format.
When creating it, imagine that you’re writing the ad copy for your product or crafting a promotional banner. What works best in advertising? Conciseness, clarity, eye-catchiness and creativity. Try to implement it all in your project description. It might be challenging to include everything in a few paragraphs on a single slide, but you should at least try.
The next slide usually familiarizes investors with the problems your target audience encounters in everyday life. Try to step into your customer’s shoes to understand their pain points better and formulate the problem more clearly. Is it a “problem” for them at all? The correct problem definition is half of the product’s success and can help you find a perfect product-market fit. It shows why people need your product.
At this step, concisely describe how your product solves a customer problem and makes people’s lives easier. It’s one of the most important parts of a presentation. Introduce your product as a perfect problem-solver with additional advantages that competitors haven’t yet offered. This part of your messaging should address the problem you previously described.
The third slide commonly shows the results of the preliminary target market research. It includes three main clusters of data about the total addressable market: the total available market (TAM), serviceable available market (SAM) and serviceable obtainable market (SOM). These data groups allow investors to see if your project matches their interests at a glance.
TAM is the number of businesses (in the case of a B2B startup) or people (in the case of a B2C startup) your product targets. In other words, it’s the total market demand for your product.
SAM is the segment of the overall available market targeted by your product within your geographical reach.
SOM is the portion of the SAM that you can realistically capture.
Investors make the first conclusions on the product idea by estimating early target market analytics you’ve provided. Usually, it’s an area of evaluation made by junior data analytics specialists. At this stage, they just trust your data, and their decision on your project approval is based on it. It helps them determine whether the project suits the vertical and funding round they usually invest in. Funding rounds typically begin with an initial pre-seed or seed round, which then progresses from Series A to B, C and beyond.
If they approve your project, all the data are exposed to detailed research and verification conducted by senior investment analytics experts. If your startup is in the later stages, investors will also pay particular attention to the project’s exposure, revenue and return on investment.
A business model outlines how you’re going to make money. This slide is the subject of the biggest interest for investors, so prepare it well. It includes information on the key partners, key resources, value proposition, marketing channels, revenue streams, customer segments, relationships with customers and cost structure. This little information is enough to show investors that you’ve conducted detailed preliminary research and have a plan to implement your project.
It’s recommended to include a competition map even if your product is ultra-innovative and doesn’t have many competitors in the niche. Why is it so crucial to mention your competitors? Because a product that has no competitors evokes shades of distrust and a lot of additional questions.
Investors may start wondering why your product doesn’t have competitors. Were similar projects closed for reasons that might be revealed only in the later development phases? Was the target audience not ready to pay for a similar product? Or was the product a poor market fit, and people simply didn’t need it? A competition map helps avoid lots of tricky questions on the investors’ side. Even if your product is innovative, it at least has competitors for its separate features, so you can mention those companies in a competition map.
The customer profile lets investors know that you clearly understand whom you target. It’s a brief description of your ideal consumer, including information about gender, age, nationality, interests, preferences, purchasing behavior, etc. The narrower your target audience is, the more sales it usually brings. Microtargeting allows you to run very specific, relevant and effective campaigns.
There are two types of target audiences: people who buy products and those who participate in a purchasing process. For example, if you sell shirts for men, you should consider that your product is more often purchased by women, although it’s initially intended for men. Consequently, it’s advisable to target your advertising and other marketing campaigns at both audiences, men and women.
The road map adds more credibility to your project. You can include early milestones you’ve already accomplished with a team to prove that you’ll hit them in the future. The road map also shows that you have a clear plan of how to move your product creation forward. It confirms that you have already estimated how much funds you need to accomplish each stage of a project.
Research and define customer acquisition strategies that will work best for your project. Is it worth focusing on online or offline channels? Would it be better to invest in brand awareness on social media or invest in paid search traffic on Google Ads? Or should you hire a B2B sales manager? Determine your best ways to win new customers, and share your thoughts with investors.
At the beginning, you have nothing but the idea and people to help you implement it. That’s why, when considering startups in the early phases, investors pay particular attention to the team, not just the product itself as might be expected. They invest in the people involved in your project. Investors try to estimate your team’s potential, professionalism and capability to build something great together.
A significant factor in the investors’ decision is your ability to make people fall in love with your ideas. That’s why live meetings, video calls and presentations at conferences are the preferred ways to introduce your startup to investors. They convert success five times better than emails or any other type of online communication.
It’s advisable to include a slide with your financials. One mistake founders often make is being vague when it’s time to talk about money. A slide with your financials helps both investors and yourself. It saves you time on communicating with investors who aren’t ready to pay such money, and it enables investors to quickly decide whether they should proceed with your startup.
It’s essential to be realistic and provide trustworthy project estimates, market analytics or any other predictions. It’s better not to show things in a positive light if they aren’t that positive in reality. Funding organizations and angel investors are smart people: Even if they accept your startup idea, they will thoroughly check all the data in the due diligence process. Investment analytics professionals will research information about you as an expert and entrepreneur. They might even check information on your social media profiles or solicit feedback from your former employers.
A business model requires in-depth market and product research that allows you to learn more about your product. You start understanding its shortcomings and some market pitfalls. Research helps you determine whether your product is a poor market fit or, on the contrary, prove your concepts and discard all doubts.
If you find out that your product doesn’t bring extra value to your target audience and isn’t in demand, it’s better to rethink or even give up your product idea at the right moment. It will save you a lot of precious time spent communicating with investors who will likely notice the same issues and reject your project. Ask yourself as many questions as you can before pitching your product to investors, and be ready to answer them, because investors will surely ask them too.
Just as the investors will be selective about who they partner with, you should be too. Learn how to target the right investors. See if they’re relevant to your project. Every investor and funding agency has its unique aspects, and you must be aware of them. For example, some investors don’t fund projects with one-founder teams because they find them unreliable. Pay attention to the project stage, industry and niche they usually invest in.
If I were an investor, I would fund startups in the later stages of development. Particularly today, when the global economy is experiencing turbulent times, it seems a more reliable investment, since you can estimate the dynamics of the project, how it has been growing over time, what strategies have worked for its target market and so on. It also allows you to assess the revenue, ROI and future prospects with higher accuracy.
However, to be honest, one of my own projects is at an early stage. I don’t find the biases concerning the economic downturn to be a reason not to pitch the product idea to an investor.
In fact, that’s my last tip for today: If you have ideas and want to grow your own company, never give up. Be diligent and patient, and do things as many times as needed to hit success and build a prosperous business.
Original Source: business.com
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