Many people waste weeks on investment because they're not ready. Make sure you're not one of them.
Should you raise money now?
You don’t need to raise money to be a successful business. Only raise if you need to. Good reasons to raise are "we’ll die if we don’t raise" and "we can grow 5x faster if we raised." Also, be completely aware of the loss of ownership that goes along with raising. Expect to lose 10% - 30% of your business with each round.
If you need to raise, is now the right time? For seed stage investment, you typically need:
Real and significant problem that you solveSolution to this problem and a prototypeProof that people want your solutionCore team working full timeYou don’t need to have a scalable product yet, although a clear idea of how this scales is important as you will get asked.
For later stage investments, the requirements broaden. As a rule of thumb, for a Series A you should have solid traction, a scalable product and a customer acquisition process that just needs an injection of capital to really grow.
The final check is are you ready? Raising investment typically consumes 50% of the founders time for one to three months.
Why have a pitch deck?
There are two reasons for having a pitch deck:
It forces you to concisely articulate the important questions about your business.Many investors want to see a pitch deck. Not having one can put you on the back foot before you even start.
Step 1. Think like an investor
These are the questions on most investors minds. You should have a good answer to each of them.
For each question, take a page in a PowerPoint, Word doc or similar and write out the key points for your business. Focus on getting concise and consistent answers rather than covering every detail.
Describe your business in a sentence.
What problem are you solving and who are you solving it for?
How do you solve this problem?
How big is your market? (TAM, SAM & SOM)
What is your traction to date? How quickly are you growing? (Revenue or user weekly/monthly growth rate)
What is your product or service & what is the technology that enables it?
Who are your competitors?
How does your product or service beat the competition?
Why is now the right time for your solution?
What is your business model (i.e. how you make revenue, what are your costs)?
How do you get customers? How does your product scale with demand?
Who are the key people in your team?
What is your pre money valuation and how much are you trying to raise? What will you achieve with the investment? When will you need to raise your next round?
Step 2. Structure your deck
A pitch deck’s goal is to make an investor excited in you and your business. To do this you need to tell a compelling story in about 20-30 minutes.
Here is a good starting point for your pitch deck storyline (this matches the order of the questions in the last section).
Fill in the details with your answers to the last section and talk the story out loud. You should iterate on the order and the content to get it flowing right. As a general rule, put your companies strengths higher up the order.
Technology & Product
We often get asked if you need an appendix. The short answer is you don’t, especially for seed stage companies. If you do decide to include one, here are some of the things you typically find:
By the end of this section you should have a document full of bullet points which tells the story of your startup.
Step 3. Visualise key points
A document full of bullet points is not going to excite anyone. Diagrams, images and charts will communicate your key ideas in a clear and more engaging way.
For each section of your story, sketch out a page to communicate the key points. This will take a few iterations to get right! Don't worry about making them look good yet - just focus on getting the right structure.
Step 4. Test your pitch
Before you do anything else test your story with a smart friend or mentor.
Changing the story now is relatively easy. It exists as sketches in a pad or bullet points in a document. Once you start to commit your pitch deck to designed pages, iterations take longer. You also get distracted by design.
Now is a good time to test your pitch on a friend. Afterwards, ask them these questions:
Describe the business back to me
What do you remember most from the pitch?
What's your biggest concern about the business?
What most excites you about the business?
Are these the answers you wanted to hear? If not, iterate on the story until you're happy.
Step 5. Design
By this stage the content of your pitch deck should be in order. Now is the time to make it shine. This is where SketchDeck can help.
SketchDeck takes your content and turns it into a well designed presentation. By this stage you should have a compelling story spread across slides, with the key points visualised. If this is the case, the final step is easy!