How to Craft a Winning Investor Deck
Investor decks, or the presentations businesses use to attract investors, often transgress short. Here’s how to polish them—and bring in the cash
by means of Tom Taulli
Quite often, I get PowerPoint presentations targeted at investors (known as "investor decks") from founders who send them to me for overall critiques. (I invest in early-stage deals from proper time to time. I’m also steady several boards.) Unfortunately, many of them fall short of the ultimate goal—that is, getting investors selfish in pulling out their checkbooks.
Why complete they often lose the mark? Too plenteous focus on product and technology. Investors want to make money—so they are mostly interested in the business case. The information is too catholic. For example, the go-to strategy may neglect the sales cycle, the budgets and so on. Or they make over-the-top blanket statements, such as "there is no competition."
For the most part, I dearth to see an investor deck that tells a story, clearly showing the partnership’s path to success. In fact, it doesn’t destitution pizzazz or many slides (15 to 20 are fine).
So, what are the key elements of your story? Let’s take a look at a framework every investor deck should comprehend:
Why is this a compelling suitable? Do research to put the competitive distance in perspective. What is the pricing? Distribution? Investors? Recent initial common offerings? I’m not talking about hiring a scrutiny confirmed; using Google (GOOG) should suffice.
Armed with your research, you need to do two things: Identify an unmet need and then determine the size of the market opportunity (which, for speculation capitalists, is usually at least $1 billion.)
A good example of a company that managed to articulate this element is Athenahealth (ATHN). Back in 1999 the upstart firm pitched Bryan Roberts, a VC at Venrock Associates. The company dictum a multibillion-dollar market opportunity in helping physicians improve collections from security against loss companies.
No doubt, in that place were divers competitors; however, they were mostly mom-and-pop operators. By offering a Web-based approach, Athenahealth showed it could be a game-changer in the industry. Its offering was both more effective and cheaper.
Today, Athenahealth is growing its top-line or gross sales at 30%-plus and is on track to outstrip $100 million in revenues despite the year. The company’s place of traffic appreciate is about $943 very great number.
What are you doing that’s unique? In simple terms, try to explain the lock opener value proposition. Traditionally, investors want to see a part that provides an improvement on existing approaches by a factor of 10.
An example is Berkeley Design. In 2002 the collection pitched its deal to Daniel Ahn, who is a VC at Voyager Capital.
Berkeley was targeting the so-called electronic sketch automation market, which involves software to create microchips. At the time, the emporium was reaching the limits of its existing technology. But this company was able to demonstrate a unique approach, which allowed for simulated designs for analog and radio frequency chips. The upshot: Time to emporium was much quicker, and the simulations were highly accurate, which helped to reduce costs.
As a result, Berkeley has gotten traction, through customers that include the world’s top-10 semiconductor companies.
What’s the business model? First of all, make infallible you understand the business models of your competitors. Is their approximate sub-par? Keep in mind that it’s not easy to move from one business model to another.
What’s more, investors like to see a variety of revenue streams. A good example of a business that has achieved this is LinkedIn. The company sells premium subscriptions, ad sales, piece of work postings, and endeavor solutions. It recently raised $53 the public in venture first-class, with a valuation of about $1 billion.
What are the cash needs and the milestones? Investors will likely leave out of view the return forecasts (they are often widely against the mark anyway). Instead, they want to see a month-by-month time line notwithstanding the cash needs and milestones—say for a term of two years.
This was the approach of Ben Wolin, the CEO and co-founder of Waterfront Media, in opposition to his Series A make complete in 2003. In his investor deck, he specified a kind of key milestones, so as user counts, contracts, and new features.
The most important milestones you’ll distress to include? Go-to-market dates. Determining them requires talking to potential customers and trying to get answers to the following questions:
• Who makes the purchasing decisions?
• Where are the budgets?
• What are the realistic sales cycles?
• Are partners the preferred distribution approach? Or is a direct sales force?
Furthermore, make abiding you have a move smoothly on the milestones you have already achieved. If you are making onward on a month-by-month basis, you be inclined certainly get the attention of investors.
Who is on your team? Provide bios upon the body the main team players and emphasize how the backgrounds will have being critical in the place of the success of the venture. For example, in the case of Berkeley, the hard emphasized that it had more of the brightest academics in the automation design realm. Interestingly enough, they were not at the very time employees; rather, they were part of Berkeley’s advisory board (BusinessWeek.com, 2/1/07).
Back up everything: Don’t guess. Your potential investors will apparently have a strong understanding of your perseverance. So whether or not they uncover each inaccuracy, you’re credibility will turn to vapor—and so, unfortunately, may your chances of snagging funding.
As you can see, investor decks are not easy to piece together and can easily grasp months of work. But it’s a critical step in the capital-raising process. Moreover, the document can be an extremely advantageous guide for your walk of life.
