You’re reading part 1/5 in the Buzinga crash course: How To Raise Startup Funds By Giving Investors What They Really Want
Go to part 4: The Secret To Acquiring Venture Capital Investment
Go to part 5: 7 Knockout Pitches Every Startup Needs To Watch
I’m going to make a big claim here:
A strong pitch is the most powerful weapon you have to getting your app off the ground.
Startups are notorious for being cash poor, and wowing investors with your app idea is challenging even for businesses with a considerable amount of traction.
After you’ve developed a thorough startup plan, the next step is compacting it into a short presentation to impress investors.
That’s why I’m giving you access to the pitch deck template we give our clients to help them create a knockout pitch deck.
I’m going to walk you through what to include in each section and how to best tackle the preparation, the pitch, and the follow up.
This will ensure you’ve included all the information investors will be wanting from this first meeting, and structured it in a logical, compelling way.
Why you need a pitch deck
The purpose of a pitch deck is NOT to answer every single question that might be raised about your startup.
It’s also NOT to close immediate investment. This isn’t Shark Tank – you’re probably not going to walk away with a $1 million investment after 5 minutes.
The purpose is to start a conversation.
Your pitch deck aims to evoke curiosity, capture the attention of investors and get them excited to learn more.
The key to doing this is to give them enough details to flesh out your vision into something tangible, without overwhelming them with data.
In other words, more ‘key success factors’, less ‘projected costs in 10 years time’.
Do this and you’ll be well on your way to securing funding.
“I’ve always considered myself to be just average talent and what I have is a ridiculous insane obsessiveness for practice and preparation.” – Will Smith
Your pitchdeck should meet the following requirements:
- Be able to stand on its own. While you don’t want to include ideas and numbers that aren’t relevant to right now, it should be the guts of your business. You shouldn’t have to whip out appendixes and other resources to communicate what investors want to hear.
- Concise. Investors are busy people. Keep it between 10-13 slides.
- Accurate. If estimations are made (market size, customer demand, projected overheads, etc) they must be conservative. Investors will be able to suss out if you’re inflating numbers, and even if they don’t it will be awkward down the line when these don’t match up.
Who are these investors?
- Venture capital investors
- Angel investors
- Family members
- People you meet at networking events
- Others who are drawn to your concept
Do some research and make a list of all your potential investors, then contact them and set up a time to meet.
Knowing a bit about their personality and what they’ve previously invested in will equip you for how you should pitch to them. Are they highly professional or a more down to earth, hoodie-wearing type?
Regardless, be professional and sincere, and tell them (either via email or over the phone) that you have a business opportunity that you’d like to run by them.
DON’T share your idea over the phone.
You want to provide investors with as little information as possible while still sounding enticing.
Otherwise you’ll be forced to start your pitch over the phone, and this is way too restrictive.
If you’re really prodded for details, tell them the industry your startup is going to disrupt or the current gap in the market.
Creating your Pitch deck
Here’s the template we give our clients to help them write a simple pitchdeck. It should be a maximum of 13 slides – we’re all busy!
Let’s get straight into it.
This is your mission, your business’ ‘reason for being’. It should be no more than 30-45 seconds.
Mitchell Harper, co-founder of Big Commerce, advises you should take your vision and make it 10 times bigger. Is your current vision to serve every target in your country? Expand it to serve EVERY country.
Remember to ask ‘why’, and continually push yourself to understand what your business’ purpose is.
Your vision will be taken from your big hairy audacious goals (check out how to craft these here).
Watch this fantastic Ted Talk by Simon Sinek on how to ask ‘why’, and get on the path to business enlightenment.
When you get uncomfortable or nervous about the size of the goal, you know it’s ready for the pitch deck.
A bonus: Writing it down and verbalizing your vision will actually make you more likely to aggressively pursue it, and achieve it.
Source: Entrepreneur mag
You’ve just opened by talking ideas. Now you need to show that you’re grounded in reality, and you do that by throwing investors social proof and data.
Start by selling your team.
The team is one of the fundamentals of the business. A good idea and a great team will always win out over a great idea and a mediocre team.
“We start with the people first. We think the ideas that entrepreneurs start with evolve and sometimes end up unrecognizable, so we believe in investing in the people,” – Ron Conway, angel investor of Google, Twitter, Square and PayPal, and general boss.
Your team includes a profile on you and your business partner(s) – the founders, as well as the rest of your staff.
It should detail WHY you are investment-worthy. What skills do you have to make this plan a reality? How many combined years of experience do you have?
What have you done in the past to prove you’re qualified to start your own business?
Moving past the founders, what makes the rest of your team so special? Why did you choose them? How do they round off your team’s skills and experience, or what connections/clients do they bring?
This is actually a great exercise to do when putting together your team in the first place – it forces you to be objective and think about your team as a whole rather than as silos. What skills/experience does the next hire need to round out your startup machine?
This takes out any nepotism or bias towards friends and family in your hiring process.
Here’s what our clients use for Buzinga when pitching to investors:
Who is your team?
Buzinga App Development
Why have you chosen them?
Previous expertise in successfully building, launching and consulting for successful startups. They have the ability to connect us with further funding opportunities and mentoring with incubators/investors post launch.
What have they done in the past to warrant you choosing them?
- Featured in Business Insider, Prime 7, Shoestring, Startup Smart…
- Crowd Mobile IP acquired for $12m @ $2.5m annual revenue
- Built 2 apps that have hit #1 App on the App Store
- Helped clients raise in excess of $10,600,000 in funding
The next thing you need to include in this section is your key numbers.
Your key numbers
- Customer acquisitions
- Retention rate
- Engagement metrics
Head over to How To Measure Your App Success for a full list of metrics you need to have.
3. The problem
Source: Vicky Loras
Every sustainable business idea will fill a gap in the market.
It might be an obvious gap or a not so obvious one.
“If I asked the customer what they wanted, they would have said faster horses” – Henry Ford
Free resources like government reports, Australian Bureau of Statistics data, and industry reports from Mintel and Euromonitor are fantastic resources for entrepreneurs.
Use these resources to show current and projected trends that will bolster your idea.
Use any other data you have to validate your idea – Any surveys you carried out, or even the success of similar products from competition.
Be conscise, and don’t overwhelm.
What is the problem?
Who has the problem?
How are you solving the problem?
Make reference to the current solutions and alternatives to the problem. This will demonstrate you understand the current state of your market.
Using this information, are you able to estimate the size of the market? This will show that you have an idea of the scale of the opportunity you’re offering investors.
4. The solution
Source: Simon Furth Seminars
Drawing directly from the problem you just outlined, explain how your app is the solution.
Use 3-4 bullet points to break down the key benefits of your app, and master the art of the sell.
This is easier said than done, so check out Oren Klaff’s website for a crash course on how to pitch (and sell) anything.
Demonstrate you’re a customer focused company (like all successful businesses are) by telling the story of the customer and how they will use your product.
Focus on the benefits your app will provide, not the features.
In this section you should also identify any assumptions in your business model. How do you aim to test and validate them?
This is a nice segue into your revenue model.
5. Revenue Model
If it’s immediately applicable:
- Identify KPI’s
- Identify primary customer
- Show how you will make money
- Show basic maths on revenues/conversions (estimates only)
- Identify lifetime value of average customer (estimates only)
Your revenue model is likely to change throughout your startups’ life, so it’s ok if you haven’t figured it all out yet.
But you should at least have 4 dotpoints explicitly stating 2 immediate revenue streams and 2 possible future revenue streams.
Investors will be impressed that you’re focusing on what you can execute now, but are still forward thinking enough to be open-minded to changing business models.
6. Marketing Strategy
Source: The Rain Maker Blog
Your marketing strategy will explain how you target end users.
Sorry, but the old ‘build it and they will come’ philosophy is not going to cut it.
First you need to identify your customer.
Segment customer groups based on demographics – statistical data relating to the population and the groups within it.
- job title
- level of seniority
These are just some examples of how you can segment your customers. Some of these may not be relevant to your app, while you may need to include others – eg marital status and income.
Next, segment based on psychographics – the study and classification of people according to their attitudes, aspirations, and other psychological criteria.
In doing this you should be able to develop some user personas, which will help categorise all your current and potential users based on their behaviour and goals from using your app.
Using this data on your customers, come up with 2 tactics for how you will market to your end user.
It’s important to provide some context around these strategies to help investors understand why this tactic has been chosen, and why it will work.
Where are your customers currently looking for solutions to the problem, and how will you get in front of them?
Use this to justify your choice of communication channels and marketing materials.
Finally, what are your target growth rates and how will you achieve them using this strategy?
7. Financial Projections (if applicable)
If applicable only, use a graph or chart to show 3-5 years of growth projections.
Recommending reading: Template: How To Write A Profit And Loss Forecast For App Startups
This section will have just come off the back of some solid data about market opportunity and a justifiable market penetration strategy, but these estimates should be conservative.
Define any assumptions in your expenses – Development costs, marketing costs, and miscellaneous.
State each of the following targets, for years 1, 2 and 3:
- Total customers
- Total revenue
- Total expense
Source: Video Hive
Demonstrating that you’re aware of competition will go a long way with investors.
NEVER say that you don’t have any competitors. All this will tell investors is that there is no market for your product, or you haven’t done any research. Neither looks good on a pitch deck!
Instead, this is a chance to show your app’s differentiating factor or ‘unique selling proposition’, and illustrate where the gap in the market is.
List your top 3 competitors and rank their market presence out of 10.
In a few dot points, briefly list what each of them do well, what each of them don’t do well , their brand positioning and their target audience.
To do this effectively you’ll need to have executed a SWOT analysis for each competitor.
How often are your competitors releasing updates? Weekly, bi-weekly, monthly, etc.
What are their target keywords in the app store? A quick search using Sensor Tower will help you zero in on these.
9. The team
You will have introduced the most important people in your team in ‘traction and validation’, but now you will detail exactly how each person contributes.
Outline in a table the key roles for the development and success of your app.
Name of Person: Jane Operator
Tasks: testing, financial management, operations.
This table should show that you’ve got every possible task covered and each task has a person accountable.
10. Master Plan
Your master plan is your plan of attack to reaching those growth targets you laid out for the next 0-12 months, 12 months -18 months and 18 months -24 months respectively.
These are high-level steps and milestones, so you don’t want to overwhelm the investors with unnecessary tasks. Focusing on the here and now will get you much further.
Check out this example for some inspiration:
10. The Investment Opportunity
In sales and marketing, everything you do finishes with a call to action.
Don’t forget to ask for the money!
Position your pitch as creating a win-win transaction. You’re not being desperate, because you’re offering the investor a massive opportunity by helping you out!
Here’s what you need to cover in this section:
- How much are you raising? Who from, ideally?
- What are you doing to raise that money? Include crowd-funding, any government grants you’re applying for, investors, and how much you’re fronting out of pocket (if any).
- Explicitly say what you are looking for from THAT investor specifically, and at what cost per share.
- Show that you have a plan for how you’re going to handle that investor’s money. List in dot points the break down of where that investor’s money will be going, as well as what will happen to it if you can’t raise the full amount you need.
After that, open up the floor for final questions.
You must be ready for EVERY question. Have numbers ready at the drop of a hat.
You need to know your stuff, because nothing looks worse than “Wait a minute, I have it in an email somewhere…”
You’ll find after you’ve done a few pitches that some questions will be coming up more than once.
This is great – it means you can add this to your pitch deck and refine it to better meet investors’ needs.
Finish your pitch by asking investors to consider your proposal, leave them with an ‘information pack’ (it can just be a print out of your slides) and tell them you’ll follow up with them in the next few days.
Follow up the same night with a thank you email (or SMS if you think it’s appropriate).
2 days later, follow up with a phone call to close if they haven’t already contacted you.
Be clear and concise in the phone call that you’re asking for more than an indication of interest.
“Hi Anne, just giving you a call back about the discussion we had the other day to see if you had any questions? Can I get a commitment from you?”
They might say maybe, but don’t stop at maybes.
Keep following up and providing them with more data, answering all their questions and rigorously negotiating until you get a firm YES or NO.
If you are lucky enough to get a yes (here’s hoping!), these are the criteria you should use as a checklist when considering a potential investor:
- Desired level of involvement
- Desired level of control
- Diversity – you want investors with complementary skill sets
- Level of compatibility with your goals, personality and business interests.
Important things to remember…
1. Just be you. But better yet, be better than you – be your best self. You need to be:
- Knowledgeable – as if you’ve thought this through
- Professional (but not over the top)
- Committed – you’re not going to go back to your old job at the first sign of slowing revenue
- Deeply focused
2. Be mentally tough.
Source: 1 pitch warrior
You will receive more no’s than yes’s, but you shouldn’t think of ‘No’s’ as missed opportunities.
If your pitch is the best it can be and accurately conveys what your startup is all about, when someone says no it means they’re not a good fit.
Here are some of the top reasons why investors say no:
- You underwhelm them
- You confuse them with your pitch
- You lack a clear strategy
- You act arrogant or use marketing jargon
The other thing you need to get comfortable with is a lack of support.
I understand that your app is your baby and you have huge aspirations for how it will revolutionise its industry.
Sorry, but no one else is going to care as much as you just yet.
You’ll find that your friends, family and potential investors aren’t as ambitious as you are about the idea. They need convincing to get on board, so be prepared for people to be a little lackluster.
3. You can’t over practice.
Not everyone is born a public speaker.
Make sure you practice in front of friends and family to get feedback.
Even after doing this, you should still film yourself delivering the pitch and look out for points you could improve on.
Your friends might be reluctant to give criticism, but if you watch yourself you’ll realise “I’m saying ‘um… too often’, ‘I’m not using hand gestures and look wooden’ or ‘I’m being too flamboyant and my mannerisms are distracting’.
When you’ve done all that, do the pitch backwards.
Only then will you be ready!
4. Be energetic
There’s obviously a logical underpinning reason for why people make investments.
But they need to be excited about THIS investment to take the leap of faith.
Remember that one of the most reported reasons for investors saying no was feeling underwhelmed.
You shouldn’t be afraid to show you’re passionate about your work. If you truly are driven by what you do, showing this in your pitch will be easy.
BUT you need to be able to calm it back down again. Obviously some sections will require a more serious tone (initial costs, asking for the investment), so just keep your energy natural.
5. Focus on the here and now.
Investors don’t want to hear about your grand plans for the future.
They want to know what you’re going to execute NOW.
It’s great that you’re a dreamer, but you need to show that you’re grounded in reality.
Pitching to investors is nerve racking even for seasoned businesses.
But with some preparation and a logical structure you’ll have a much better change of leaving that room with some interested investors.
I hope this pitch deck template helps you when crafting your own!
Continue the crash course…
Go to part 4: The Secret To Acquiring Venture Capital Investment
Go to part 5: 7 Knockout Pitches Every Startup Needs To Watch
Latest posts by Logan Merrick (see all)
- Ep 18: Collective Campus’ CEO on Intrapreneurship and Corporate Innovation - December 20, 2016
- 50 User Engagement Strategies For Planning Memorable Mobile Experiences - December 19, 2016
- Latest Data: App Monetisation Trends And Drivers 2015-2020 - November 25, 2016