What topics should I include in my pitch deck?

Every pitch should be a clear, complete and simple story. It should have a beginning — the problem identified — and an end, how much money will be needed to solve it. Chances are there is a lot of information you want to share in between these point, but don’t. There is no plot to this story, just a beginning and an end. Sharing too much information turns your pitch into noise and will change the focus of the real story you are trying to tell. You want your pitch to make sense and should be a maximum of 15 slides including the following topics (at least) in any order that flows for your story:

• Market Opportunity
• Problem definition
• Solution that you are building or have built
• Distribution and Marketing—Do you have traction; how to build traction?
• Competition
• Team
• Demo
• Execution
• Business model and financials investment requirement

 
These topics should be broken down into five blocks

1. The Team
2. The Problem
3. The Solution
4. The Market
5. The Financials

 
Ask yourself the following questions, because investors sure will be, to know exactly what you should include in your story.
 

Is your team committed, on-board, and performing?

You may have the next Steve Jobs as your co-founder, but it is important that every team member is completely dedicated and delivering. You want a team that is with you before you even get a cent from anyone. It shows that they are just as passionate as you about the company and are confident that your product will succeed. If you cannot convince a group of your peers that you have the next best thing, there is no way investors will be on your page. Most importantly, you must prove and validate that your team will deliver.
 

Is the market large and growing?

It is important you can name the market and have trustworthy numbers because nobody wants to gamble in a stale, shrinking market. Growth should be expressed in terms of CAGR It is better to have numbers you have found on your own through speaking with clients/potential clients, conducting a survey etc.
 

Do you actually solve a problem or are you looking to find a problem?

A solution without a clearly defined problem is a red flag for investors. Knowing the ins and outs of your problem is going to help you find your target market and define your market potential. When you are pitching this part of your deck, the audience should be engaged and confirming what you are saying. If this is not happening and you are getting blank stares, you should be concerned.
 

Do I need to bring my product or demo?

Yes. Whether this is the actual product, or a mockup—you must show it! Here are some tips: If you don’t have traction, show the product; if you don’t have the product, show a demo or prototype; if you don’t have the prototype or demo, show mockups; if you don’t have mockups, make sure you are extremely prepared! Your product or demo should be shown when you explain the problem and start explaining the solution. Use your co-founder to click through the slides while you are showing the product, or vice versa.

Does your solution sound credible? You must show that you have tested the solution you are giving them. And more importantly, that you have tested the possible adoption of your solution by your customer.
 

What is your lead time on the competition?

Depending on the industry, this is going to vary. If your product is patentable, then you already have an advantage. You want to make sure you know your competition and that your lead time and business model are disruptive enough, that your immediate competition will not be able to keep up.
 

How will you get your product distributed?

The chance that your distribution tactics will get you a huge number of followers overnight is slim to none. This slide should give the investors the sense that you know how distribution models work and you are more than capable of choosing the right one. Many people struggle with this part of the pitch deck, and in the presentation this time will most likely be more of a discussion, moderated by you, where it is necessary you write down every word and suggestion said.
 

How will you make money or reach mass adoption?

More often than not, you will not be making money as projected in your first business model. You want to explain your assumptions, be very honest, transparent, and take criticism. You should have your model written out to where you have given yourself room to make changes and want to show that you are willing to.
 

Can you execute?

Say what you do, do what you say. If you tell investors you will have something done by the next meeting—have it done, otherwise you will not be taken seriously and you have failed.
 

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Want To Learn More?

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

• An overview of the angel investor process and who they are
• The milestones angel investors look for when evaluating your business
• Strategies for finding the angels best fit for your startup
• How to nurture the relationship, prepare for the meeting and deliver the pitch
• Rounding out the details and preparing for the future

Raising funds from business angels may be difficult, time consuming and even frustrating but for the right founder with the right project it may be the preferred option. Your chances of success are likely to reduce the more you stray from the 10 guidelines discussed below.

1. Establish a group of angels who have indicated an interest in investing the opportunity to form an angel group.

2. Ensure that speak with all the angel group members and have guarantees on the amount they want to invest.

3. Nominate one lead angel to lead the group. This individual should have the most investment experience and relevant domain or industry experience. They should be highly regarded by the other group members and able to secure their confidence.  The individual is likely to be the lead  investor in the venture and may join the Board of Directors.

4. The entrepreneur will need to be ready and able to respond to due diligence information requests. This process may include the provision of various scenarios on revenues and costs as the investors validate forecasts initially presented.

5. The term sheet is a legally binding document and should include the following elements:

Offer terms, such as:

1. Company, founder and investor details
2. Amount to be invested
3. Pre-money valuation
4. Type of security and structure

Conditions, such as:

1. Satisfactory completion of due diligence and references
2. Service contracts

Terms of agreement, such as:

1. Board composition and decision making criteria
2. Rights and restrictions of shareholders
3. Representations, undertakings and warranties of the founders
4. Professional fees and costs
5. Exclusivity period and timescales

A capitalization table showing the post-investment ownership structure of the business to include founders, option pool and investors in the current round

6. Instruct legal advisers to begin the documentation process, having earlier established and agreed to the fees involved. Both parties will need legal representation, but the angel group should now operate as one with a single legal adviser. The documentation process will include a shareholders agreement, articles of association, disclosures and various board minutes and filings.

7. Maintain communication with the group through the lead investor and throughout the documentation process. Confirm the expected date for funds transfer and completion to ensure that angels will have transferred funds to the legal adviser beforehand and are available for document signature.

8. Respond to documentation queries and change requests raised by the investor side promptly.

9. Ensure the business continues to make progress and, especially, meets any expected milestones. If at all possible, provide the group with some good news to reflect progress, increased traction and momentum.

10. Do not underestimate the difficulty of gaining signatures on documents if multiple investors are involved. Many angels have business schedules and travel frequently.

Want To Learn More?

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

• An overview of the angel investor process and who they are
• The milestones angel investors look for when evaluating your business
• Strategies for finding the angels best fit for your startup
• How to nurture the relationship, prepare for the meeting and deliver the pitch
• Rounding out the details and preparing for the future

The Best Thing You Can Be When Raising Capital is Prepared

You have finally set up that meeting with an angel investor and have everything prepared for your pitch. What do you do to make sure you hit your pitch out of the park and get a second meeting, and better yet, a check?

Be sure to address these four items that investors will always ask:

1. Is the business idea simple enough for me to understand and buy into
2. Does it solve a problem or meet a need
3. Is there a big enough market and customer base for the idea
4. Does the entrepreneur have the right team to pull it off

 

Pitching Tools

Aside from your business plan with a well-defined marketing strategy and financial statement, the way you look, speak, and what information you leave out during your pitch can make or break the deal.
 

Keep the focus on the money

While it is important that you have a product that works, in your first meeting, angels will assume that your technology works. If an investor is interested in hearing more about your product or business mechanics, they will ask about it, otherwise only spend a few minutes talking about this. You are going to investors to get money and that should be the focus. Let them know the amounts and number of investors you are will to sell equity.
 

Be aware of your body language

They say, “Don’t judge a book by its cover”, but investors will. You are going to have a level of nervousness, and investors know that. Come into your pitch well groomed, dressed professionally, and making direct eye contact. Don’t let them write you off because you have not showered in a few days. Try not to show any nervous ticks, like swaying side-to-side, keeping your hands in your pockets etc. Make sure you look confident (even if you might not be completely feeling it) otherwise investors may think you are hiding something.
 

Be clear about what you say

Present with passion and enthusiasm. You are telling a story and want to use language that is clear and concise. If you are talking about a website, use the word “website” not “platform”. Anyone can come to a presentation and read off cards, but as stated before, investors are interested in the story and want to get excited. Communicate clearly—this is my idea, here is the market, this is what differentiates me from my competition, here is why I will be a financial success, and this is why you should invest in it.
 

Have something to show

A presentation with 12 slides is standard for a tech product. If you have a working product or prototype bring it in to show investors, better yet if possible bring in samples for each of the investors. This is when you will talk about your research on testing your business concept, and anticipated orders or actual sales.
 

Be prepared for questions

You better know the ins and outs of your industry, because they will ask. You want to be prepared to answer anything that comes your way, including alternate strategies. The key is to stay cool, calm, and collected. It is better to get back to them with an answer, then slip-up and say something that does not make sense. They want to know how you will function under pressure.
 

Have an exit strategy

You need to provide a way out. Provide one to three year projections of how the investor with make their money back. If you say by sales revenues, you’re done. Keep in mind most angel investments take seven to eight years to reach an exit.
Make sure you have done your homework.
Common errors will get you rejected in no time. On the financial side of things, common mistakes are too high of a valuation, insufficient growth potential, and indebtedness. Other reasons for rejection include unfair competitive advantage, and a team that is inexperienced or too thin.
 

Follow up, follow up, follow up.

The hardest part is closing the deal. The longer it takes to close, the less likely it will get done. Make sure to return phone calls, emails, and any questions ASAP.
 

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Want To Learn More?

Are you a first time entrepreneur and looking for angel funding for your startup? It can be tricky figuring out where to find the best investors. You may think that numbers and locations are the only thing to look out for, but in reality it is best to find the angel that fits you and then your situation. As always, keep these key principles in mind while looking for, and after you find an angel investor.

Angels are typically only interested in opportunities local to them. They want to “touch and feel” their investments, so email blasts are out of the question. Not only are angels not interested, but it is much more work for you to do follow up with the thousands of people you sent an email to.

Angels want to get to know you. They invest in people more so than they invest in ideas. They want to know that you are a credible and trustworthy person, and need to know you before investing any money.

Even though sometimes you are paying to pitch to angels, their time is still valuable and it is important to respect it. Do not go into a meeting with a sales-like pitch. Angel investors are people too, and want you to understand their motivation as much as they want to understand yours, and will not respond well to those kinds of pitches.

With the internet access available almost everywhere finding an investor, nowadays, is just a Google search away. It is important to get involved with different startup networks, conferences, and competitions. These are some of the best places to meet investors first hand and meet and connect with other entrepreneurs. You are each other’s biggest support system and resource for all things startup. Here is a short list of conferences, competitions, and networks to check out for upcoming events.

1) Funding Post –This website showcases entrepreneur’s to over 7,900 investors. All you need to do is create a company profile. It also has a list of upcoming events all over the United States.

2) Startup Weekend– Search your location to see upcoming events. Startup weekend has events almost every weekend in locations all over the world. It is a place to grow as an entrepreneur by learning new skills, meeting other entrepreneurs, and getting feedback from local thought leaders—just to name a few.

3) Lean Startup Machine– A three-day workshop that teaches entrepreneurs and innovators how to build disruptive products. Similar to Startup Weekend, this is for growing as an entrepreneur.

4) The Startup Conference– It is an annual conference that takes place in Silicon Valley. It has close to 2,000 entrepreneurs and gives you the tools to pitch to investors, find co-founders, and launch your product to the press and more. Its speakers include many top influencers in the startup and funding world.

Another option is to go straight to a network designed specifically for angel investors. Here are some of the largest and most successful:

1) Gust (formerly AngelSoft) – Run by the “Father of Angel Investing in New York”, David Rose. It has a lot of information on angel investing, and is the most widely used source. It is used by both entrepreneurs and local angel organizations. As an entrepreneur, use the investor search to find investors according to location, industry interest, and other conditions. All you do is set up a company profile and it will present all the information investors need to know in a professional way. The site has more than 1,000 member-managed groups and VCs, with 40,000 investors and more than 1,800 startups funded in the last 12 months.

2) Angel List– Founded in 2010 by Naval Ravikant and Babak Nivi of Venture Hacks. It is more of a social networking for raising equity. Their community has already grown to more than 500 startups and 2,500 investors.

3) Keiretsu Forum– Founded in 2000, it claims to be the largest angel investor network in the world. It has 1,000 accredited investor members throughout 21 chapters on three continents, and its members have invested more than $400 million in companies in technology, consumer products, healthcare/life sciences, real estate and other segments with high growth potential.

4) New England Investment Network– This is an online forum that connects entrepreneurs in the New England states with angel investors worldwide. It has a very broad reach with 30 branches, covers 80 countries, and has more than 200,000 members worldwide. The only limitation with this platform is that it only gives contact information, meaning you need to find matches on your own.

5) Angel Capital Association– this organization includes more than 160 angel groups and 20 affiliate organizations across North America. They fund approximately 800 new companies each year, and manage an ongoing portfolio of more than 5,000 companies throughout North America.

 

Want To Learn More?

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

• An overview of the angel investor process and who they are
• The milestones angel investors look for when evaluating your business
• Strategies for finding the angels best fit for your startup
• How to nurture the relationship, prepare for the meeting and deliver the pitch
• Rounding out the details and preparing for the future

What is an angel investor?

.It is a high net-worth individual who invests his or her own money directly into promising startup businesses in return for mostly equity share of the company. Angels are often former or current entrepreneurs themselves, as well as business professionals and corporate leaders. There are a few reasons why angels make investments, and those are to gain a return on their money, to participate in the entrepreneurial process, and to give back to their communities by catalyzing economic growth. Angels typically invest in companies local to them. Sometimes they will co-invest in a company if the other so-investor is someone they know and trust. What is important is that they are wealthy and willing to invest a great deal of money in your business for a piece of the action in return.

Angels need to meet the Securities Exchange Commission’s definition of an accredited investor, which in their case is they need to have a net worth of at least $1 million and make $200,000 a year—or $300,000 a year jointly with a spouse. About 225,000 people have made an angel investment in the last two years. Investments commonly run around $600,000. The Center for Venture Research estimates that U.S. angel investors invested $19 billion in 55,000 deals in 2008, with most of the investments being made in start-up or very early-stage companies. Angels make a return on their investment when the entrepreneur successfully grows the business and exits it, generally through a sale or merger.

What is an angel group?

An angel group is individuals that join together with other angels to evaluate and invest in entrepreneurial firms together. These group members can pool their wealth together to make larger investments. The Angel Capital Education Foundation has three hundred American angel groups in its database, and they all come in many forms. They do all share some of the same characteristics. Group members meet regularly to review business proposals and watch presentations of the selected businesses. They decide together whether or not to invest in the presenting entrepreneur. And members work together to implement due diligence to validate plans, statements, and history of entrepreneurial team.

Groups invest in firms in a wide range of industries, but are typically all innovative and high growth. The most common industries include software, medical devices, telecommunications, and manufacturing. The Angel Capital Association found that the median investment per round per angel group was about $277,000. This number varies widely depending on the industry and on the angel group making the investment. Many angel groups will co-invest with other angel groups and individual angels to make larger investments. These investments generally range from $500,000 to $2 million per round. Since angels are typically entrepreneurs, business professionals and corporate leaders they will have areas of expertise. Some groups will select the markets of the group member’s expertise to invest in, whereas other groups will have a market focus on a specific industry. Angel groups are commonly easier for entrepreneurs to find and since they comprise of some of the most sophisticated and active angel investors in the country, groups have become the leading indicator of angel investor activity in many communities.

Want To Learn More?

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

• An overview of the angel investor process and who they are
• The milestones angel investors look for when evaluating your business
• Strategies for finding the angels best fit for your startup
• How to nurture the relationship, prepare for the meeting and deliver the pitch
• Rounding out the details and preparing for the future

Often times, entrepreneurs get rejected from Angel after Angel because they neglect to understand the essential components that appeal to Angel investors. Regardless of how solid the product or service is, if an entrepreneur does not consider the following fundamentals, they’ll find it difficult to attract Angel investment:

• Type of industry
• Company’s stage of development and capital requirements
• Geographic location
• Management team
• Sustainable competitive advantage
• Exit strategy

Business owners can greatly increase their chance of raising Angel investment by researching a prospective angel’s investment profile in regard to the 5 fundamentals above.

 

Type of Industry

Angel investors usually have an industry profile that they feel comfortable investing in. These are typically industries that they have experience in as well. Angels are sensitive about the industries they invest in for several reasons: 1) they want to be able to add value to the companies they invest in; 2) they feel more comfortable evaluating the market need and potential for a new company in an industry they are familiar with; 3) investors can identify growing markets that they see have a large potential and target companies within those markets.

 

Company’s Stage of Development and Capital Requirements

In addition to having an industry profile, Angel investors typically have a stage and capital requirement profile for their startup investments. Angels are interested in building small, seed stage companies into moderately sized businesses with strong ROI potential. Startups that require large amounts of capital will likely not provide the level of ROI that will make the investment worthwhile to an angel. With that said, Angels will often pool their investments in order to invest in the companies that require $500K to $1M without assuming too much risk. When determining which Angel or Angel group is appropriate for you and your startup, it is important to understand the stage of development and capital requirements that the target Angel feels comfortable investing in.
 

Geographic Location

As a general rule of thumb, Angels like to invest locally. The primary reason for this preference is convenience. By investing close to home, Angels can visit their startups, convene with management team, and monitor the overall investment process. Additionally, from the procurement side, it is easier for Angels to source deals from referrals that they see on a daily basis and therefore have developed a higher degree of trust.
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Management Team

Angel investors heavily weigh the importance of the startup team when evaluating an investment opportunity. The reason is simple, the company will face adversity, things will go wrong, and the plan will change. But, if the right team is in place the company can overcome the adversity, fix the issues, and adapt the plan. You should plan on having a team member, service provider, or advisor for every part of the business other than your area of expertise. For example, if you are a tech expert launching a mobile app, you will want a team member, service provider, or advisor fulfilling the following roles CEO, CFO, sales, and marketing. At this stage, it is fine for one person to fill several roles so long as they have the expertise to fill these gaps.
 

Sustainable Competitive Advantage

Many first time entrepreneurs ruin their chances of raising Angel investment by shying away from the competitive landscape as opposed to using it towards their advantage. It is very rare that a startup raises capital without clearly defining the competitive landscape and showing how the startup’s solution presents a clear competitive advantage beyond others in the market. Investors want to know how your competitive advantage is sustainable and how it will keep competitors from copying an advantage that you have discovered.

 

Exit Strategy

As mentioned previously, Angel investors are looking for startups that have the potential to provide a large ROI. Angels realize their ROI during a liquidity event. The exit strategy is the entrepreneurs opportunity to pitch a clear strategy to an Angel that highlights what a probable exit looks like, when it will likely occur, and what type of return can be expected. One of the bigger mistakes that an entrepreneur can make is to neglect the ultimate motivation of a potential Angel investor: a large return on their investment.

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Want To Learn More?

Download our free Raising Capital from Angel Investors eBook.

This guide will walk you through the process of obtaining seed capital for your startup. This book includes:

• An overview of the angel investor process and who they are
• The milestones angel investors look for when evaluating your business
• Strategies for finding the angels best fit for your startup
• How to nurture the relationship, prepare for the meeting and deliver the pitch
• Rounding out the details and preparing for the future