How do we make money slide in a pitch deck? Where does the how we make money go in your pitch deck? What should be on it?
Showing potential investors how you make money is one of the most important parts of your pitch.
Unless this is a charity, no matter how noble your mission and desired impact, or how much investors like you as people, this is a financial decision. If this is a business, it is about making money.
So, how do you achieve this, deliver on expectations, and maximize your value, fundraising ability, and get the best terms by getting this right in your pitch deck?
The Ultimate Guide To Pitch Decks
Every slide in your pitch deck is closely interconnected to create a compelling narrative. The entire presentation should flow smoothly, culminating in the ask where you put down the amount you need. Check out this video I have created, where I explain how to create pitch deck and include the how we make money slide.
Here is the content that we will cover in this post. Let’s get started.
- 1. Investors Need To Know How You Are Going To Make Money
- 2. Why This Is So Important For Investors
- 3. Financial Responsibility
- 4. Returns
- 5. Cash Flow
- 6. Shows That You Know Business, And Your Domain
- 7. Shows That You Know What You Are Doing
- 8. How Much Investment Is Really Needed
- 9. Negotiability
- 10. What About Freemium?
- 11. What About Pre-Revenue Startups?
- 12. The Six Slides That Show How You Make Money In A Pitch Deck
- 13. The Solution Slide
- 14. The Product Slide
- 15. The Business Model Slide
- 16. The Financials
- 17. Financial Forecasts
- 18. Use Of Funds
- 19. Your Milestones
- 20. Summary
Investors Need To Know How You Are Going To Make Money
One of the top questions that investors are going to press you for as you try to raise money for your startup, is how you make money.
Why This Is So Important For Investors
VCs, angel groups, and other investors have a financial responsibility to their own partners and investors. They have to do their due diligence and check the boxes for their own protection.
Obviously, if the investment fails or underperforms, then it is going to be hard for them to answer to their bosses and investors and legal challenges as to why they invested in a company that wasn’t making money.
Perhaps, most obviously, this is about returns. What are they investing in, and how much are they putting in, in exchange for anticipated or proven money coming out?
This applies to late-stage investors, launching an initial public offering, and even those investing earlier.
If you are preparing to scale, and are raising money to expand your business, investors should be able to look at your unit economics and be able to simply multiply the outcome by how much they are willing to put in.
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Following on from the above, cash flow can be just as, if not more important than, future returns.
If you are generating cash flow, then investors can much more easily make the argument to invest in your company.
It makes it easier to calculate values and measure investments by traditional formulas. Which can also open up the doors to many more forms of money. Not just venture capitalists, but private equity investors, family offices, pension funds, and a vast array of banks and business loan programs.
Having cash flow also greatly reduces the risk of investing, even if you are not yet profitable, or are not hitting your desired profit margins.
Shows That You Know Business, And Your Domain
Whether or not you are actually making money yet, or not, showing how you are, or at least plan to make money, speaks an enormous amount about your own diligence and knowledge of this space, and business in general.
It shows if you know your customers and competition, pricing, benchmark profit margins, and more.
Far too many aspiring entrepreneurs whip up a pitch deck and rush out to raise money based on an idea, without even really knowing their market. You will establish, or burn your credibility right here. So make sure you clearly indicate the how do we make money slide in a pitch deck
Shows That You Know What You Are Doing
Even if revenues and being profitable are not top priorities for your investors, your plan to make money, and proven ability to do it shows investors that you really know what you are doing.
There are so many wannabes firing out pitch decks that investors are inundated with pitches. Very often from pure dreamers that really don’t have a business plan, and don’t have the makings of a real business.
A strong business model, and showing that you can sell and bring in some money is far more important than a big ‘genius’ idea or invention that hasn’t had any paying customers sign up yet.
How Much Investment Is Really Needed
How you will make money greatly dictates the amount of investment required.
For example, if you plan to sell based on model homes you plan to build that are going to cost $1M each, you have some substantial hard costs. The same is true if your business needs to fund operations for two years while you are working on selling and closing enterprise customers, or are waiting on clinical trials and FDA approvals.
These facts can help justify your ask, or may even trigger experienced investors in this space to provide more funding than initially asked for to ensure you make it through.
Knowing how you make money, and how much you are making will tell investors a lot about your current financial position.
It will indicate your burn rate and current financial runway.
These metrics show investors whether you are raising and negotiating from a position of strength, or are about to have to close the doors, and will have to take whatever terms are being offered to you.
What About Freemium?
There certainly have been investors who have been more focused on growth and scale than profitability. Freemium was a huge thing. US-based investors may still be the most bullish on this type of startup.
There are also products, services, and business models that may certainly support a partial freemium model. At least at some user level, or for one type of user in a platform or marketplace startup.
Just note that this does not mean that it needs to be free for everyone.
In fact, as the economy and capital markets rotate, entrepreneurs may find that investors are shifting much more towards funding startups with revenues and profits than they used to. Learning how do we make money slide in a pitch deck could help you get a share of that funding.
What About Pre-Revenue Startups?
Just because your startup isn’t producing revenues yet, or isn’t profitable, does not mean that you can’t successfully raise money from investors.
There are definitely some types of startups that may find it harder to establish revenues before they have built a product and are able to ship it.
Though, if you are creative and innovative, there is probably a way to secure some revenues or contracts in advance. This may or may not end up being in tandem with investments from strategic corporates.
Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
The Six Slides That Show How You Make Money In A Pitch Deck
Do startups even need a ‘how do we make money’ slide in a pitch deck?
No. In fact, the best, proven pitch deck templates do not have a dedicated slide for this one factor.
Still, you should make it obvious, so that you are not having to field this obvious investor question or objection at the end of your pitch, instead of moving your audience right into negotiating a term sheet.
So, here are six of your pitch deck slides that you may use to show this information to your prospective investors.
1. The Solution Slide
If how you make money is a core part of your solution, and key to how you will be entering and positioning yourself in this market, you may drop this information on this slide.
Remember, that you really only have room for one good sentence or three to five bullet points.
It could be something like, “we provide a subscription service for ____.” Or “we enable our customers to rent Y for 10x less than they are currently paying.”
2. The Product Slide
This information may also be relevant to your product slide.
For example, if you are presenting screenshots of your website or app on this slide, then one of them may be your pricing page.
Here you want to focus on one main benefit. Three at the most. If this is intertwined with how you make money differently than existing solutions in the market, it may be appropriate to include it here.
This can also apply if what makes you unique, or your competitive advantage, is how you make money or charge differently than the industry’s incumbents.
3. The Business Model Slide
The business model slide comes about halfway through your typical 16-slide pitch deck.
You can use a simple graphic here showing your business model, and how money comes into your business.
Remember that investors will be very interested to understand how you are marketing and driving in new customers and sales, as well as what your customer acquisition costs are.
This all helps them evaluate your aptitude as a business operator, the soundness, strength, and sustainability of your business, and the potential returns.
4. The Financials
If you have already been operating you will be including your current and historical financials in your pitch deck.
Even though this may just be one slide, with a simple spreadsheet-like table for early-stage startups, it will clearly show if you are making money, if you are making enough money to break even and grow, and where most of that money is really coming from.
Your attention to creating this slide may even prove insightful to you as you review your own data and reevaluate which product lines and revenue streams are really producing, and are most profitable.
5. Financial Forecasts
Whether or not you have any operating history or not, this slide will show how you intend to make money going forward. As well as how much money you plan to make, on what margins, and in what timeframe.
Depending on how detailed these financials are, they may include your different product and revenue streams, how much of this is monthly recurring revenue (MRR) versus new sales and customers, and your anticipated growth curve.
6. Use Of Funds
This pitch deck slide should show the categories where you plan to spend and invest the funds you raise will tell investors a lot about how you should be making money.
For example, hiring more sales reps. That suggests you are making money through in-person or phone sales. If you are investing in new retail stores, then that’s how you are making your money, and so on.
Just make sure these things add up and are congruent with how you ate, stating you are or will make money.
The milestones that you are telling investors that you will achieve with this money also tell them a lot about your business, your ability to focus, and the value they can expect you to create.
Be sure those milestones will create value for them. If they are not revenue and sales goals, they may be getting your company to a certain stage. For example, regulatory approvals or licenses. Or getting to a level that will qualify for more financing or taking your company public on a stock exchange.
Showing how your startup makes money is a very important part of your pitch deck.
This is true whether you are already making money and are profitable, or not.
While you may not need or want a dedicated how we make money slide in your pitch deck, there are several slides where this information can be presented to check the boxes for investors and speed you toward getting funded.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.