How Investors Review Pitch Decks

How investors review pitch decks? Most new businesses need investors. This is especially true if you are starting out as a new entrepreneur.

No matter what type and size of funding you are seeking, the best way to create the perfect impression on the potential investor is through a well-crafted pitch deck and being effective in its delivery.

Pitching your business idea to a room full of investors and may not be everyone’s cup of tea. It can be nerve-wracking and intimidating.

Still, if you want to get the funds, we all have to go through it. Almost all successful entrepreneurs have been there and done it. Sometimes even more than once or twice.

You do not have to be terrified or fearful of it. The key is to craft a pitch deck that can grasp the attention of the potential investors for a significant enough amount of time and let you explain your product and business concept as a good investment opportunity.

However, a good pitch deck is not a substitute for a great product concept or business idea. You need to have the best of both components.

Only then can you claim victory over the hearts of the crowds of investors. Most of whom are already drowned in a flood of pitch decks every day.

Believe it or not, almost 85% of all start-ups are on hold because of fund shortages. The reason behind this is simple. Either you do not have the money or you do not have a viable idea to generate the money.

Whilst reading this information, you might be feeling the intimidation already trickling in, but to make your dreams come true, you need to work hard through it and be fearless.

The Other Perspective

In this article, we will bring together some of the key components you need to take care of for creating an effective pitch deck and getting the investment that you are looking for.

We will share with you a perspective that is different from that of the entrepreneur. This discussion will help you identify and understand the essential elements an investor is looking for in your pitch deck.

We will find out how investors review pitch decks and give you an insight into the thought process and perception that lies on the other side of the table.

It will help you gain the confidence and poise needed to face the investors with an outstanding, flawless pitch deck, and deliver it well. So, start by understanding how investors review pitch decks.

The Investor’s Take

Many new startup founders and entrepreneurs believe that they are the highest risk-takers in the proposed venture. Of course, angel investors and venture capitalists are also risk-takers, because they are investing in your company. In fact, they may have more to lose.

What you need to understand is that both parties want the risks mitigated. No one wants their hard-earned money going down the drain. Avoid being over-ambitious and reflecting on yourself as a major risk-taker.

Another thing to keep in mind is that making the decision to invest in a company is a difficult process. They need that decision to be justified.

Making startup evaluations without any solid explanation or briefing is a worthless exercise. There are so many innovative ways and means to enhance the visual attractiveness of your presentation.

Some overemphasize pitch deck designs and formats as a sheer distraction for the missing elements and facts. Avoid making pitch decks that are too glamourous and flashy that do not carry any real content.

The investor hates being left with only sizzle and no steak.

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.

Elements Investors Look For in a Pitch Deck

Highlight the Customer Problem

The first and foremost thing that investors look for in your pitch deck is the basic idea or concept.

• They want to know what the problem is and how does your product solve that problem.
• The investor looks for the value that your product and business can bring to the potential customers.
• Does your product provide the perfect solution for the problem?
• How is this solution effective?
• Does this product have a big market?

The key is to pinpoint a problem or a need that exists in the world, and how your business can be helpful in providing its solution.

This is the point where the investor will differentiate your startup as a value-adding prospect and will be looking for a market credibility demonstration.

Here it would be really worthwhile to mention the exact target audience or potential customers whose problem or need you want to address. You should also mention the pain points or niches that you are trying to fulfill.

All this should go in the first portion of the pitch deck. If you are presenting a product or service that is new and has not yet been invented or discovered, chances are that the investors will also not be aware of it.

So, make sure to provide data-driven evidence and supporting components to validate your problem and solution. Research how investors review pitch decks and how to impress them.

Overview of the Service Offering

This is the second most important category in a pitch deck. The service offering that you plan on through this startup company.

The discussion should revolve around the basics of what the company does, who are potential customers and why would they be compelled to buy the service. These should include:

• Service features and specifications
• Target market and segmentation
• Production goals and capacity
• Service demonstration (if applicable)
• Make sure to provide only a basic overview of the entire offering. Avoid getting into the minute details of production, materials, technology, or supplies.

The Team

This is definitely one of the most important startups reviewing criteria for an investor. Ideas and products can be changed or transformed over time, but the skills and abilities of the founders and team members will remain the same.

Like in any company, human capital is one of the determining factors for success; the same is the case with startups. A new company cannot succeed if it does not have the right human resources to lead and run it.

An investor will look at the entrepreneur, his abilities to lead and execute, and his determination to achieve his goals.

By listing and briefly introducing the cofounders and other key team members in your pitch deck, you showcase your strength and capabilities as a company to the potential investor.

Underlying aspects that an investor assesses in these individuals include levels of passion, energy, determination, motivation, and track record of executing various projects.

Obviously, entrepreneurs and founders who have the strength and courage to face hardships and challenges in the short and long term are the backbones of a company that foresees success and growth in the long term.

Remember:

• Investors like to invest in people rather than products
• They try to analyze the founders and understand their type
• To list team members including advisors with professional expertise and experiences
• You need to demonstrate the possession of the right professional ethics and values needed to make this startup a success
• To support your claims of determination and dedication with hardcore evidence and anecdotal backup
• As a founder, you need to briefly highlight your struggle to reach this point and the sacrifices you might have made
• Be knowledgeable about the product and market as you will be asked technical questions.
• You need to showcase your expertise through research, data, and knowledge.

The key is to make the investor realize that you are the perfect match for the business and they should be confident enough about your capabilities and strengths to face the upcoming challenges of the new business.

Keep these factors in mind when figuring out how investors review pitch decks.

Market Condition and Opportunity

Once the investor has gone through the overview of your product, company, and team, the next thing they would be concerned about is the market condition and competitor analysis.

Elements that need to be highlighted in your pitch deck about the market include:

• Overall market size
• Growth rate and projections
• Segmentation
• Competitors and their products
• Entry barriers

The investor would be interested in finding out how big the market opportunity is and who are major players currently dominating the market trends.

Craft your pitch deck in such a way that you are able to present this market as large enough to sustain long-term growth and profitability.

Business Model and Marketing Strategy

With clarity about the existing conditions and stakeholders of the market you are proposing to enter, the investor would like to know how you plan on entering into it.

This comprises the business model and go-to-market strategy, including:

• Products and sales plans
• Roadmap of execution
• Targets of sales and growth
• Marketing strategy
• Outreach plans to target markets
• Distribution channels
• Projected revenues

Even as you’re trying to understand how investors will likely evaluate your presentation, you need to go one step forward. Learn how to improve storytelling in a pitch deck. If you aren’t quite sure how that’s done, check out this video I have created. You’re sure to find it helpful.

Establish a Competitive Advantage

After understanding your product, business strategy, and current market competition, the investor would like to know your differentiated advantage.

Any person investing money in a product would definitely weigh the available options on a given criterion. With other competitors in the market, he would be looking for a difference that is crystal clear to give your product a superior advantage over others.

Points to remember include:

• Distinctively mention why your business or product is better than others
• What keeps you from reaching a saturation point
• Why is your offer a unique proposition

As an entrepreneur, you need to keep in mind that investors are often not interested in products that are upgrades of existing offerings of competitors.

This is because soon or later, they will be automatically upgraded by their original, established makers. Investors need to know the real gap that you have intelligently identified in the market and that is big enough to capitalize on.

Stages of Development

After going through all the above elements, the investors sometimes start losing focus. With so much in front of them, comprehending and remembering the first few slides becomes difficult.

To bring clarity to the road map that you propose in your startup venture, you should provide the investor a breakdown of the activities and forecasted milestones.

It is always wise to mention the stages of progress or development in the pitch deck.

Development stages may include raising and obtaining funds, product development, customer acquisitions, marketing achievements, partnering goals, and profitability targets.

Such breakdowns with timeline options, provide an investor a very crisp and clear picture of your future goals, strategies, and plan of action. It’s how investors review pitch decks.

Financial Projections and Traction

Every pitch deck must have supporting financials and forecasted projections. It is best to validate all your proposed claims of profitability and growth through quantifiable figures and estimates.

Traction of any kind must be presented in the pitch deck as authentic data and information that can be explained clearly by the founder at any point in time.

Things that an investor will be interested in include:

• Funds required
• Distribution of funds
• Assets and liabilities
• Sales projections
• Expenses projections
• Profitability targets
• Break-even point
• Statements of cash flow and income
• Debt servicing

Risks and Challenges

As already mentioned above, both entrepreneurs and investors are actively concerned about the risks associated with any startup venture. That’s another of the facets of how investors review pitch decks.

While reviewing the pitch deck, these risks will be hovering in their minds at all times.

So, without being too pessimistic or fearful, just highlight the things that can go wrong, the major risks associated with the market and company, and challenges that can obstruct or hamper the plan of action.

However, the ideal way to deal with this component is to provide a foolproof contingency plan for the above risks. Let the investor know how you will overcome the obstacles and mitigate the risks. This will provide him the confidence to move forward and make the investment.

Final Words

These are some of the key factors and elements that an investor looks for in a startup pitch deck.

How investors review pitch decks vary from person to person. In general, these are the few details that can make or break your proposition for procuring investment.

Expecting too much from a basic pitch deck can be a little unreasonable. A seasoned investor is always open to drawing out the details in subsequent question-answer sessions, follow-up meetings, and due diligence.

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.