How to create a fundable pitch deck for your startup?
Not every startup business is fundable. Most pitch decks and pitches do not get funded by investors. In fact, fewer than 1% of pitch decks may bring in any funding.
So, is your startup fundable? How do you convey that correctly in your pitch deck, and present it to your desired investors in the right way?
The Ultimate Guide To Pitch Decks
What Makes A Startup Fundable?
There are a wide variety of factors that investors will look at and evaluate when deciding if your startup is fundable. Some of them may seem obvious. Others you may never have thought of, or considered could prevent your startup from receiving funding.
It is also important to point out that some of these factors will vary by investor, the stage of business and round you are raising, and the wider economy and capital market conditions.
Some things will be more important to angel investors. While VCs and private equity firms may put more weight on other items.
Some investors are narrowly focused on certain industries and business models as well. So, even if you check all of the other boxes, your startup may simply not be a fit for them. For example, if you have a hardware startup, pitching to investors who prefer SaaS. Or you’ve been focusing on profitability, but are pitching investors who only care about growth at all costs.
This can all change over time to some extent as well. When things are great, everything is heading up, and investors have more capital than opportunities, they may make far more exceptions to common sense funding criteria.
In times of crisis, when other investments are down, the economy is struggling, and liquidity is tight, they may be much more demanding about your metrics and other nuances.
Now let’s dive into the specific factors investors are looking at to consider a startup as being fundable.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
A Big Market
To be fundable, you have to be in a really big market. It is not uncommon for today’s most funded startups to be in industries that are worth in excess of $1T per year.
If your market isn’t that big yet, then it certainly helps if you are in a fast-growing new market. For example, a $10B a year market headed to $100B a year. This alone can give investors the kinds of returns they need.
Otherwise, you need to be in a really big space, and be able to take a significant amount of market share from the incumbents.
An essential facet of creating a fundable pitch is knowing how to build a riveting narrative that interests investors. For more information on how to improve storytelling in a pitch deck, check out this video I have created. You are sure to find it interesting.
The market is the opportunity. Your own startup’s traction tells how well you are capitalizing on this opportunity.
In the early startup stages, your pace of growth, and consistency in pushing growth, are more important than size. This is the greatest predictor of how well you could grow and multiply any capital invested in your company.
Some investors have very specific traction criteria. Especially for early-stage startups. They may often look at week-over-week growth, not just monthly performance.
The problem you are tackling is one of the most important elements for investors. It is more important than your proposed solution or product. Though it can be hard to pin this one down to a science.
The closest you can get to codifying this element is choosing a problem that you can prove exists, and very clearly define exactly what it is, with real data. Then show how this is an urgent problem. Preferably one that people are already paying to solve, or at least have a budget to solve. Make sure to include this critical element when learning how to create a fundable pitch deck.
The founding team itself needs to be fundable.
Any notoriously bad actors, especially with serious criminal records in the industry or to do with finance, may be a hard no for savvy investors who do even the most basic due diligence and background checks.
Experienced investors know how much of a grind startup life is. That the top reason startups fail is because the founders give up. So, in addition to having the best team covering all the essential business skill sets, and elite domain experience, they are looking for those that can demonstrate that they have the tenacity to keep on going through the challenges.
Customer Acquisition Costs
This number will make or break a startup. It greatly determines if there is even the potential for a profitable business. Even more so if that business can become sustainable, or hope to survive any challengers or market changes.
Be sure that you know your market benchmarks, and where you stack up on the scale.
Your marketing plan and strategies also greatly define your business and its future prospects.
That’s not to say that you can’t revamp, expand, and scale your marketing. Though investors will judge you on your marketing plan.
It says a lot about you. If you are betting everything on Facebook and Google ads, they are probably not going to want to gamble on that. It is even better if you have a unique marketing and sales channel.
Product Market Fit
While it is possible to get funded before you’ve nailed product-market fit, you will have a lot more credibility, and negotiating power if you have found it.
At this point, you have removed an enormous amount of risk for investors. You’ve also reached a point where they can make a much better data-based calculation on the potential returns and potential for multiplying their money. It is just about scaling and expanding from that point.
Corporate Structure & Location
How is your company registered? Is it an LLC, a C Corporation, or an S Corp? Or something else? While this can be fixed and changed, not having this right before you pitch and present your pitch deck will tell investors that you don’t understand fundraising, and aren’t ready. At a minimum, this will put you at a disadvantage in negotiating.
Where your company is registered can also make a big difference. Some investors are very old school and have preconceived notions about where startups should be located. Some are only interested in local companies. Then there are issues like tax implications. When understanding how to create a fundable pitch deck, make sure to factor in the location.
Who Is On Your Cap Table
In addition to who your cofounders and key team members, and advisors are, future investors want to know who else is invested and is on your cap table. Maybe they don’t get along, like the way they run businesses, or don’t want to be associated with them. Though having the right investors there can also make getting new funding so much easier.
When it comes to this round, everyone will want to know who your lead investor is.
How To Create A Fundable Pitch Deck
So, how do you bring together everything that investors are looking for in a fundable startup with best practices for creating a pitch deck that will convert investors?
It doesn’t matter if you check all the boxes of what makes a fundable startup if you don’t present it in the right format.
Just like you can’t expect to walk into a bank, refuse to use their loan application form, submit your information on a paper napkin, and expect to get a loan. It just isn’t going to happen, no matter how strong your financials are.
Investors expect you to be competent enough to do some basic research and care to try and create a pitch deck in the format, and order of slides they want to look at.
Make It Legible
They have to be able to read it. Digest everything in less than four minutes, and get it, without any effort.
That means you need to use a large font that can be read from the back of the room, even with poor eyesight. It needs easy-to-read fonts, that contrast well with the background, and very little text.
Use simple wording that everyone can understand.
Include All The Right Data Points & Metrics
From the first half of this content, you already know the key data points and metrics that you need to convey to show you are fundable. Don’t expect investors to guess or ask. Show them you are fundable. Do it in big and easy-to-grasp data points.
You have very minimal space to introduce your team and show them how they check all of the boxes. Including convincing them that you are the best team to take this on.
Use each team member’s name, title, and a powerful one-line bio. Then link to their LinkedIn profiles. You can also update their resumes and post them in your virtual data room for serious investors who are ready to take the next step.
Even if you are a brand new startup with zero sales or revenues, you can benefit from including financial projections in your pitch deck.
This is not only a test of the potential of your business and business skills, but how well you know your business, and how well you are balancing being bold and thinking big, with being realistic about what is possible. This is your chance to build more credibility or lose it all.
You should be ready to answer questions on your profit margins, as well as industry benchmarks around this data. You can reference sources that you used to make your assumptions in your pitch deck appendix or data room.
Get The Cover Slide Right
Of course, if you don’t start with a good cover slide, no investor will get any further through your pitch deck.
This is a good place for your name, company name, logo, catchy tagline, and contact information.
This makes it super easy for investors to get in touch to take the conversation further. Especially if they try to come back to your pitch deck later. Don’t blow this opportunity because it was too hard to contact you.
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.
Making A Fundable Pitch
Knowing how to create a fundable pitch deck is going to be key to opening doors, getting attention, and connecting the dots. Yet, you are also going to have to speak.
Sooner or later, you are going to need to meet with your prospective investors in some format. You’ll need to present, speak well, defend your pitch well, and be able to roll with the questions.
You must be able to communicate. You’ve got to sell. If you can’t sell them, then you can’t sell customers, recruit, or land other investors. This will be a big red flag. If this isn’t your best strength, then consider bringing in another cofounder that is strong in this area, or getting some support from a speaking coach.
Funding is everything for startups. To get it, you need to understand what makes a startup fundable, or not. Then, be able to bring it together with best practices for creating a winning pitch deck. Then present it well. Follow these steps, and you’ll quickly learn how to create a fundable pitch deck.
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.