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Neil Patel

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How to present the amount to raise in a pitch deck? Creating a pitch deck is really all about getting funded and asking for the money. There is a lot  of advice available on pitch deck design, and many of the core slides in a deck. Though much less on presenting the raise and ask.

So, how do you position your ask?

How Much Should You Be Raising?

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    Before you ask, you have to know how much to ask for. Sooner or later you are going to have to justify that number somehow too.

    From the headlines it may seem like many startups are raising at very arbitrary numbers. There are good reasons to round up. Yet, any investor who has put in the work and sacrifice and has had the financial wisdom to amass the amount of capital you are asking for is going to obviously have some financial smarts, and will want to do the math. If they have other investors or LPs they are responsible to, then they are legally liable for making sure the math makes sense too.

    So, what should your raise be based on?

    Reaching The Next Milestone

    Exactly what the need is will vary by your fundraising round. Whichever stage that is, this pitch deck is all about getting you to the next milestone. 

    This may be building a prototype, getting to market, scaling and expanding, or funding the roll up of other companies ahead of an exit.

    There may be hard fixed costs to get there and investments to be made.

    Runway

    Without a doubt runway is the most critical point to understand before you go into addressing how to present the amount to raise in a pitch deck. Not only may you have to layout capital investments to get to the next milestone, but you will have carrying costs and operating expenses to keep running until you get there as well. This can include software, leased space, communications, insurances, payroll, etc. 

    The average time between funding rounds has typically been about 12 to 18 months. In times of crisis and great financial uncertainty the ability to close a new round may be delayed. Meaning raising for a longer runway is wise. While you may be able to raise back to back rounds faster, it is dangerous to bet on it. 

    Make sure you are raising enough to get through closing the next fundraising round, without getting so low on capital that your next investors can have the power to take advantage of 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.

    Hiring

    Expanding hiring is considered a good use of funds if it is justified by need. After all, having the best team in your space is critical for winning. Sharing your hiring needs in your deck can also lead to introductions to top talent from your investors. 

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    Comps

    How much are your competitors raising at this stage in business? That is a good justification and benchmark to use. 

    Cushion

    Be sure to include additional funds for a cushion. Everything costs more than you think, and takes longer than you think. It’s far better to have extra, than not enough. 

    The Ask Slide

    In order to nail it on how to present the amount to raise in a pitch deck, keep your ask slide extremely simple. All you need is a few bullet points laying out the categories you plan to use funds for.

    Be wary of asking for money for marketing channels that don’t seem efficient, or asking for less than competitors have been raising at for the same rounds. 

    Positioning The Ask

    Setting up the ask is done throughout your previous slides.

    The Financials Slide

    The financials slide demonstrates the potential returns on their investment in a simple way. Early stage startups have very simple, if any existing financials. So, it is about crisply laying out the forecast and projections for profit margins and growth. 

    The Problem Slide 

    The core of your business isn’t really the product or solution, it is the problem. If you have the right and a strong problem, everything will work itself out. Use your problem slide to show you have clarity on the problem. An urgent one, with demand, that you have proven exists, and you understand the value of in terms of what solving it is worth to your target customers. 

    Market Slide

    Use this slide to show just how big this market and potential business is. How vast can their investment grow as you expand into this market and the problem grows over the next decade?

    The bigger the market the better and this will also support on how you think and address how to present the amount to raise in a pitch deck.

    Traction Slide

    If you have proven the problem, and have created a solution and product, how is that showing up through actually doing business? This is where you give them something tangible. It’s real. Something that they can take to the bank, instead of only being an inspiring dream. How many sales have you been making? What about revenues and profits and unit economics? If they add their capital how can it simply multiply the great results you are getting already.

    Other Investors

    What other investors have participated in previous rounds that can give you credibility and make them feel smart about participating in? Which other investors have committed to participating in this round? Which investor has committed to leading this round and can make them feel comfortable and confident about jumping in too? How much are these other investors pledging to put in?

    Summary

    There is a lot of art to creating a successful pitch deck. When it comes to presenting your ask, you have to be able to back up the math. Your positioning of the ask should start well before the ask slide, and allow them to connect the dots for themselves. This is critical as it may lead you to finding the lead investor

    Hope this post provided you with some perspective as you are looking into how to present the amount to raise in a 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.

    Below is a video where I cover in detail how to present the amount to raise in a pitch deck.

     

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    FULL TRANSCRIPTION OF THIS VIDEO:

    Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about how to present the amount to raise in a pitch deck. Before we get started, make sure that you hit that subscribe button, and this way, you will never miss out on any of the videos that we roll out every week.

    Understanding how you’re positioning, packaging the money that you’re going out to market, that money that you’re going to be asking investors for during your fundraising efforts is absolutely critical. That packaging, that positioning is going to make all the difference. So in today’s video, we’re going to be breaking it down for you and give you all the step-by-step, all the insights, so that you know how to nail it. With that being said, let’s get into it.

    Figuring out the amount to raise is absolutely necessary because that is, in a sense, the amount that is going to give an understanding to the investor on how you’re thinking about things, where you’re planning on deploying the capital, and so forth. Really, the different areas that you need to keep in consideration when you’re thinking about runway are the following.

    • Reaching the next milestone
    • The runway
    • Hiring
    • Comps
    • Cushion

    Ultimately, when it comes to the runway, you need to know that the runway is the amount of time that you have left before your startup crashes, meaning that there’s no more money. Here, typically, is 18 to 24 months, and this is money that you need to count in without the actual revenues. So just pure cash burn that goes into some of the costs of being up and running.

    What you want to do is, even though people say to raise for 18 to 24 months, you don’t know how the market is going to react over the course of time. You don’t know some of the unexpected expenses that you’re going to have to face, so I would recommend that you go for 36 months to give you a little bit more time in the event that you need to maneuver. 

    Now, the other thing to keep in mind is the milestones. Over the next course of the 18 to 24 months or even 36 months of what we’re discussing, what are the things that you need to achieve? What is going to allow you to move from one lifecycle of your business to the next lifecycle of the business? Is that going to be a certain amount of team members? Is that going to be a certain amount of revenue or engagement on the customers that you have coming to you?

    You need to be in very good clearance of what that looks like, what is your vision for that, then what eventually needs to happen from having a money perspective in order to cover those costs to get you there. Once you know that, then that’s going to help you in that regard.

    The other area is the hiring. Obviously, you need to take a look as to who are the essential people that are going to help you get to the next lifecycle of your business? If you are at a, let’s say, seed round, you’re probably going to have the founding team in place. When you go from a seed to a Series A, you are actually going from just having the founding team to having more of an executive leadership team that is helping you with the execution, and you’re going to have to get clear as to perhaps what will be their salaries, how you’re going to be compensating that with stock that you’re giving them in the business. But, ultimately, those are costs and costs that you need to keep in mind when you’re going out, and you’re looking to raise money. 

    Then you need to think about the ask slide. When thinking about the ask slide, I always see entrepreneurs making the mistake of putting a very specific amount. If you’re, for example, looking to raise $5 million, just to throw in a number, don’t go specifically with $5 million. Go with a range. You can say $3 to $5 million. That way, you can get all the people that are investing under $5 million and all the people that are investing $5 million. You can even broaden that up and say $3 to $6 million. That way, you can even get the people that are investing a little bit above $5 million. 

    That gives you a broader range of the people that you can tap into, and this is going to be a strategy that you want to pull out when you already have a lead investor. That means someone that is coming in, pricing your round, putting the price tag, so that everyone else comes and invests. This could be an open discussion that you have with some of the investors. Again, keep it as a range, and that way, you’re not boxing yourself into one single amount. Because, remember that investors have certain mandates with their own LPs, Limited Partners, meaning people that have invested in their funds as investors. Those are promises and perhaps mandates that they’ve said that they’re going to comply with. So if they’re only investing up to certain amounts or in certain rounds of financing, you want to make sure that you are also going in parallel with those mandates that they have with their own LPs.

    When it comes down to positioning the ask, the way that you want to go about this is don’t just think about the ask slide itself because you need to think about the pitch deck as a whole. Remember, it’s a flow, it’s a structure, it’s a certain story that you’re walking the investor through as they’re reviewing. It’s not just the ask slide itself. 

    You need to think about the financials, how you’re breaking that down, what are the financial drivers, and how you’re positioning those on the pitch deck itself. You want to think as well about, as well, the market slide, where you are talking about who has raised, other valuations, and that’s going to give an idea to the investor as to where you’re positioned. 

    One thing the investor likes to do is ask you questions. They like to, for example, ask around valuation, the amount to raise. One thing that you could do so that you’re not negotiating against yourself, and maybe you can raise even more money at a better valuation, is to do some market comps. What that means is, take a look at your competitors, directly and indirectly, see how much they have raised, and at what valuations. 

    When the investor comes to you, and they try to get some of that critical info from you, you can say, “Look. Basically, in the market, we have Company A, Company C, Company D, whatever that is, you show that range and you show the amounts and the valuations that they have raised. You can say, “We could be in-between, and I think that we could do this much with this amount, this other much with this other amount, and this other much with this other amount. That way, you’re giving all the relevant information so that they see where you actually fit. Then also, what you can accomplish.

    Now, if they try to push you into the valuation, because, obviously, the amount that you’re asking for is going to impact that, one thing that you can do is just to say, “At the end of the day, I believe that in a valuation negotiation, there’s one party that wins and another one that loses. So with that being said, I’m more interested in a partnership where everyone wins. Given what you are seeing here, and all the different companies with all the amounts that they have raised and at different valuations, where do you think we fit, and what do you think is fair so that we make this a super successful partnership where we both win?”

    Just to wrap it up, there’s a lot that goes into creating a super-powerful pitch deck. It’s not just about putting 15 to 20 slides together because every single thing that you say and that you do is going to make it or break it. Again, investors only allocate 2 minutes and 41 seconds per presentation. That’s it. So you need to make it count, and you need to make it be in a way which they can skim through it very quickly. 

    You can actually take a look at the template that I have below that you can use for free. Founders are using it all over the world to raise millions. That way, you don’t need to start from scratch. So hit a Like on this video, and subscribe to the channel so that you don’t miss out on all the videos that we’re rolling out every week. Also, let me know on the comments how you’re thinking about valuation, amount to raise, and so forth. And if you are raising money, shoot me a note at alejandro@pantheraadvisors.com. I would love to help out. Thank you so much for watching.

     

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    Neil Patel

    I hope you enjoy reading this blog post.

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