How to show how you make money in a pitch deck?
The whole purpose of creating, pitching, funding, and scaling a business is to make money. This makes being able to convey this to those who see your pitch deck very important. Perhaps even far more important than your specific product or solution.
Where does this fit into your pitch deck? Which of your slides, directly and indirectly, show how your startup makes money? How will they be interpreted through the lens of investors you are approaching for funding?
The Ultimate Guide To Pitch Decks
The Importance Of How You Make Money
Making money is vital. It’s crucial for creating a profitable and sustainable business.
It is true that in recent years we’ve seen some startups soar to having huge valuations, raising billions of dollars, and also losing many billions of dollars too.
Some may still be able to create value in some form by mimicking these strategies. Though as the cycle rotates, entrepreneurs may find that making money, and profits, are much more critical. Not only internally, but for investors too.
How you make money can also be pivotal. Though, how this is perceived and what difference it makes can also vary depending on who is viewing your pitch deck.
Before you even consider approaching any potential investors, you will likely go out to recruit some strong advisors. Who, in turn, may also help you hone your business model and pitch deck.
How you plan to make money or are making money may influence which advisors are interested in joining your venture. They are not only considering the compensation you may offer and the impact that they can have on the world but where they can lend the value of their experience as well.
For example, if you are a B2C retail company, and they have exclusively worked on enterprise software sales, it may not see the synergy. If there is alignment, then you should demonstrate it.
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For Recruiting Team Members
Putting the right people in the right seats is vital for a successful startup.
In this respect, potential team members should be able to see how you are or plan to make money quickly. Then they can determine whether this is a good fit.
For example, if you are hiring a CRO or CMO, and you are only wanting to do Facebook Ads or in-person sales, that may not be a fit for their skill set, or in alignment with their beliefs about where the market is headed.
They’ll be interested in your pricing, value proposition, and sales processes too.
This document will also give your entire team clarity on how your company makes money, what’s important, where they can focus on adding value, and have a better understanding of the big picture. That also includes going beyond initial sales transactions to lifetime customer value and creating a strong and sustainable business that can afford to keep them employed.
It seems to have become more and more common for startups to pitch their customers very early on. Even before they raise any other money, or have built their product.
This helps you design and develop your product in tandem with your ideal customers, which means nailing product-market fit from right out of the gate.
Many of these potential customers may also become partners and strategic investors as well.
Showing how you make money demonstrates how your interests are aligned, and how your pricing may evolve in the future as well as showing the value you can provide, without hard selling them.
This is probably the most obvious reason to show how you make money in a pitch deck.
Investors not only want to know how much money you are making, and the future potential for making money with this company, but how you are making it.
They may not only see how they can add value and profitability to what you are doing right now but also how you can expand and introduce new revenue streams.
This is again important for them to see how they can add value, and if it is a fit for their interests and experience, but also to determine how safe their capital may be along with the potential returns, and when they might see their money returned and profits.
Many investment firms and individual investors also have their boxes and criteria for what types of startups they want to invest in. Some like B2C, others B2B. Some will have very different connections to distributors and suppliers that are relevant to your company and revenue. Be sure that you are positioning your pitch deck and business model with this in mind.
Capital market and investment trends change over time too. Which often means the bulk of the startup capital ecosystem jumping on the same bandwagon. Just as we saw with SaaS, the sharing economy, and AI.
Focus Is Important, Multiple Revenue Streams Are Good
As the founder of a new startup, you may have many ideas for your product roadmap and a variety of revenue streams for your company.
Marketplace businesses often have two sides of revenue potential due to their very nature. Multiple and diverse income streams have many advantages. They can keep your cash flow steady and more consistent through various cycles and shifts in trends.
They can make your business more sustainable, less risky for investors, and can enable you to continue to grow while others become stale or go out of business. Well-strategized, this can also greatly improve your unit economics and profitability.
However, it is also wise to plan ahead thoroughly, and not just copy what you see incumbents are doing. Consider how changing your pricing, service packages, and how you make your money may impact your goodwill, customers, and the lifetime value you thought you had been earning and locking in.
Yet, with all the above said, early-stage startups must harness the power of focus. Investors are looking for entrepreneurs and founding teams that can demonstrate laser focus.
Just as a tree can ultimately branch out with a huge crown, and propagate new trees from its fruit, it all starts with focusing on growing upwards and developing strong roots. Nail your initial income stream, then branch out from there.
What If We Aren’t Monetizing Yet?
What if your startup isn’t monetizing or making money yet?
This may have been trendy a few years ago. It may trend again. There can be startups, as in the biotech or space industries, where it is traditional for it to take years before launching a product and bringing in money.
However, as capital markets and the investment space change, it can quickly become a top priority for investors to pick businesses that do have revenues and cash flow.
No matter what stage your company is at, from pre-seed to Series D, you should be showing how you plan to make money and have the ability to quickly pivot to profitability if needed and turn on your monetization.
So, how do you convey all of this in your pitch deck?
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.
Pitch Deck Slides That Show How You Make Money
The Problem Slide
Beginning with your problem slide, you show the issue you are tackling. Which often alludes to the business you are in.
Even before this, a strong cover slide, with a good one-line tagline, slogan, or elevator pitch, can set this up too.
The Market Size Slide
This slide can be used to show just how much money is available in this space, and how much of it your company could earn, and take as its slice of the pie.
You can show the total value of the market annually, and how much it is predicted to grow over the next few years. Make sure you use and reference credible sources for this data and your assumptions.
You may also reference your initial target segment of this market, or how much market share you already control in this industry.
The Solution Slide
This is a general overview of the solution you are aiming to provide. Unless this is a completely new market you are creating, then investors should have an immediate idea of the general business model, and what unit sales, revenues, business models, and profit margins are expected in this industry.
The Product Slide
This is where you dig into your specific product or service or menu of products.
This is what you are selling to make money. Focus on the one main benefit for customers here. It is best to keep this slide simple. You can always expand on it during your Q&A time, which can also be valuable for gaining others’ instinctive and experienced opinions about pricing, go-to-market strategies, and unit economics.
The Competitive Advantage Slide
This is relevant in that you may be able to sell for less than competitors or have a premium-priced product. You may have far fatter profit margins than others. You may be able to remain competitive financially, yet provide your customers with much larger savings, faster delivery, and better service.
If your advantage is patents and other IPs, then licensing and royalties may be ways to make money as well.
The Customers And Engagement Slide
Who your customers are says a lot about how you are, and can make money.
Are you B2C retail? B2B for SMEs, or engaged in enterprise sales? This also helps investors and others to understand the length of your sales cycle, and funding needs in the interim.
When formulating your pitch deck, you’ll want to indicate to investors how your startup with make profits. However, that can be tricky when your new venture has yet to generate revenue. Check out this video, where I have talked about how to present financials for a startup with no revenue. You’re sure to find it helpful.
The Traction Slide
There are a variety of ways of demonstrating your startup’s traction. You can pick your own metric to focus on. If this is sales in units, ARR, or profits, that is all relevant to how you are making money, how much you are making, and the trajectory you are on. As well as how much you have really proven, versus what is just wishful thinking.
The Business Model Slide
This is the most obvious slide that may come to mind for how to show how you make money in a pitch deck.
This slide should be just a few bullet points, or a graphic, demonstrating the basics of how your business works at a high level. Where are your raw materials or inventory coming from, how are products sold, and money circulated and recycled through the company?
The Financials Slides
Your current and historical financial statements clearly show where you have really been making money. What is being sold to generate income, and what actual profits are being made?
In more complex businesses, with multiple products or brands and subsidiaries, you will keep this slide simple, and provide more detail to qualified investors in your data room for due diligence.
Financial Forecast Slide
This is where you provide an outlook as to where your income and profits will be generated over the next 1-3 years, and how much.
The same applies to the above. Keep this slide very simple. Expand within your virtual data room as needed.
Use Of Funds
As the funds you raise should be carefully invested into your value creation and money-making activities, this slide will tell investors a lot about where you think you will make money, and how you plan to multiply their investment.
Reading these tips will give you a fair overview of how to show how you make money 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.