What are the key metrics to include in your pitch deck? It is only a matter of time before entrepreneurs find themselves needing to contact potential investors to secure funding for their new business. However, unless you are prepared to pitch your business or idea to investors properly, you might not be able to secure sufficient funding or any funding at all.
That is where a pitch deck comes in, and if you are a new entrepreneur you are well aware of this term thrown around in entrepreneur groups or conventions. Yet, a lot of founders aren’t really sure what a pitch deck is and how it works. Never mind the best practices which really yield new capital and important investor connections.
In its essence, a pitch deck is a form of presentation that consists of all the information related to their business, and its goal is to impress the investors.
With that said, a pitch deck should contain some essential metrics about your startup which can encourage investors to invest in your business. So if you are an entrepreneur trying to put together a pitch deck then this article is for you.
The Ultimate Guide To Pitch Decks
What is a Pitch Deck?
A pitch deck also called a startup pitch deck is a presentation that gives investors important information about your business, service, or product, and fundraising needs. It also includes key metrics like target market, valuation, and financial goals and projections. The best pitch decks are short but full of useful information. They have simple, visually appealing slides that are usually made with software.
A business or entrepreneur can use a pitch deck to give a detailed but brief overview of their company to attract investors. Understanding what makes a good pitch deck will help you get one step closer to getting the money you need. Most of the time, this presentation is made up of 10 to 20 slides that give a short summary of your company.
It is essential to know that investors often don’t put money into a new business right after seeing the pitch deck. To finish the deal, there are often a lot of meetings and negotiations. So, the main goal of a pitch deck is to make it possible to meet with the investor again and get him or her to be willing to talk. Not to mention you will need a different type of pitch deck depending upon the application, the stage your business is in, and the purpose of presenting. The two key types of pitch decks include:
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.
Demo day deck
A demo day deck is usually a pitch or presentation that lasts between 4 and 10 minutes. This is not long. Your main goal here is to quickly sell your idea live. Depending on your audience, you probably won’t want to include too much financial or confidential technical information.
Most of the time, you are giving a presentation while standing in front of the slides, so less text and more talking is ideal for demo day decks. Demo day decks are between 3 to 10 slides long.
An investor deck is a more detailed form of a demo day deck. Often, an investor deck is sent before a meeting is set up, so you will have a bit more text. There could be anywhere from 10 to 20 slides, and they will include financial information and information about products that can’t be shared openly.
You are not only selling your idea, but you are also showing the investor how your product works, reducing risks, and making financial projections. You’re using stories as part of your business model. These investor decks are usually 10 to 20 minutes long. Though on average investors may spend less than 4 minutes skimming through them. Whatever may be the type you’re using, make sure to understand the key metrics to include in your pitch deck.
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What Are Some Key Components of a Pitch Deck?
1. Introduction to your business
The first slide should introduce the pitch deck and describe the business in easy-to-understand language. Most businesses have a unique value proposition on their first slide of the presentation, which compares their products and services to those of another well-known business.
The most successful new businesses have built products or services that solve problems for customers. Use this slide to talk about the problem you are trying to solve and how your targeted solution will help people. This section should also tell a story that people can relate to. Investors will understand your business, industry, and funding goals better if you tell a simple story that anyone can understand.
A new business is only as strong as its plan. Use this section to talk about the overall goal of your business. Keep things short, simple, and easy to understand. This should be a short summary in one sentence.
4. The target market
A target market is a group of people who have things in common. Every service or product is made for a certain group of people, and yours should be in your pitch deck. Include information about your business’s competitors and the market opportunity that you have discovered to succeed in that environment. This is one of the key metrics to include in your pitch deck.
5. Unique selling point
Your value proposition should show why your startup is the best option to solve the problems your customers are having. If your industry is getting a bit crowded, what new solutions or discoveries has your startup made? How is your new business set up to solve problems for customers?
In this section, you should talk about the most important people on your team, their experience, and the most important skills they bring to your startup. Don’t be afraid to talk about what they’ve done at other businesses or organizations. What makes this team the best one to build and run a fast-growing, profitable startup?
7. Financial details about your company
Investors usually want to see a company’s financial health for the past three to five years, including income statements, growth projections, and information about the business model itself. Rather than using a list of numbers, use data visualizations like pie charts and bar graphs as a way to demonstrate the data.
8. How much investment do you need
In the last part of your startup pitch deck, you should explain how much investment you need, what the money will be used for, and why these funds are important for the company to grow. One of the most important parts of your startup pitch deck is the ask. Make sure you have a lot of data and expert opinions to back up the numbers. This section is where you can show that your startup is worth the investment.
These sections are usually some core points that are covered in a pitch deck. However, you can always add or remove certain components from a pitch deck to make it more suitable for the type of investors you are pitching to. Remember to perform some level of research about the investors you are presenting to beforehand to know what type of details they may like.
Using this research you can create a more personalized pitch deck that is likely to appeal to each individual investor. But take the time to learn which are the key metrics to include in your pitch deck.
Prepping the right metrics and information to share with your investors ensures your best chances of getting funding. But, if you need more tips on how to prepare for investor meetings, check out this video I have created. You’re sure to find it helpful.
What Are Some Key Metrics you Need to Include in a Pitch Deck?
Now that you know the basics of a pitch deck and the important components that make up a good pitch, it is time to answer the key question. What exactly are some important metrics that you should include in a pitch deck? So, without further ado, here is the list of metrics that should be a part of your next pitch deck:
Customer acquisition cost (CAC)
How much does it cost your company to secure a new customer? This is the total of your marketing, advertising, and sales costs to land each new user or paying customer.
The customer acquisition cost (CAC) needs to be competitive, sustainable, scalable, and profitable.
How often do your customers leave after signing up and becoming customers? This is the number of customers who leave compared to the total number of customers you have, including those who came in (or were expected to come in) during that time.
Market research will help you benchmark your churn rate. It is important to note that as your business grows, the growth can hide churn, so it’s also important to look at things as a whole rather than focusing just on the churn rate. This means you should look at how many customers were added in a given month and see how many are still customers 3, 6, 9, or 12 months later.
Lifetime Value of customers (LTV)
LTV stands for the “lifetime value” of your customers. The lifetime value of customers (LTV) might seem like an odd metric to some founders, but you should know that investors look at if a business can increase its customer’s LTV, and how that compares to the investment and CAC.
Businesses use different types of enablers, such as loyalty programs that give customers a discount on every purchase, upselling programs that use coupons and promo codes, cross-branding efforts, etc., to help customers buy more from them.
Only by knowing this metric can you make informed decisions for your budget and investment. And, make sure to understand all the key metrics to include in your pitch deck.
Customer Retention Rate (CRR)
Most businesses put most of their attention on getting new customers, but only a few businesses put their attention on keeping customers. Customer Retention Rate (CRR) is a key metric that shows how well your business is doing at keeping customers.
Some of the most important things that go into this metric are the revenue analysis of repeat customers. Which also translates into recurring revenue.
It goes without saying that anyone who wants to invest in your business will look at how much money it makes. You can use different kinds of reports like YoY (Year over Year) analysis, product profitability matrix, compounded growth rate, etc. This will help break down your business and make its profitability clearer to potential investors.
With this kind of transparency about your business’s profitability and growth potential, it’s easy to attract more investors and get them to put money into your business.
The total amount of revenue your business made, minus the expenses directly related to running the business (or COGS) gives you the gross margin for your business.
It tells investors a lot about how well your company is operating in comparison to other businesses that are similar to yours. Investors can use this metric to predict how much revenue your business can potentially generate in the future.
All the metrics mentioned above are considered to be some of the key metrics to include in your pitch deck. And if your pitch deck already has these metrics, your investors are much more likely to put their money into your business.
Other data to include are the size of your market, growth rate, and customer count.
With that said it is important to display these metrics in a clear way using visual representations to make sure they don’t make your pitch deck difficult to understand.
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.