Webinar attendees discovered, among others, the importance of context for building a professional pitch deck.
The session, led by Patricio Hunt, Managing Partner of Intelectium, focused on the importance of take into consideration the context for the creation of a professional pitch deck, capable of attracting the right investors.
When an entrepreneur is looking for investors to allow him to close a round of funding for his startup, both the content and the format of the presentation must be adapted depending on whether such presentation takes place in a investor forum, in a Meeting at Petit Comité or it is sent by e-mail with the objective of achieving a future meeting with potential investors.
Thus, when the presentation is made to an investor forum, it is important to take into account and know the conditions under which it is carried out. As a general rule, in these cases, the presentation is made before a room with between 50 and 70 investors, and this number may be slightly higher depending on the characteristics of the network. In addition, the investors present in the room are located at a certain distance from the screens, and the presence of as many other remote investors is common, who attend the presentation via video conferencing. Since in this case, the central screen is used to project the image of the entrepreneur himself and the side screens for the presentation of the slides themselves, Intelectium recommends using slides with little information in clear and large typefaces and completing this information with graphics and illustrations that reinforce the message. Including an excessive amount of information in the presentation makes it difficult for investors to pay attention to the message that the entrepreneur is trying to convey through his speech.
In cases where the entrepreneur manages to schedule a meeting to present the investment opportunity to a small committee made up of 4 or 5 attending investors, the context changes completely. Under such circumstances, investors can read the presentation individually, either printed or from their own electronic devices (tablets, smartphones, computers...), which allows them to use slides with more detailed content, using a smaller font size than should be used in investment forums. Finally, there is the possibility that entrepreneurs send the presentation by e-mail to a list of investors (Business Angels and VC's) whose investment theses fit the opportunity presented to them. In these cases, the objective is to get the person to read the presentation and show interest in scheduling a meeting with the entrepreneur, so it is not so important that the presentation be read in its entirety, as that it generates sufficient interest for the investor to decide to establish a first contact with the entrepreneur. Another aspect to consider, even if it does not seem relevant to the naked eye, is the investor profile. Adapting the message to its specific characteristics maximizes the chances of success.
What is the profile of most investors?
- Age: 47 - 50 years old.
- Gender: 84 - 97% men.
- Equity: >1M $.
- Profession: Successful entrepreneurs, former entrepreneurs and executives.
- Educational level: 60-80% have a university degree and between 28-42% have a master's degree.
What documents should be used each time to search for private investment?
The context in which the investment opportunity is presented will determine the documents to be used by entrepreneurs.
In general terms, the Pitch Deck and the Investor Forum Deck are the two documents most frequently used by entrepreneurs to publicize investment opportunities. These documents can be completed with additional information if necessary and the situation requires it.
How should investment documents be structured?
Although the structure that the presentations made must follow varies slightly depending on the specific characteristics of the investment opportunity and the entrepreneur's objective, there are some general guidelines that must be followed to maximize the success of both the Pitch Deck and the Investor Forum Deck.
Thus, with regard to the documents used to make the presentation in an investor forum, it is advisable to: -Limit yourself to developing 10 key themes over 10 slides.
- Use an average of 1 minute per slide.
- Design the slides with the right and necessary information, clear and large typographic fonts and graphics that illustrate the entrepreneur's message.
- Use the presentation as a support mechanism to the entrepreneur's message and not the other way around.
- On the other hand, at petit committee meetings, it is advisable to limit yourself to developing 10 key themes over 10 to 15 slides.
What topics should be addressed throughout the investor presentation?
From Intelectium, we have identified the 10 key issues that should be addressed when presenting to an investment forum or meeting at a petit committee:
1. Purpose, highlights or executive summary. The content of this slide will vary slightly depending on the context. In a Pitch Deck that we send by email, we can start with an executive summary that talks about the purpose of the company and details the characteristics of the investment round through 5 or 6 bullet points. In an investment forum, this slide has to be limited to talking about “purpose”, that is, what we do.
2. Problem. Described in a clear and concrete way, identifying who is suffering from the problem and explaining why it is a relevant problem.
3. Solution and technology. In cases where the technology used by the company is somewhat complex, it is worth using more than one slide to address this topic.
4. Traction and metrics. Depending on the context and stadium of the company, this slide may be moved at the beginning of the presentation, to generate a positive impact right from the start and for the investor to decide if the investment opportunity interests him or not.
5. Market size. Usually explained in terms of TAM, SAM and SOM, correctly defined. Be careful with the definition of what is meant by SAM and SOM. TAM is generally obvious... but SAM and SOM tend to be defined differently by each entrepreneur, so it's important to talk properly about how we have defined SAM and SOM in our particular case.
6. Competition. Here, a debate has been set up about how to present the competition, whether in a matrix of quadrants or a matrix of functionalities. As in many other areas, in the opinion of Patricio Hunt, this depends on the context. If explained in terms of a matrix of functionalities, it is very important that these functionalities come from an in-depth analysis of their relevance to customers. Who cares that your product has 10 features that are irrelevant to customers...?
7. Business model. In this part, it is important to re-emphasize who are the customers who are paying for the product, how revenues are generated, how recurring they are, what is the company's gross margin, if you have churn and how much.
8. Go to market strategy or expansion plans.
9. Equipment. When the presentation is made to an investor forum, it is important that this slide is not left until the end, in live presentations, the first thing an investor wants to know is who is speaking to him.
10. Value creation, relevant financial aspects and “Ask”.
Once the content that the presentation should have has been established following the previous guidelines, it is important to design each of the slides taking into account the following 4 components:
- Index.
- Heading.
- Graphics or illustrations.
- Notes, usually at the bottom of the page.
In addition, since there are certain cognitive biases that influence investor decision-making, such as that of every human being, there are intangible elements that we must take into account in order to achieve a greater emotional impact on the people to whom the message is addressed.
Along the same lines, it is interesting to mention the 6 Principles of Persuasion which, according to Robert B. Cialdini, are defined as: reciprocity, commitment and coherence, social proof or consensus, sympathy, authority and scarcity. Taking them into account when designing presentations will increase the chances of successfully closing an investment round.
