What is a deck? When is it used? What do you have to consider to create a good deck?
To help you increase the chances that your startup will be able to successfully raise a round of private funding, in today's article we reveal the main issues to consider and the errors that Intelectium suggests avoiding during the creation and presentation of the deck to future investors.
What is a deck and when is it used?
An investor deck is composed of a series of documents that entrepreneurs prepare, usually when they are in the process of raising private funding rounds, for Present the company's key information to anyone who might be interested in it. In short, the deck is your project or company's cover letter to future investors.
It should be clear that the purpose of the deck is not to obtain funding, The purpose of the deck is to achieve that future investors are interested in the project and convince them to have a next meeting.
An important aspect to consider is the channel through which future investors will receive the company's presentation. In the event that such information is to be sent by email or similar, with no possibility for the entrepreneur to provide additional information, the deck must be a self-explanatory document, with enough text to answer the main questions that investors may have at first about the project.
On the other hand, when the entrepreneur has the opportunity to present orally the project for which he seeks to raise funding, the deck will be the presentation that accompanies and reinforces the entrepreneur's discourse. In these cases, it is essential to design simple presentations, to prevent the presentation itself from diverting the focus of attention of the listeners, which must be in the entrepreneur's discourse. In recent years, many investors welcome the addition of what is known as “One pager” to the documents that form part of the investor deck.
Normally, the one pager is usually sent after or with the introductory email, but always before the first meeting with future investors. The one pager is a useful tool that allows, as its name suggests, to summarize on a single page the main elements that future investors must take into account in order to build a clear picture of the investment opportunity presented to them.
Structure of a good deck
From Intelectium, we have identified 12 key points you should include in your deck to help investors have a clear picture of the situation of your company and of the investment round that you want to raise. In addition, the information included in each of the points should be able to answer the main questions that investors may ask themselves:
1. Executive Summary.
2. Problem: What is the real pain that you are trying to solve? Why aren't existing solutions effective? Sometimes, whoever is listening to the project does not suffer firsthand from the problem posed during the presentation, so appealing to feelings will help future investors put themselves in the shoes of the target audience and understand the need for the proposed solution.
3. Solution: Is the company able to solve the existing problem? Why is it the ultimate solution? What is the differential value? At this point, it is important not to forget to mention the name of the product and to include, as far as possible, testimonials that validate the value provided by the proposed solution to the customer.
4. Business model: Does the project generate enough value for the customer? How will revenue be generated?
5. Traction and KPI's: What has the company achieved so far? Is there any type of validation by the market? Although it is true that sales are a key metric that will allow future investors to evaluate the state in which the project is, if it is in the phase known as pre-revenue stage, market validation can be demonstrated through other metrics such as pre-orders, website traffic, etc.
6. Market size: What is the size of the market where the company operates? What is the market size in those countries where the company intends to internationalize in the near future? Intelectium recommends including 3 distinct concepts at this point: Total Addressable Market, Serviceable Available Market and Serviceable Obtainable Market.
7. Competence: Who is both direct and indirect competition? Where is the proposed solution positioned in the market? What is the competitive advantage? On many occasions, entrepreneurs choose to use graphics or matrices that help to position the competition around the key variables of the market.
8. Equipment: Why is it the right team to carry out the project? What value does each of the members provide? If any key element is missing for the optimal development of the project, there is no need to be afraid to express it, it will be another sign that the entrepreneurs themselves have carried out a previous analysis of the project in an objective manner.
9. Road map: What is the company's vision? How will the project's growth strategy be structured? What are the key objectives that the company wants to achieve?
10. Momentum: Why should I invest now? Being able to convey a clear message at this point will be key to creating what is known as a feeling or syndrome of FOMO (Fear Of Missing Out), which will prevent the round from dragging on indefinitely over time.
11. Financial plan: What is the expected evolution of the main financial metrics over the next 3 or 5 years? It is advisable to bet on simplicity and be realistic to avoid creating false expectations for future investors, which in the long run will create an image of unprofessionalism.
12. Features of the round and use of funds: How much funding is needed and why right now? What role will the investor play in the company? What areas and projects will the funds be invested in? At this point, it is not so important to explain in detail what the raised capital will be invested in, but to make it clear what goals are intended to be achieved through it.
Even so, it's important analyze in detail the target audience that will receive the deck to adapt certain elements to the specific requirements it may have. In this regard, there are several venture capital firms that have published, on their own website, the scheme that they expect to be found on the decks of the companies they analyze.
DO
- Adapt the content to the audience's interest.
- Provide realistic and objective information. Citing the sources of such information will help defend the message.
- Create a storytelling around the project and develop it in a coherent way throughout each point.
- Avoid including information that is not relevant or provides any type of value.
- Opt for a presentation with an attractive design that manages to capture attention from the start.
- Make use of visual aids to guide the reader throughout the presentation. -Ask for feedback and refine the documents.
DON'T
- Not having established or communicating the reason for the project.
- Focus on the specific features of the product or service rather than on the problem being solved.
- Ignore both existing competition and potential risks.
- Not having a clear Call To Action
- Not having ready supporting information to provide in case investors want to answer specific questions.
Search for specialized financial partners
Having a financial partner specialized in investment rounds and the entrepreneurial ecosystem can greatly help you increase the success rate of obtaining the funding you are looking for, while streamlining the process.
At Intelectium we prepare and perfect your business plan and deck for investors and we provide you with our knowledge, experience and network of contacts within the private finance market to be able to obtain your first rounds of Seed or A. We also help you implement rounds B or C to expand your business internationally.
Get in touch with us hitherto be able to receive expert advice.
