Selected Practices:
Insight
From Vision to Venture: Securing Early-Stage Capital Commitments
Crafting a compelling narrative to gain investor interest and close capital from angel investors, family offices, and small venture capital firms
Raising investment capital is a critical activity in the lifecycle of a business, and securing funding is a multi-stage, iterative process. Each funding round requires extensive planning and strategic intent. Ideally, investors provide value to the business beyond an infusion of capital. This idea of smart money means having investors who bring something to the table that the business didn’t already have. This could be supplier connections, introductions to other investors, subject matter expertise, or regulatory or compliance knowledge, among others. To attract smart money, your pitch and narrative must be crisp and cohesive, effectively portraying the potential for a positive return to the investor and allowing the investor to understand the strategic fit between the company’s approach and the investor’s individual area of domain knowledge, expertise, and inroads.
Building an effective pitch deck to secure capital
No two pitch decks are the same, and there is no hard and fast list of “must-haves” for an effective pitch — despite what many self-described pundits say. The structural nuances, content focus, and messaging of an investor narrative change greatly depending on the maturity of your business. Numerous variables determine the content and flow of your deck, including industry, product type, funding round, capital requests, audience (e.g., scientific/technical vs. businesspeople), and format of the meeting (e.g., in person, Zoom, pre-read, standalone deck).
Thoughtfully considering the unique variables specific to your business and business context enables you to create a highly customized, extremely impactful deck that informs and energizes potential investors. Your pitch deck will vary greatly depending on the stage and industry of your business. For example, the content and structure of investor-facing material for a pilot-stage B2B tech company will be significantly different from a pre-revenue biotechnology company raising its fourth tranche of 7-figure capital.
Delivering an effective pitch is like telling a story. It starts with a hook that grabs the audience’s attention before going into the background and main arc. Similarly, an effective pitch grabs potential investors’ attention by illustrating a real-life pain point before delving into the creative and novel solution your business provides. Many founders have personal stories about why they started a business. These types of stories usually resonate strongly with investors and serve to demonstrate that the founder is personally invested as a driving force behind bringing the new solution to market. The effective delivery of a pitch is important, but it can only be achieved if the core content of the presentation is relevant and impactful.
Pitch deck content: elements of an effective investor presentation
Early-stage pitch deck content can vary depending on business model, industry, and type of product. However, there are some content pieces broadly applicable to many types of pitches. A pitch deck shouldn’t need to be more than 8-10 slides. After all, the best stories are tight and punchy.
Early-stage investor pitch content
| Section | Description |
|---|---|
| Title | A simple title slide with your company logo and a clear one-liner or bullets conveying what your product/service does |
| Problem | Detailed description of the specific problem that your business solves |
| Solution | A clear explanation of how your product or service solves the problem |
| Differentiator | Description of your competitive advantage, how your offering is differentiated from what else is on the market, and how you will defend against competitors |
| Market | Quantification of the size of the market and how much of that market you can capture over what period. Describe your target audience/consumer |
| Proof | Description and quantification of any traction you have to date (e.g., revenue, number of subscribers, bookings, retail partnerships, etc.) |
| Financials | Actuals and pro-forma financials showing actual/expected revenue and channel growth, relevant operating expenses, and a breakeven expectation for EBITDA positivity |
| The Ask | How much money you are raising, the investment instrument being used (e.g., SAFE), how long of a runway the investment provides, and the key milestones for the use of funds |
| Team | A list of all team members/founders, their credentials, and relevant aspects of their backgrounds that bring value to the venture |
| Appendix | Other supporting information (e.g., FAQs, credibility drivers, supporting data, contact information) |
Title
Keep it simple with your title slide. Show your logo and include a clear one-liner or a few bullets on your unique product or service.
Problem
Begin the presentation by clearly defining the problem you seek to solve. Provide a detailed description of the pain point(s) that individuals experience today. This can usually be accomplished in fewer than three slides. An effective tactic is to illustrate the problem using an example rather than an explanation. Walk the audience through the journey of the person who currently experiences the pain point. Make the audience emotionally connect with the journey so the need for the solution becomes obvious. Show investors that you have pinpointed a specific problem that you can then solve. Many investors appreciate succinctness and clarity throughout the presentation, which begins with placing parameters on the problem statement. The problem statement should also include the significance of solving the problem – the so what? This is the essence of why solving the problem matters.
Solution
Once the problem is clear, the next step is to present a concise, straightforward explanation of your solution and how it directly solves the problem — in other words, your product’s value proposition. Map your solution statement directly to the problem statement in a 1:1 manner. For example, if your problem statement consists of three components 1) wasted time, 2) lost revenue, and 3) unhappy customers, then your solution would ideally create 1) time savings, 2) increased revenue, and 3) happy customers.
Most importantly, your solution section should not only describe what your business solves, but also how. Go into the appropriate level of detail here so that a complete novice in your field would understand how your product or service generates the desired solution. If your product or service is highly technical, scientific, or medical in nature, describe its merits in layman’s terms without diving too deeply into industry-specific concepts or jargon. Said differently, the solution section is the what and how to the problem’s why. It is important to explicitly demonstrate product-market fit, illustrating that your product directly satisfies a strong market demand.
Differentiator / Competitive Advantage / Defensibility
Strong differentiation is critical to a competitive and defensible product. A differentiated product either solves an unmet need or solves a market need in an innovative way, generating greater value for consumers than alternative solutions. Differentiation creates competitive advantage, driving consumers to select your product over others. Having a unique and differentiated product is only valuable if you can protect it against competitive pressures. Investors will naturally wonder what sets your product apart from the competition and how you plan to mitigate risks and protect against competitive encroachment. Achieving defensibility can manifest in many ways, including:
- IP protection through patents or trade secrets
- Overcoming high barriers to entry (e.g., technical breakthroughs)
- Creativity through unique marketing, consumer segmentation, and brand positioning to resonate with a specific consumer niche. Brand awareness, quick traction, and customer loyalty (measured and supported by metrics) can impart defensibility in a highly competitive market
- Scarcity, such as supplier contracts for raw materials that are extremely difficult to procure, or unique regulatory allowances that allow you to sell in a jurisdiction that prohibits others from entering easily
Even with a highly differentiated product or solution, most investors want to see proof and understand the total opportunity to forecast a potential ROI.
Part two of From Vision to Venture explores how founders and early-stage businesses can answer the “so what” question for investors.
Disclaimer
This article does not constitute fundraising advice and has been shared for informational purposes only. There are important additional details to consider when strategizing and executing a fundraising approach and/or capital raise for a business. Professionals and subject matter experts should be consulted to help determine what makes the most sense for the specific needs of a business before critical decisions are made and transactions are entered. The information contained herein should not be relied upon to make an investment decision, and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those discussed, if any.