- 1. Opening Gambit
- 2. Team
- 3. Problem Statement
- 4. Market
- 5. Solution
- 6. Competition
- 8. Traction
- 9. Operating Plan & Financials
https://www.unusual.vc/chapters-enterprise/fundraising
In terms of the structure of the pitch itself, here’s what we recommend. We are not suggesting this is the only way to structure a good investor pitch! Based on our experience, these are the key aspects that founders need to focus on and this is a structure we’ve seen work very well thousands of times.
Start with a human story about the problem and benefit your startup provides when implemented. It shows the listener whether you are an authentic entrepreneur who found the problem and insight honestly. Investors will be assessing your true passion and reasons for starting the company. Objective: Hook the listener. You’ve got <5 minutes to grab the investor’s attention.
Who is on the team today and what are your backgrounds? Investors will be assessing 1) if this group is uniquely qualified to best solve this problem, and 2) if they have what it takes to recruit the world-class team necessary to build any enduring company. The order of the team slide is a personal preference. Some people prefer to save this to the end. We believe it should be at the beginning of the presentation because it informs the audience of who is pitching and it is typically one of the stronger aspects of any pitch.
Objective: Introduce yourself and your current team in a way that helps the investor understand why this group is uniquely qualified to best solve this particular problem.
Zoom out and talk about the greater trend that’s happening in the world and zoom in on the opportunity (pain) you are tackling.
Objective: Establish common ground that there is a clear market opportunity happening in the world today (or what we call a “disruption in the force” at Unusual). You are looking for nodding heads and agreement that now is the time to solve it.
Classic total addressable market (TAM) slide. For a venture investor, the market needs to be big enough that they don’t need to do the math. Revenue potential is in the billions of dollars (not necessarily today, but in a timeframe that is relevant for this company). That said, we highly recommend a bottoms-up analysis to prove the point. Example: 50,000 companies buy DevOps tools today. If 2% of the market purchases $100k worth of subscription software from us, we will be a $100M ARR business in seven years.
Objective: Investor feels “greed” for the opportunity and isn’t questioning market size after this slide. Leave no doubt that the prize is worth the fight.
Explain what you do in 1-2 slides. First, explain it in 25 words or less. Second, highlight the aspects of your solution that are particularly important to a customer and difficult to build. Note: don’t go into every technical detail. If the investor wants to dive deeper on the technology, she will in a separate session. At this point, the investor is going to give you the benefit of the doubt that you can do what you say you can do. She is mostly deciding if the solution in theory is compelling.
Objective: Two objectives for this section. First, explain in plain English the big idea for the company. At Unusual, we refer to this as the “Vision” visual as it is the big picture for what the company will eventually do. Venture investors want to see that founders are thinking big and have an idea for the chapter book that will ultimately be written. Second, dive into the heart of what is unique about your solution that will enable you to win and is difficult for competitors to replicate.
This should consist of a visual comparing your solution with alternatives. The comparison criteria should be those that a customer would use to evaluate in a buying decision, and should highlight where you are differentiated. This is often a 2x2 or a Harvey ball chart. We suggest you use one of the two.
Objective: Enable the investor to easily see that your product is superior on the dimensions that matter most to the buyer/user.
# 7. Go To Market
Most importantly, highlight what you believe is your beachhead use case. Emphasize who you will sell to in this phase to achieve the current Traction goals. This is NOT the time to focus on the big vision idea. In fact, it is the opposite. In Solution (#5 above), you told them you are going to take Paris, now tell them where your Normandy is.
Objective: Investor clearly understands who the target user/buyer is for this product in the next phase. Worth commenting on the organizational design and product strategy aspects that facilitate the intended go-to-market (direct sales, inside sales, free trial, open source). The investor wants to get a sense of the associated costs (and capital) required to execute.
This differs depending on if you are raising a Seed or Series A.
Seed - Highlight customer conversations you’ve had and any possible early adopters or design partners you are engaged with.
Objective: Demonstrate you have a strong thesis about your initial use case and articulate why customers would opt to go with your solution
Series A - Show logos and state of engagement with customers (Early discussion, POC, or current customer). Ideally have two case studies to describe problem and solution and an ROI to the extent possible.
Objective: Communicate that your company has achieved Product Market Fit as evidenced by 8-10 customers and a robust pipeline of prospects who are similar in their use case, and are willing references. The investor is convinced you’ve found a repeatable sales motion and have clarity on your ICP (ideal customer profile).
In one slide, create a visual representation of the execution goals for the company for the next 24 months in terms of headcount, product releases, customer activity, and cumulative cash burn.
Objective: Summarize what the company’s key goals are for this period and the capital required to achieve them. Remember, on one level, this is ultimately a financial decision they are making so assist the investor in answering the question: “What will the company look like when it needs to raise money again?” They will use this information to decide if this financing is setting up the business for a future successful fundraise (a significantly higher valuation at the next “step” in the journey).