November 03, 2020 5 min read

Every business starts with an idea. Before any product is built or any service is rendered, they must first be born in the form of an idea. While developing an idea is generally the toughest part of the process, many ideas are born but never grow due to a lack of funding. This is where the concept of pitch decks comes into play. Most successful businesses use pitch decks in order to generate funding for their ventures, but what exactly does a pitch deck entail? 

What Are Pitch Decks?

pitch deck is the action of presenting your idea for a product, service, or company to an audience. For the most part, the audience will be made up of potential investors. Hand in hand with a solid pitch deck is an executive summary. An executive summary is a business plan that describes in detail the goals and plans of the business to potential investors in order to entice them to invest. Pitch decks are important because the backbone of any business is its cash flow. Cash flow is essentially all cash and cash equivalents entering and leaving the company. 

The goal of a pitch deck is to convince prospective investors to inject the desired amount of cash into the product, service, or company. Investments are often made in exchange for partial ownership or profits, referred to as a “return on investment.” As the saying goes, “you’ve got to spend money to make money,” and when talking about starting a product, service, or company, investors offer a considerable amount of outside help. Using a pitch deck can help business owners to convince potential investors that the cash flow on said product, service, or company will benefit all involved.

What Does a Pitch Deck Include?

There are many ways to create an effective pitch deck, but some have a tendency to work better than others. The best pitch decks include the following 12 components:

  1. Introduction: Who are you, and why are you here today? Often the person selling the idea is a more important sell than the idea itself.
  2. Team: Who are you working with, and what are their responsibilities and roles? Is this a one-person operation? Who are the rest of the members of the organization?
  3. Problem: Why create this product, service, or company? Is it an important enough problem? The more urgent and severe the problem, the easier it will be to market, sell, and sustain the product or service.
  4. Advantages: Why should a customer choose your product, service, or company? What separates it from the competition? Is there anyone else competing to solve the same problem? Why invest in this idea instead of their idea?
  5. Solution: How are you planning to solve the problem? Pointing out potential problems and flaws is much easier than creating solutions to them. What are you going to do to fix this one? 
  6. Product: Show the product, service, or company in action if possible. Most of the time, “showing” works much more effectively than “telling.” Has anyone used this product, service, or company? What were their thoughts and reactions? Can I try it? 
  7. Traction: Is there a measurable set of customers to prove the value? Do we know that there are enough people out there with the same problem and with a strong enough desire to fix that they will purchase the idea being pitched?
  8. Market: What’s the size of the target audience? How many people are interested in this? Will this be a one-time market, or could it possibly expand and grow even bigger? 
  9. Competition: Are there any alternative products, services, or companies attempting to solve the same problem? There will always be another option with whatever product, service, or company you are pitching, so how can you assure an investor that your idea will outlast the other similar ones?
  10. Business model: How will this idea make money? When can a return on investment be expected? Every investor puts in capital to an idea with the purpose of being able to get more capital back from it. How much would that be? How likely is it to succeed?
  11. Investing: How much money do you need? The question on both parties' minds is, “how much is required?” The more detailed of a number and plan you can provide, the better a pitch deck will be. 
  12. Contact: How can you be reached quickly and easily in case of acceptance? If they decide to accept the proposal, both parties will want to get started as quickly and easily as possible, so contact information is critical as the final point of a pitch deck.

Those are the 12 basic components of a pitch deck, but you can also consider covering additional topics, including: 

  • Exit strategy: How do we end this partnership when the time comes? Selling ownership to a third party is a fairly common example.
  • Partnerships: Who is involved? Opportunities to work together with other partners could help persuade an investor and alleviate concern for a potential loss.
  • Personal touch: What motivated the move to create this product, service, or company? Every person has a story, and so does every idea. What are this one’s origins?

What Is a Good Pitch Deck and How Do You Build One?

good pitch deck is the one that successfully convinces an investor to invest or learn more about the product, service, or company. There really is no right or wrong way to create a pitch deck, but there are a few guidelines to follow that can help take the pitch deck presentation to a whole new level. Some examples would include researching your target audience and then adjusting the pitch deck if necessary to play to their interests. Every person is different, and therefore every pitch should be different, even if the product, service, or company stays the same. Any personal information known about a potential investor would absolutely be beneficial to any pitch deck. 

Another key aspect is honesty. It’s important to highlight the potential rewards, but the more an investor learns about the behind-the-scenes minutiae and possible challenges, the more credible a pitch becomes. One of the best inclusions would be first-hand testimonials. Any person that has used the product, service, or company can be very valuable in helping convince an investor. 

Sometimes with pitch decks, it’s not as much about selling the idea as it is about selling its creator. Pitch decks aren't going to be successful if the creator of the idea isn’t able to first sell themselves as an individual and potential business partner, no matter how good the idea. 

Why Is a Pitch Deck Important?

While investors will often receive high numbers of meeting requests and pitch decks, most pitches don’t tend to last very long. On average, pitches only last around 3 minutes and 44 seconds. That can be a tremendously short amount of time when trying to cover all the steps and examples covered previously. This is why it’s so critical to have a well thought out and planned pitch deck ready to go in order to convey the appropriate information as efficiently as possible. 

While pitch decks are still fairly common, an innovative way of providing the information found in them is with web designs. Consider using a firm that works with the creators of a product, service, or company to design their own version of a pitch deck online. Millions of business owners just like you, are creating new products, services, and companies every day, so set your idea apart by creating a professional pitch deck that immediately catches the investor’s eye. 

Sources:

https://konstantkreative.com/

https://techcrunch.com/2015/06/08

https://articles.bplans.com/what-to-include-in-your-pitch-deck/

https://www.cooleygo.com/glossary/executive-summary/

https://www.cooleygo.com/glossary/pitch-deck/

https://www.investopedia.com/investing/what-is-a-cash-flow-statement/

https://www.inc.com/jeff-haden/how-to-pitch-18-steps


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