Best way for Pitch Presentation for startup funding
Lets understand pitch presentation from zero
What is Pitch Presentation ?
Pitch deck presentation is a short and brief presentation (not more than 20 minutes) to investors explaining about the prospects of the company and why they should invest into the startup business. So, pitch deck presentation is a brief presentation basically using PowerPoint to provide a quick overview of business plan and convincing the investors to put some money into the business. Pitch presentation can be made either during face to face meetings or online meetings with potential investors, customers, partners, and co-founders.
Here, some of the methods have been highlighted below as how to approach a pitch presentation:
INTRODUCTION
To start with, first step is to give a brief account of yourself i.e. who are you? What are you doing? But care should be taken to make it short and sweet. Also, use this opportunity to get your investors interested in your company. One can also talk up the most interesting facts about one’s business, as well as any huge milestones one may have achieved.
TEAM
The next step is to introduce the audience the people behind the scenes. The reason is that the investors will want to know the people who are going to make the product or service successful. Moreover, the investors are not only putting money towards the idea but they are also investing in the team. Also, an attempt should be made to include the background of the promoter, and how it relates to the new company. Moreover, if possible, it can also be highlighted that the team has worked together in the past and achieved significant results.
PROBLEM
Further, the promoter should be able to explain the problem he is going to solve and solutions emerging from it. Further the investors should be convinced that the newly introduced product or service will solve the problem convincingly.
For instance, when Facebook was launched in 2004, it added some new features which give it a more professional and lively look in comparison to Orkut which was there for some time. It enabled Facebook to become an instant hit among the people. Further, customers have no privacy while using Orkut. However, in Facebook, you can view a person’s profile only if he adds you to his list. These simple yet effective advantages that Facebook has over Orkut make it an extremely popular social networking site.
SOLUTION
It is very important to describe in the pitch presentation as to how the company is planning to solve the problem. For instance, when Flipkart first started its business in 2007, it brought the concept of ecommerce in India. But when they started, payment through credit card was rare. So, they introduced the system of payment on the basis of cash on delivery which was later followed by other e-commerce companies in India. The second problem was the entire supply chain system. Delivering goods on time is one of the most important factors that determine the success of an ecommerce company. Flipkart addressed this issue by launching their own supply chain management system to deliver orders in a timely manner. These innovative techniques used by Flipkart enabled them to raise large amount of capital from the investors.
MARKETING/SALES
This is a very important part where investors will be deeply interested. The market size of the product must be communicated to the investors. This can include profiles of target customers, but one should be prepared to answer questions about how the promoter is planning to attract the customers. If a business is already selling goods, the promoter can also brief the investors about the growth and forecast future revenue.
PROJECTIONS OR MILESTONES
It is true that it is difficult to make financial projections for a startup concern. If an organization doesn’t have a long financial history, an educated guess can be made. Projected financial statements can be prepared which gives an organization a brief idea about where is the business heading? It tells us that whether the business will be making profit or loss? Financial projections include three basic documents that make up a business’s financial statements.
Income statement
This projects how much money the business will generate by projecting income and expenses, such as sales, cost of goods sold, expenses and capital. For your first year in business, you’ll want to create a monthly income statement. For the second year, quarterly statements will suffice. For the following years, you’ll just need an annual income statement.
Cash flow statement
A projected cash flow statement will depict how much cash will be coming into the business and out of that cash how much cash will be utilized into the business. At the end of each period (e.g. monthly, quarterly, annually), one can tally it all up to show either a profit or loss.
Balance sheet
The balance sheet shows the business’s overall finances including assets, liabilities and equity. Typically, one will create an annual balance sheet for one’s financial projections.
COMPETITION
Every business organization has competition even if the product or service offered is new and unique. It is necessary to highlight in the pitch presentation as to how the products or services are different from their competitors. If any of the competitors have been acquired, there complete details like name of the organization, acquisition prices etc. should be also be highlighted.
BUSINESS MODEL
The term business model is a wide term denoting core aspects of a business including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture. Further, as per Investopedia, a business model is the way in which a company generates revenue and makes a profit from company operations. Analysts use the term gross profit as a way to compare the efficiency and effectiveness of a firm’s business model. Gross profit is calculated by subtracting the cost of goods sold from revenues. A business model can be illustrated with the help of an example. There are two companies – company A and company B. Both the companies are engaged in the business of renting movies. Prior to the advent of internet both the companies rent movies physically. Both the companies made ` 5 crore as revenues. Cost of goods sold was ` 400000. So, the companies made ` 100000 as gross profit. After the introduction of internet, company A started to offer movies online instead of renting or selling it physically. This change affected the business model of company A positively. Revenue is still ` 500000. But the significant part is that cost of goods sold is now ` 200000 only. This is because online sales lead to significant reduction of storage and distribution costs. So, the gross profit increases from 20% to 60%. Therefore, Company A isn’t making more in sales, but it figured out a way to revolutionize its business model, which greatly reduces costs. Managers at company A have an additional 40% more in margin to play with than managers at company A. Managers at company A have little room for error and they have to tread carefully. Hence, every investor wants to get his money back, so it’s important to tell them in a pitch presentation as to how they should plan on generating revenue. It is better to show the investors a list of the various revenue streams for a business model and the time line for each of them. Further, how to price the product and what does the competitor charge for the same or similar product shall also be highlighted. It is also beneficial to discuss the lifetime value of the customer and what should be the strategy to keep him glued to their product.
FINANCING
If a startup business firm has raised money, it is preferable to talk about how much money has already been raised, who invested money into the business and what they did about it. If no money has been raised till date, an explanation can be made regarding how much work has been accomplished with the help of minimum funding that the company is managed to raise. It is true that investors like to see entrepreneurs who have invested their own money. If a promoter is pitching to raise capital he should list how much he is looking to raise and how he intend to use the funds.
Bottom line
Pitch presentation is short direct communication of approx. 20 minutes to individual or group of interested party to crack future deals for business. It should be brief but should cover every section of business.