The 10-Step Formula Startup Founders Use To Pitch Investors

The 10-Step Formula Startup Founders Use To Pitch Investors

The best tech startups build great products that solve real problems. These startups are also excellent at communicating the value of their products, both to investors and their target market.

Communicating the value to investors, specifically in your pitch deck, is crucial. The problem is making a pitch deck is one of the most frustrating processes on the planet, even if you like doing it. Having a communication formula will save you a lot of time.

One of the most successful startups of all time is Airbnb. Pitchenvy features the Airbnb pitch deck. The formula Airbnb uses to make their case can be applied to a variety of situations where you need to be persuasive. It goes like this:

1. Identify the problem.
This is where you make your audience care. Why should investors in the crowd want to pay attention to the rest of your presentation? This slide is easy if you build a product that solves a real problem. It sounds logical, but you’d be amazed how often it is done in reverse-order i.e. products get built, then the pitch wastes time trying to convince the audience that there is a problem.

2. Describe the solution.
Let’s imagine your startup has successfully identified a real problem. What would solve this problem? Keep it short and sweet, and if possible, re-iterate how it addresses the problem(s) described in your opening slide.

3. Validate the money-making potential.
Is the problem worth solving? For investors, the money-making potential matters most. After all, they want a 10x return on their investment. Is solving this problem going to bring that return?

4. Show-off the product.
This is big for credibility. More than ever, having something tangible will separate you from the startups with their hands out.

5. Explain the business model.
How will this make money? If your idea doesn’t make money, then it’s probably not solving a real problem. Some may disagree with that, but I’m a realist. Money is value. If your product/business offers value, people will exchange value (money) to get it.

6. Show the market validation / growth / traction.
Depending on how far along you are in the fundraising process, you will have some traction to show. If you are a seed-funded startup going for Series A, you better be able to show traction. Nothing validates your assumptions more. Even if you’re not racking in the big money yet, proof that people want to use your solution will go a long way.

7. Describe competitive landscape.
You need to show how well you know the competition and potential threats. I’ve been in pitches before where I was asked, “what if Facebook makes this tomorrow”. Be prepared to answer all sorts of questions like that. Think of this slide as a place to proove that what you are doing is unique.

8. Outline your competitive advantages.
Investors don’t want to invest in your business, only to find out that it can be crushed. This principle is not limited to tech. When Warren Buffet and Charlie Munger invest, they look for businesses that have competitive advantages. Here’s Warren Buffet in his own words:

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”

Pitchenvy has a section of their site dedicated to showcasing the best startup pitch decks. Ever heard of Mixpanel? Buffer? Square? Their pitch decks are available on Pitchenvy.

Top tier engineering without communication skills is like acquisition without retention. You need them both. I will write more on this in the future.

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