How To Think About Business Models In Presentations
Posted: 20th September 2021 07:54A pitch deck could be anywhere between 10 and 20 slides and this is what you need in terms of presentation if you want to have an investor give you capital via safe notes. The financial and business model section in the pitch deck should be in the third quarter.
A pitch deck is usually between 4 and 20 minutes. Depending on whether an investor is viewing it on their own, or you are presenting it live. Most of the time is spent on the business model and the financials – with good reason. What is your valuation? Revenue vs. expenses? Projections? So, to learn where the business model goes in a pitch deck, we need to understand each slide to see how they flow from one to another. We'll cover a basic 10 slide pitch deck.
Introduction slideBriefly describe who you are and what your product or service is. The introduction slide is similar to an elevator pitch. Only spend about 20 seconds on this slide. Make sure it's engaging and get the investors excited to learn more about you and your company.
The problemRemember, your pitch deck should tell a story. So, introduce the problem and explain how you will solve it. Find a way for investors to relate to your problem. They have experienced the same problems as the consumer. Your job is to remain focused and essentially explain what is not working in the current market.
The solutionThis is where your product must shine! How will you solve the problem? Your company is the hero of this story, and the delivery must be clear and concise. Also known as the "Utopia" slide, the solution slide can be exciting, and you should add infographics and other imagery to increase engagement.
Market OpportunityWhat does the market look like? Investors want large returns. Their exit could be within 5-7 years, and they want to see at least ten times their return on investment. How much of the market share do your competitors have, and what is untapped?
TractionStartups often use the traction slide to show current success. Even if that is freemium users. However, just because the public wants what you have to offer doesn't mean it will lead to a sale.
To exhibit traction to investors, emphasize the data elements that demonstrate the following:
- Sales quantity
- Orders quantity
- Total sales
- Revenue to date
- The total number of users
- Wait-list registrations
- Other quantifiable measures of success
Present data and indicate that your idea will succeed. For example, this could be done with projections, focus group data, survey results, and other data points.
Data visualization is essential for understanding traction and validation. To make your visualization more impactful, use basic charts and graphs to simplify things for a strong design.
Marketing strategyWhat is your strategy for attracting clients' attention, and what will your sales process entail? This slide should be used to define your marketing and sales strategy, describing the primary strategy you plan to utilize to bring your product in front of potential clients.
Finding and attracting clients can sometimes be the most problematic thing for a startup. It's critical that you understand how you'll reach your target market and which selling channels you plan to use and also show how your marketing and sales techniques differ from your competitors.
CompetitionDiagrams and infographics are an excellent way to highlight the competition. Display how you stack up, and show where your value proposition fits in. You want to stand out from the crowd so that the audience understands what makes your startup so unique.
You might also want to add how much each competitor has previously raised, which could provide some insight into how much the market is willing to invest. When it comes to negotiating the terms of a potential investment, this could seriously work in your favor.
Business modelNow you've got your product or service, it's time to discuss how it will generate revenue. Who will pay the bills, and how much is your turnover?
You can also illustrate how your pricing fits into the bigger market by referring to the competitive landscape. Are you a high-end, high-priced offering or a low-cost alternative to an existing solution?
FinancialsYou should aim for at least three years of projections, which will give investors an idea of where your startup is heading and what the potential outcomes are. Financial projections will also give investors insight into how your startup is managed. It's also a good idea to be on the side of caution and over-deliver.
After reading your pitch deck, investors may want to examine your financials, so be sure to have them ready. Don't go into great depth in the pitch, but instead provide a summary of the finances. Details come during due diligence, after you get a term sheet in hand.
The TeamSure, investors are looking at your product, market, competition, and financials, but they are hugely interested in who you are and who the team is that will lead the company to success.
This slide should give a brief rundown on the team and their credentials and how each member contributes to the company's success. You should include the founders, executives, and advisors. Highlight their experience and qualifications.
The Best Way to Present a Business Model SlideYour pitch deck's success depends on each slide:
- Detail: Whilst you can't pack your plan into one slide, be sure to add the most essential information, such as product development, consumer counts, and lead flow.
- Innovation: How innovative are your services or products, and how can you improve in the future? Highlight how you will take the product to the next level.
- Make no mistakes: Ensure there are no large text blocks. Use graphics and images. Make no spelling errors. Double-check your information and make it perfect.
- Speech: Work on your speech and practice. Get feedback from your peers and take their advice seriously.
Common Mistakes on a Business Model Slide for a Pitch DeckThe best thing about mistakes is you can learn from them. Here are some of the common mistakes people make on a business model slide:
- Failing to show investors the money. As discussed earlier, an investor's whole intention is about making themselves money by investing in you and your company. If you don't have the revenue to prove your traction, you'll need a substantial market and competitor research to prove your projections.
- What is the financial margin? What are your expenses "per unit" or for each subscription or client? Over complicating the projections is a common mistake people make when developing their pitch deck.
- Understanding the financials and effectively describing all areas of the business. You might be the brains behind the product, but as an entrepreneur, you need to learn about all aspects of the business and walk into the meeting with full confidence and knowledge.
ConclusionInvestors want a share in your business because they are either in your current market, experiencing the same problem as the consumers, or see the potential return on investment. To achieve success during your funding, you need a pitch deck that turns heads.
Ensure that each slide flows from one to the next clearly and concisely. Since most of your pitch deck is spent on the business model and financials, these slides should go in near the end – preferably between slides 7 and 9. Hook them at the beginning with your "hero story," and then show your projections for growth later in the pitch.
Your startup is a short 4 minutes away from receiving funding. Make sure you spend time on your business model to get your investors hooked.
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and NYU Stern School of Business.
Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.