Fundraising is often vital to a startup’s success, and at the heart of fundraising lies a concise and compelling investment pitch.
Just getting started? Here’s a rough outline of the 15 slides every investment pitch should contain, based on my experience pitching hundreds of investors and ultimately raising over $100 million in funding for Kaltura. Basically, think of pitching as presenting and answering two sets of four questions: what, who, why and how.
1. In a nutshell
In 10 concise bullet points, summarize the two sets of four questions, high-level financials and the contemplated offering. This lets investors understand the “big picture” before diving into the weeds, and makes it clear early what excites them and/or troubles them. It is very important to address such feedback throughout the presentation in order to convince them, and equally as important, demonstrates the ability to adapt to different people and inputs.
Present what products and services the organization provides. If links to a demo or an engaging video are possible, use them. It’s important to wow investors, especially at the beginning. Remember, there is no second chance to make a great first impression. Explain what unique and golden technologies or capabilities are being brought to the table. Be clear about what the company develops, vs. what is provided by third parties.
Present who the potential or actual users/customers are, how they use the products and services, and if applicable, who the major ecosystem partners are, including key suppliers and distribution channels.
Present why users/customers need what’s being offered, as well as what competing alternatives exist and why users/customers would use the new product or service instead. What pains are being solved? What opportunities are being offered? Argue what the company’s sustainable “unfair advantages” are — the reasons that would lead to success more than someone else trying to do the same thing (for example, unique talent, strategic connections, key intellectual property).
Present how the company will make money or otherwise derive value — that includes the business model and pricing.
Explain what the company has done so far. What has been developed? Whom has it been sold to? What challenges and risks have already been overcome, and what challenges and risks still lie ahead. Additionally, mention how much money has already been raised and from whom.
Introduce who the company team members are and explain why they are a strong fit for what the company is planning to do. Highlight who the next key hires are and why the company will find and attract them.
Explain why the organization needs money. Present how much is needed, and how the proceeds will be used to overcome and mitigate current challenges and risks. Be honest about what the next level of risk would be after using the proceeds. Also, explain why the investors being pitched are a good fit for the company’s needs. Maybe they have a specific expertise, other related portfolio companies, etc.
Finish up the eight questions part by stressing how big the opportunity is. Talk about things such as how big the market is, how large the company can become, which big companies would want to buy the company, and why is this such an amazing and inspiring opportunity. Be audacious and bold, yet realistic.
This is the last chance to build their excitement before diving into financials and projections.
10. Projections: key revenue assumptions
Highlight assumptions for bookings and revenue, both top-down (addressable market size and deemed market share) and bottom-up (lead funnel and conversion rates, sales heads and productivity rates, average deal sizes and number of customers).
11. Projections: key cost assumptions
Highlight assumptions for the cost of goods sold, gross margin, operating costs (including headcount requirements) and capital expenditures.
12. Profit and losses
Provide a three- to five-year statement of operations. It’s best to use three graphs. The first summarizes revenue, gross margin, EBITDA (earnings before interest, taxes, depreciation and amortization) and net profit. The second highlights different revenue and gross margin sources (for example, separating between recurring and non-recurring and/or different products or market segments), and the third the P&L cost items (cost of goods sold, and each of the main operating expenses line items).
13. Cash flow.
Provide three to five years of cash flow highlights. Again, this is a good spot for a graph presenting operating income, operating expenses, investment in capital expenditures, funding and closing cash.
14. The offering.
State again how much is being raised, and provide a high level pro-forma capitalization chart both pre- and post-round.
15. Closing argument.
When preparing to wrap up the presentation, present approximately five bullet points summarizing why this is an amazing investment opportunity (for example, a huge market, perfect timing, strong sustainable differentiators, fantastic team and great strategic value for the following big companies).
Leave time for final questions, and to discuss possible next steps. If resistance is encountered, ask them what they would do and what progress could be shown in the future that would make them interested. Note these points and remind them of it in the future if and when it’s achieved. Good luck!
What else should a fundraising presentation contain? Let us know in the comments section below.