Beat startup hiccups: How to pitch right and raise funds

While there are many versions about the role of the founder of a startup, the one that I like the most is as follows:

“The primary role of a founder is to ensure adequate resources, be it funds, people, infra, clients, vendors, partners or anything else needed by the startup to achieve success in line with its current and long-term value proposition and potential.”

In most cases, funds are singularly the most important resource needed by a startup.

While words like bootstrapped, frugal, etc. are relevant and valuable, a founder can commit no higher sin than to starve his startup of the required funds, just to be fashionable.

Accordingly, it becomes the responsibility of the founder/s to raise adequate funds, at the needed time, from the right investor.

The Pitch Deck

Here again, various pundits will tell you their versions of what constitutes an effective pitch deck. At most times, there is a wide variation in the versions.

Over time, after assisting numerous startups in their fund-raise journey, from pitch deck creation to getting the funds in their accounts, I have kind of arrived at a CMP, or common minimum programme, as to what should constitute a good pitch deck.

The following information should be available in the pitch deck, preferably one slide per topic, and preferably in the sequence mentioned below:

  1. The Elevator Statement
    • This is the opening slide and should crisply and succinctly articulate the following information:
      1. The offering
      2. The target client
  • The problem being solved
  1. The value proposition
  • A good example is the Airbnb pitch, namely, “We have created a platform that connects travellers with locals, letting them rent their rooms, or even entire places. Travellers save money, and locals can monetise their empty rooms; we just take a 10% commission.”
  1. The Problem or Opportunity Statement
    • This captures the following information
      1. Who has the problem?
      2. What is the problem?
  • How big and long is the problem?
  1. What is the impact of the problem?
  • I used to advise a startup which had an Idea to make a fall detection device with automated alerts in case of a fall. We created the following problem statement: “The probability of injuries turning serious and, in extreme cases, leading to mortality is directly proportional to the delay in medical response whenever an aged person has a fall.” All current offerings work on the aged person manually triggering an alarm after a fall, which in most cases is impossible. A significant percentage of the global population is 70+ and that percentage is growing exponentially.
  1. The Solution
    • It should cover:
      1. What is the solution that is supposed to solve the above problem?
      2. How does it do it?
  • What are the features of the solution?
  • The startup mentioned above articulated their solution as below:
    1. A fall detection wearable device
    2. Auto triggered once an aged person falls
  • Alerts go instantaneously to nominated care giver mobiles, including security and ambulance providers
  1. Uses embedded mobile SIM.

 

  1. The Market Potential
    • The size of the pond in which you wish to swim, changing over time
      1. The total annual spend or potential to spend, on all startups and enterprises, offering their solution/s to the above problem.
      2. The increase in the spend over time, as population increases and offerings become value added, with more features.
  • The increase in spend as you move into new geographies, like from city to state, single state to multiple states, from domestic to international, etc.
  1. Numbers/statistics, preferably from credible sources, which support your depiction of the market potential.

 

  1. The Team
    • This is probably the most crucial slide as investors actually fund people with good ideas and not vice versa. So even if the idea fails, the right team can pivot and come up with better ideas.
      1. Founder info:
        1. Role played at startup, NOT fancy designations, something like Business Development, Product design, Innovation, etc.
        2. A few lines about relevant experience and expertise to create credibility
        3. Academic qualifications, if relevant to the role
      2. Advisory Board members’ info
  • Key employees.

 

  1. How do you make money?
    • Revenue model, current and future
    • One time or recurring
    • VAS

 

  1. Go-To-Market, or GTM
    • How do you intend to make your offerings available to the clients?
    • Channel or Direct?
    • Sales/BD/Marketing structure
    • Partners

 

  1. Competitive Edge
    • Both product and alternate offering competitors to be mentioned
    • Your competitive edge over both
    • Your positioning vis-à-vis competition

 

  1. Traction till date from inception
    • Achievements till date, including but not limited to:
      1. Offering/Product readiness
      2. Client acquired/Revenue
  • PoCs/Sampling done
  1. Team built
  2. Vendors/Suppliers
  3. Certifications.

 

  1. Long-term vision
    • Talk about your vision regarding product, clients, geographies, etc.

 

  1. Financial Projections
    • 3 to 5 years’ projections, assuming adequate funds are available as and when needed
    • Topline, from all revenue sources
    • Costs
    • EBITDA (Earnings Before Interest Tax Depreciation and Amortisation)

 

  1. Funding till date and ask
    • Funds deployed till date, including your own and taken from anyone else.
    • Amount of funds required, for what and when, at what valuation/dilution.

 

  1. Use of funds and milestones post funding till next ask
    • Broad categorisation of the heads for which the funds will be needed, like product development, market expansion, etc.
    • Please note that investors rarely fund working capital
    • What will be achieved, as milestones, in what time, by using the funds raised, till further fund raise is needed.
  2. Summary
    • Sum up your value proposition to the investor and thank them for their interest.

The best pitch decks are not more than 15 slides long and should not take the founder more than 10 to 15 minutes to effectively communicate the value statement to the investor, thereby motivating him/her to consider investing.

 

Also, the best decks use as less words as possible and depend more on communicating through bullet points, images or icons. This ensures that the investor looks more at the founder while pitching and less at the presentation. The presentation should be a guide which the founder should use to articulate his/her value proposition.

 

About the Author

Anirudha Modak is a Shared Service Partner for our Shared Service Centre for Social Enterprises. Post exit from his own fintech startup in 2016, Anirudha Modak founded his consulting firm, Guru On Tap Consulting. Till date, he has worked with more than 60 startups and MSME Organisations across India and overseas. His core work is in Organisational Strategy, Business Development Consulting and Fund Raise Advisory. He is an Engineer with an MDP from IIM-A.

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