How to Draft a Pitch Deck

With experience as an investor and lawyer, I have seen many so-called "pitch decks". Most of good quality, but also some with weaknesses.

What are the "usual suspects"?  

• A typical weakness is that one does not distinguish clearly enough between generic input factors, and the company's solution, and places too much explanatory effort on the former. For the professional tech investor, this will be familiar material. For the less professional investor, this often contributes to confusion about what is third-party technology and what is proprietary to the company.

• Another weakness is exaggerated selling points about why the solution is justified in the market. The value of the concept should, in my view, be fairly self-evident.

• Excessive use of "buzz words" is something I would also call a potential weakness. If you plan to integrate some solution like machine learning (artificial intelligence) in the future, don’t emphasise this without being able demonstrate which unique data access will form basis for the AI, and how this will provide a real competitive advantage.

Here are some basic points that should be covered in a pitch deck:

1. The presentation should start with a good description of the solution and what problem it aims to solve. "Disruptive" solutions to replace manual collaboration operations have long been popular. One should then be able to demonstrate that all aspects of the manual solutions are replaced, such as the importance of trust between the parties and the need for clarifying communication in the process. If a demo version of a functional product has been developed that can be tested and demonstrated, an important milestone will have been achieved.

2. The revenue model is often something a little different from the solution itself. In early-stage companies, one have perhaps been most concerned with building a value-added solution, without thinking more closely about how it will generate revenue. If, for example, it is a subscription solution that you envisage, then it is wise to have some thoughts about how this will be detailed and tested. An important clarification is whether the revenue model is legal, or whether special permits are required. Payment solutions will often require permission from Finanstilsynet, while the use of personal data requires informed consent, etc. A presentation should indicate that you are familiar with the requirements that apply and how this has been resolved.

3. Which markets one is targeting is of course relevant. In the case of a solution to be sold to companies (B2B), the market can often be less intuitive, and technical or commercial knowledge may be necessary. However, the first thing to prove is that there is actually a willing market for the solution. Investors seek proof that there is a demand for the product or service. Can you conduct in-depth market research to identify your target audience, assess your market size, and validate your assumptions? Here, stories from pilot customers will be good to have.

4. Competitive advantage is something investors will emphasize. How does the company stand out? If the company is based on intellectual property rights, it is important to demonstrate how these are secured. For an early-stage company, it is perhaps just as important to show that you have a strategy for building up competitive advantage, e.g. by being the "first mover" into a market where the first person to possess a critical user base will have a great advantage.

5. A well-defined business plan is the basis of any investment. The plan should clearly articulate the company's vision, objectives, as well as the assumed market, competitive advantage and revenue model (as in the preceding points). Investors want to see that the company has a viable plan leading up to upcoming milestones and resources to execute. If you are in the early phase, the path to the market is probably among the central topics that you should have a clear opinion on. Do you have an agreement with a distribution platform, or do you plan to initiate a recruitment campaign? How else should the solution be marketed, and what are the costs of this?

6. Growth forecasts follow naturally after describing the available markets. Financial markets have long attached great importance to growth rates, and for the early phase it is important to be able to justify scalability and what the solution's economic potential is. But anyone can make skyrocketing graphs, and I don't think many investors look at these and start calculating with decimals. Moreover, the sentiment in these times is probably that investors have once again begun to value profitability, not just growth, and strategy for a fast track to positive cash flow is unlikely to be a disadvantage.

7. The team will be given much attention. Provide a good description of your team's background and qualifications. By extension, one should account for the current ownership composition, and it hardly comes as a surprise that investors prefer that the founders themselves hold the largest stake. If suppliers or investors who do not add value occupy a large amount of space in the shareholder register, this may lead to entrepreneurs being too diluted in subsequent capital rounds. Therefore, be at the forefront of this issue and see if there are opportunities for reallocating ownership if necessary.

8. Valuation is a demanding topic, especially in the early stages before the business idea has a proven ability to generate revenue. Therefore, convertible loans, or so-called SLIP agreements, which provide a share subscription price that is seen in the context of a later capital round, has become popular. A lot can probably be said about convertible instruments, and experience shows that when used indiscriminately, they can create a somewhat confusing picture. I would imagine that most investors would prefer a classic contribution of equity if given some thought, and this requires putting a value on the company in light of how much dilution the founders are willing to tolerate. You may want to have some dialogue with experienced investors in advance and get some indications.

9. An overview should be provided of basic company information, such as recent annual accounts, articles of association, existing share capital/ownership composition, any options, SLIP agreements, convertible loans or other rights related to equity. These are not the factors that determine the success, but orderliness and transparency always inspire confidence.

10. Provide basic information about the process going forward, the availability and timeframes of the data room, unless this is in a separate document.

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This article represents the author's general views and is written for discussion and learning. Professional opinions may differ. Advice on specific matters must be sought on an individual basis.