What an investor should look for in a pitch deck

The pitch deck is the figurehead of every start-up. It is the central element in every presentation of the company and should give investors an authentic and stylish first impression. For start-ups, the pitch deck is the most important communication tool to arouse investors' curiosity and raise capital. For investors, the pitch deck is the first opportunity to get to know the start-up and to check for possible strengths and weaknesses.

What components should a pitch deck contain?

The pitch deck is a kind of application basis for the start-up looking for investors. It should contain only the most important ideas about the company and explain them simply and briefly. This includes the problem on the market, the solution in the form of a product or service, and the business idea on the basis of which the company intends to generate profits in the future.

The product or service should be explained in terms of how it works and it should be clear at a glance how it solves an existing problem in the market or why there is a demand for this product or service. The level of demand ultimately determines the market potential as well as the expected cash flow in the coming years. In addition, the pitch deck should highlight what the company's unique selling proposition is and how it differs from the competition.

In addition, every pitch deck should include the company's vision, i.e. the big goal, as well as a rough strategy for making this vision a reality. This results in the company mission, i.e. the company's raison d'être (also called "mission statement"). The founding team should also be briefly introduced in the pitch deck. Here, only the most important people in the team are important; not all employees need to be introduced. It should be quickly apparent what qualifies the founders to bring the company to success in their field.

In addition, a "proof of concept" should be listed, i.e. the proof that the product or service works and can survive on the market. In addition, a short roadmap should list the most important upcoming milestones that are necessary for short- and medium-term success. Finally, a possible exit scenario should be outlined, for example an IPO or takeover by a major market player.

What does not belong in the pitch deck?

As an investor, you should not expect to see detailed financial plans in the pitch deck. Forecasts for the future development of the company take up too much space and belong in a separate financial plan. However, relevant financial figures should be included so that, for example, initial cost drivers can be identified. The same applies to details of the product or service. Anything that goes beyond a brief explanation of how the product or service works does not belong in the pitch deck. This applies to tricky technical as well as legal details.

A pitch deck should tell a good story about the company, but there must still be enough facts in it for investors to assess the potential. Too much self-praise, cloudy forecasts and fantasies about world market leadership are just as inappropriate in it as crooked comparisons with already existing unicorn companies, even though, for example, not a single euro of profit has been made yet. Self-confidence is important for founders, but so is a certain professional style. The pitch deck gives investors a good impression of whether they are dealing with a promising and serious company.

What do investors look for in a pitch deck?

The business idea should be simple and clearly understandable, because it will be the core of the company in the future. If the founders are able to communicate their business idea clearly, this indicates that they have a clear vision and understanding of their company. They should have a clear view of when and how they want to generate profits so that the company can support itself in the future and become interesting for possible exits. If, on the other hand, the business idea is not simple and immediately understandable, doubts about future success are appropriate. Perhaps the idea is not yet mature enough or the market niche is overestimated by the founders. In addition to market potential, scaling also plays an important role here, i.e. the possibility of expanding the business idea quickly and cost-effectively to other markets.

The founding team deserves a closer look, because investments in start-ups are primarily investments in excellent teams due to the young age of the company. What qualifications do the founders and their core team bring to the table? Have they already been able to gain experience in this field? Have they perhaps even already founded a company and therefore know what is important? It does not have to be an obstacle if their first company was unsuccessful. Unlike in Germany, in the Anglo-Saxon world it is not considered a shortcoming if a company founder has already had one or more insolvencies. Hopefully, he has gained the necessary experience to avoid future failures and to anticipate problems.

References are helpful in assessing the potential of a start-up. Are there testimonials from customers or external partners? Were they satisfied with the product and willing to state this publicly? Are there perhaps already favourable press reports about the company? A reference to press reports and testimonials should then appear in the pitch deck. In addition, the founders should make it clear in the pitch deck what they intend to do with the capital they have raised. In which areas should the capital be invested? This quickly makes it clear whether an investment in the company can generate further growth.