Startups

VCs vision decoded: the hidden purpose of a pitch deck

Max Voronin
Max Voronin
5 minJune 17, 2024
VCs vision decoded: the hidden purpose of a pitch deck
VCs vision decoded: the hidden purpose of a pitch deck

A pitch deck is the first step toward securing funds from investors, but it's only the beginning of a challenging journey. In reality, a significant number of pitch decks do not bring the desired results. Even the most well-crafted investors pitch can fail if it does not impress VCs.

Investors are looking for more than just bells and whistles; they are looking for future unicorns that will bring them a decent return. Understanding the mindset of investors can greatly enhance your outreach efforts. Find helpful insights in this article!

Importance of pitch decks for startups seeking investment

At some point, every startup founder dreams of taking their venture to the next level, but it doesn't come cheap. For those without deep pockets, like many of us, securing investment becomes a crucial step in the journey. And it usually starts with crafting a pitch deck, a compelling business story that might invite investors into your world.

A masterfully crafted pitch deck sparkles interest and forms the first impression of your business. It is your chance to encourage investors to schedule a funding meeting. Even if you do not get money immediately, a well-designed deck leaves a positive aftertaste. Investors might revisit your idea later or mention your startup to others.

Overview of what investors typically look for in a pitch deck

Before you even consider approaching investors, take time to learn how investors think. Venture capitalists continuously assess pitch decks, seeking out those with promising growth potential and robust competitive opportunities.

Research reveals that investors roughly spend three minutes on pitching to investors presentation. You must make a swift and impactful impression to persuade VCs that your startup deserves financial backing. So, what investment criteria do they use?

Pitch deck elements valued by investors
  1. The dream team
  2. Problem and value proposition
  3. Market size and its growth potential
  4. Investment ask
  5. Traction metrics
  6. Financial forecast

These slides are the backbone of your pitch deck. Let’s have a closer look at each of them.

1. A strong founding team

Investors back people as much as ideas. A strong team with relevant experience and a proven track record of expertise inspires confidence, demonstrates your ability to navigate challenges, and increases your chances of success. Underline your strengths in a team composition slide—add photos, titles, and brief background of each member, showcasing their expertise and contributions. Do not forget to mention your advisors and consultants.

2. Identifying the problem and providing a solution

A powerful pitch must include a slide with a clear problem statement. Offer a compelling solution and present a well-crafted business model. Support your go-to-market strategy with concrete facts, figures, and realistic scenarios. Describe the competitive landscape for your business idea. There is never a business with no competitors, and thorough analysis is crucial to showing how your startup will outperform others in the market.

There is no need to delve deep into technical details. Focus on the benefits your solution offers to customers and how it solves their pain points. Depending on the nature of your startup, it may be appropriate to present an MVP to investors.

3. Expected milestones or outcomes resulting from the investment

Investors want to know what they can earn by investing in your idea. They must be sure there is a market for your idea. Identify the market size (total addressable and serviceable markets - TAM/SAM), expected market scalability, target customer segments, and the specific pain point your idea aims to address.

The rough formula of market validation looks like this:

4. Breakdown of expenses and investment requirements

The investment ask slide must clearly show how much funding you need and how you plan to use it. Investors appreciate a clear understanding of how their investment fuels your growth trajectory. You may show the following information:

  • Expected raise amount.
  • Runway (monthly runway provided by the raise).
  • Milestones you are going to achieve with the funds raised.

If you are open to different investment types (equity, debt, convertible notes), you can mention this too. However, terms are typically discussed after initial interest is established.

5. Milestones achieved to date (e.g., sales, partnerships, user growth)

It is fine to talk about your potential, but if you can showcase evidence of early customer validation or market traction, it is going to be a winning pitching strategy. Do you have a user base? Pilot programs? Actual numbers are the best way to prove to investors that your potential is not a pure theory.

Show the growth in the number of customers, revenue figures, highlight any strategic partnerships or collaborations. Include other relevant metrics, such as customer acquisition cost (CAC), lifetime value (LTV), churn rate, or engagement rates.

6. Cost structure and margin analysis

Investors will need a clear picture of your company's current financial health and its future burn rate (monthly or yearly cash loss during product development and marketing). This slide usually contains the following information:

  • Three- to five-year financial projections.
  • Key business metrics (e.g., annual recurring revenue, EBITDA, and expenses).
  • Risk assessment.

Ensure your projections are realistic to avoid losing credibility with prospective investors. And do not forget to present your exit strategy so that investors can understand how they get a return on their investment in the future.

Conclusion

Summing up the above, it is a huge mistake to rely on your presentation’s visual appeal. Remember, a pitch deck is a tool, not a guarantee. To succeed, you must efficiently communicate your core message, value proposition, and market opportunity in just a few slides. Take time to learn more about your potential investors. It will enable you to see your presentation from their perspective.

Your pitch deck is like a live organism, so do not be afraid to continuously evaluate and refine it. And if you need a professional design touch for your pitch deck, reach out to the DreamX team – we are always ready to help elevate your pitch with our expertise!

Head of Lead Generation
Max Voronin
Head of Lead Generation

Max Voronin is the Head of Lead Generation at DreamX. He is dedicated to developing strategies that cultivate high-quality leads and forge strong partnerships, fueling the company's growth.

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