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A Startup Fundraising Process: Investment Pitch Deck

In the early stages of a startup when founders are figuring out the Product-Market Fit and trying to hit the escape velocity, fundraising for business can be a daunting task. Raising investment for attaining growth and scale involves time commitment from founders when they already have their hands full with building the company. Building the pitch deck, financial projections, and reaching out to investors involves strategic planning.

Most startup founders in India find it difficult to navigate the ever-evolving Indian landscape with:

  1. Valuating their venture.
  2. Assessing their venture's investment readiness.
  3. Crafting a winning narrative for their pitch deck.
  4. Accessing credible experts in fundraising for startups and legal experts for due diligence.
  5. Finding and connecting with the right investors.
  6. Pitching to Investors.
  7. Negotiating the deal.
  8. Closing the round.

Stages of Startup Funding

Seed round (commonly called seed funding):
As the name suggests, the company gets 'seeded' with the initial funds to conceptualise the business idea and bring it to the market. At this stage, a business may not even have a fully working prototype and could still be working towards developing the product.

Series A:
Once the company develops the product or service and begins to gain traction and Product-Market fit, it starts looking out for VCs the next round of funding, to aid in its early stage of growth.

Series B:
By this time, the business would have established a working business model and gained sufficient credibility in its target segment. Now, with the potential to grow further, additional capital would be required to expand operations and reach more customers.

Series C:
This round of funding happens when the company has proved its mettle in the industry and is on the lookout for further expansion of the customer base in new markets, targeting acquisitions, and looking at innovation on other types of products. This may also be the last stage in a company's growth cycle after which it might go for an initial public offer (IPO).

Investment Pitch Deck.
A pitch deck should effectively communicate effectively to your potential investors your startup's business plan. Most venture capitalists, private equity firms, banks, and other financial institutions demand a business plan in one form or the other before scheduling an Investor Committee meeting. A pitch deck needs to be visually attractive with minimal text and at the same time self-explanatory, effectively communicating your startup's business potential. Investors or prospects spend less than 4 minutes* on a deck.

Some of the key components that go into a well-thought pitch deck are:
  1. Elevator Pitch - A quick and crisp synopsize of your startup - the problem it is solving
  2. Solution - Your answer to the problem you are trying to solve and how it is different from existing solutions
  3. Market Analysis - Insights into the market and a detailed analysis of the demand to solve the problem
  4. USP - How does your business differ from other businesses and why it will succeed
  5. Business Model - How will you generate revenue and grow the same.
  6. Go-to-Market Strategy - What's your strategy to acquire customers
  7. Current Traction - What's your current traction and key business metrics
  8. Founding Team - Background on each founding member their expertise and other key partners, advisors, etc.

Investor Connect
Once your startup is investment ready, Business law firms facilitate connections to their curated network of investors, who showcase interest to invest in your business. Business law firms match startups with the right investors for the sector you operate in and the mutual interest from investors. Some of the key investors in high profile network are the likes of kStart, The Chennai Angels, Advant Edge, Astarc Ventures, Veda VC, and more from the Indian startup ecosystem.

For fundraising for startups, Business law firms sign up for Investor Connect, once an investor has expressed interest in investing in your startup and a term sheet is signed, closure of the investment process could take anywhere between 3-6 months on average. Note that this is only an indicative timeline and the actual timelines could vary.

The investment thesis and criteria for each fund or investor differ. Investors take into consideration multiple factors before finally making an investment decision. Many businesses firms believe that - a strong team, promising product, good traction indicators, huge market size, and nature of the market (many investors feel 4-wheeler ride-sharing market is too competitive at the moment for example), etc are the key factors most investors take into consideration for evaluating a startup.

Key information that investors are looking for needs to be conveyed to them in a succinct manner, without glossing over any important data. Examples of good decks can be found for free online, to get a better understanding of what needs to be included, format to follow, etc. - Uber, Airbnb etc.

Investment Pitch Deck.
Entrepreneurs must have a strong investment pitch deck in place before they even consider seeking funding for their businesses. The investment pitch deck is a crucial part of the financing process. It increases the likelihood that they will make a funding by piqueing their interest in your business concept and getting them talking about it.

An investment pitch deck is a business pitch presentation that informs potential investors about your company. The investment pitch deck is also known as a business pitch, investors pitch, or investment business plan. It uses the slides to simply depict the company and its chances of success in order for the investor to comprehend the business potential. Writing a business proposal or investor pitch is in some ways similar to writing a client proposal.

Advantages of Having a Investor Pitch

  1. Convince the Investors.
    The business pitch is where start-ups showcase their potential for success in an easily understandable presentation that bank executives, private equity investors and others who are interested. Increase the potential investors' mental clarity.
     
  2. Equity Funding
    If you're a technologist with deep expertise in building products, but having difficulties in presenting your vision in a way that makes business sense, you will need a business pitch deck to close your funding round. Depending on the need for funding, the investment pitch deck can be updated and modified for various purposes and periods. It also acts as a marketing strategy for the company. An executive summary of the company is given in the investment pitch deck, along with a description of the management goal.
     
  3. Build the Roadmap
    A business pitch deck can serve as an internal memo for the founding team, to set benchmarks and track its progress as a business over a period of time. It is an effective structure for drafting a small business plan. A perfectly drafted Investment pitch deck can assist in adjusting the business goal to particular customers and investors.

What Does a Business Pitch Contain?

  1. Elevator Pitch
    A quick and crisp synopsize of your startup - the problem it is solving
     
  2. Solution
    Your solution to the massive problem you have identified.
     
  3. Market Analysis
    Insights into the market and the opportunity it presents
     
  4. USP
    Evidence that your business differs from other businesses and why it will succeed
     
  5. Business Model
    How will you generate revenue and grow the same.
     
  6. Go-To-Market Strategy
    What's your strategy to acquire customers and attain massive growth.
     
  7. Current Traction
    What's your current traction and key business metrics.
     
  8. Founding Team
    An overview of the domain expertise and the background of the founding team and other key advisors, partners, or investors.

Paperwork Is Necessary for an Investors Deck:

  1. Enterprise Plan
    A business pitch is a written document that outlines the objectives and tactics for the company's future.
     
  2. Technical Documents
    An investor may request the relevant documentation from a business owner who is launching a technology-based venture or a medical venture. Investors can consult a specialist to evaluate potential technology. Additional information, documentation, and company operations must be provided.
     
  3. Documents Concerning Financial Issues.
    Financial business forecasting is a requirement for every company. Detailed financial projections for the upcoming years will be needed by the potential investor who is interested in the company. The investor can comprehend the fundamental presumptions underlying the forecast.
     
  4. Various Documents
    Investors want to see the plans and pertinent documents related to hiring new employees and the costs associated with payroll, R&D, manufacturing, and marketing. The entrepreneur must give the investor a thorough sales and profit-and-loss forecast report.
     
  5. Information Regarding the Market
    Information about the target market helps the entrepreneur solve problems by giving pertinent data. Such information on the target market can be requested by the investor.

Business Pitch Preparation
For your startup, Business Lawyers & Management professionals can create a business pitch. Your startup's business plan or investor pitch can be created in 15 to 20 days. Better understanding of your business. Financial experts will work with you to comprehend your business, proposed plans, and capital requirements prior to developing the business pitch. Creating a business pitch in which Financial experts will create a business pitch for your startup based on their knowledge of your startup company and the data gathered.

Finalisation of the business pitch
Internal review meeting at company professional front or input once the draft business pitch has been created in order to finalise and prepare the final investor pitch.

Investment Pitch Deck Building Process
Minimum 5 Working Days:
ask startups to share data of their business in a proprietary format, using which we perform an in-depth analysis of the business and competitors. The data requested from startups will be broad-ranging right from the vision for the company to the finer details such as business model, customer acquisition costs, breakdown of revenues, etc.

Minimum 10 Working Days:
Business lawyer share a rough draft of the investment pitch deck in text format. Upon confirmation from the startup, within 10 working days, business lawyer will be able to deliver an end-to-end business plan that will visually impress a potential investor or partner.

Minimum 4 Working Days:
Business lawyer encourage iterations requested by the startups on the business pitch upto 4 working days after delivering the first draft of the investment pitch deck.

Conclusion.
An investment pitch deck serves as a presentation or document which helps an audience understand, in brief, a company's business plan - how the business model works, and how it plans to make a profit. The basic purpose of an investment deck is to help your clients, potential investors understand why they should work with you.

Consider using a more succinct approach that involves describing how the good or service will benefit them rather than reciting an endless list of features. Talking about your product in terms that your target market can understand will help you persuade them more. Basically, let them know what's in it for them.

An investment pitch typically consists of 10 to 20 slides and is intended to provide a brief overview of your business, your business plan, and your startup vision.

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