Friday
August 23
2019

Mehak Malik

Yes, Your Pitch Deck is That Important: Here’s How to Get Investors’ Attention and Raise Your First $100K

Entrepreneurs with social missions have a million questions when they start a business. And most of them center on fundraising. 

When seeking out investors, there is often a misconception among social entrepreneurs about how early failures are perceived. So entrepreneurs may get overly committed to their first product or service and find it difficult to iterate – and do it quickly enough. At the same time, entrepreneurs often have uncertainties about how much capital is the right amount to ask for at the seed stage, and whether the business should take debt or equity. Above all, entrepreneurs often don’t realize that how they tie their business solution to the big picture and marry it with the right narrative makes a lot of difference to an investor.

In our work with local entrepreneurs in East Africa, the Beyond Capital team has observed a lack of investment readiness as a key scale challenge. Clearly, the ability to fundraise successfully often determines the survival prospects of an innovative solution. That’s why, in recognizing our role as an early ecosystem builder, we have endeavored to provide tangible fundraising solutions to entrepreneurs. Earlier this year, Beyond Capital, in partnership with other investors and the Aspen Network of Development Entrepreneurs, organized a series of workshops designed to help entrepreneurs in Nairobi and Kampala learn first-hand what investors expect. Our goal was to give entrepreneurs access to tools that can help level the playing field. 

In these encounters, we’ve seen that many of an entrepreneur’s anxieties and misconceptions around fundraising all come together into one document: the pitch deck. So here are some ideas, advice and resources that can give you a head start as you prepare for your first investor pitch. 

 

Questions You Need to Ask – and Answer

If you’re an entrepreneur, you’re often told that the first step in fundraising is to get a pitch deck ready. What you’re not often told is that research, brainstorming, iteration and reflection should precede this exercise, and that this can prove useful in building not just a solid pitch deck, but also a sound business strategy. 

Most investors prefer simple-to-read decks that convey key elements of the business model. Venture Capitalists spend an average of 3 minutes, 44 seconds on a deck, so be sure to make your slides count by clearly and concisely including relevant details about your business model. 

Here is a list of questions you can use to brainstorm your business idea with your team/advisors. The list below is intended to get the ball rolling for a thought process that pays off beyond fundraising: 

 

1.) Why are you the right person to be building this solution? Teams are very important to investors because, at least at the early stage, the business model is likely to change. One way to distinguish yourself from the get-go is to communicate the depth of your understanding of the market, and why you and your team are uniquely positioned to build the solution you’re proposing. We want to work with teams that are open, coachable and have deep expertise in the problem they are trying to solve.

2.) What are your customers doing now? In the absence of your product/service, how are your potential customers addressing their pain points? Know that many times a solution involves inducing behavior change. For your solution to be viable and adaptable, you have to hit the right notes on a few different dimensions. The first is simple but not always intuitive: Are you making it easier to access your solution than the compared alternative? If not, your product/service might only appeal to a handful of early adopters. Break down the number of steps it takes for a customer to use your solution vs. their go-to alternative. 

The second dimension is affordability. Is your solution more expensive than the go-to alternative? Finding the balance between the first and the second is tricky. Even if the product makes the life of your potential user easier, most mid-to-low income consumers are price sensitive. In response, many enterprises have experimented with the pay-as-you-go (PAYG) model to solve the problem of upfront affordability. (I also talk about the risk-averse nature of customers in a previous article, here.)

3.) Why now? Often a novel solution can invite skepticism around its feasibility. Why has no one done this before, or why is now the right time to build a solution such as this? It is worth including a slide in your pitch deck that lists enabling factors that improve the viability of your solution now versus years ago. Examples of such a change could be increased ownership of smartphones, lower cost of data accessibility, change in the cost of raw materials, etc. 

4.) Is there investor alignment? Many entrepreneurs overlook the importance of finding and communicating alignment with the investors they’re targeting. On the impact paradigm, whether your investor cares about jobs created, carbon emissions reduced or another social outcome, do your research – and don’t forget to share how these impact goals stack against the internal priorities of your business, and what you have achieved so far. On the business paradigm, think about what your investors will bring to the table in addition to capital, and whether their value-add aligns with the current stage of your business. Shivani Siroya, CEO and founder of Tala, explains this concept beautifully when sharing her investor alignment strategy in this Forbes interview (timestamp 1:14 to 1:57). Incidentally, Tala just raised $110 million in series D funding.

 

Additional Tips and Resources

It is also important to reflect on the limitations of your model. Ask yourself what can go wrong (hint: Murphy’s law), and think about mitigation strategies that will combat any perceived challenges.

The goal of a pitch deck is to get an investor interested in engaging further with you. Think about what will get them excited, and include that in your deck. It could be the traction you have built, the technology behind your solution, the complementary skill sets, and the unique experiences that have prepared your founding team to execute effectively.

Here are some additional resources that can help you design a pitch deck that will achieve these goals.

  1. Business Model Canvas, Value Proposition Canvas and Progress Board by Strategyzer: I have found the Business Model Canvas and Value Proposition Canvas by Strategyzer very useful in visualizing a business model. These templates are available for free. This is a great tool if you are thinking about pivots, or finding a product-market fit. 
  2. Watch 11 inspiring examples, put together by Acumen, of social entrepreneurs pitching their social ventures. 
  3. Developing your Social Enterprise Pitch Deck by Margot Dushin and Nathalie Laidler-Kylandar: Margot Dushin heads the Social Enterprise Initiative at Harvard Business School. Nathalie is a Managing Director at DRK Foundation, and I’ve had the opportunity to benefit from her class on Management, Leadership and Decision Making at Harvard Kennedy School. 

 

A version of this post originally appeared on LinkedIn.

 

Mehak Malik is an Investment Associate at Beyond Capital Fund, where she focuses on social enterprises in the health care, financial inclusion and agriculture sectors. 

 

Image via original post: Seed-stage investment planning workshop, Kampala, Uganda (April 2019).

 


 

 

Categories
Entrepreneurship, Investing
Tags
ANDE, business development, entrepreneurship, funding, impact investing, investing, investment funds, social business, social enterprise, social entrepreneurship, venture capital