10 Common Pitch Deck Mistakes Startups Make
Before we dive into the common mistakes that startups make when creating a seed funding pitch deck, we first need to clarify what we mean by a “seed funding pitch deck”. When we talk about business pitch decks, it is easy to assume that there is a one-size-fits-all approach. However, there are in fact different types of pitch decks to serve specific goals.
Let’s talk about a seed funding pitch deck
- What are the different fundraising rounds?
- The 10 most common mistakes made with startup seed funding pitch decks
- What are investors looking for when it comes to a seed funding pitch deck?
- Leverage specialised financial projections software for your seed funding pitch deck
Depending on your company’s size, age, and funding needs, you should be clear about your financing goals before creating your investor pitch deck.
What are the different fundraising rounds?
There are, broadly speaking, four types of pitches related to businesses at their various stages of development:
- Series A
- Series B
These categories of pitch types each have their own requirements and general guidelines as they’re designed to meet different goals.
What is a “Seed Round” pitch deck?
A “Seed Round” pitch deck is for companies that are raising funds for the first time. The goal of this pitch deck is to entice and share their story with investors to get their business off the ground.
A “Seed Round” pitch deck should:
- Explain the funding needed to build a foundation for a profitable business
- Demonstrate hiring needs, market needs, financial projections, etc
- Showcase how the business would fit into an existing, or create a new, market
What is a “Series A Round” pitch deck?
With a “Series A Round”, the company would already have found its product and market fit. Here, the aim of funding is to:
- Figure out or scale distribution
- Master a revenue or business model
- Adapt a business model to new markets
Due to the change in funding needs, the goal of the pitch deck itself changes. Because some investors specialize in follow-on rounds while others focus on early-stage investments, it is key to tailor the company’s story to the right audience.
A “Series A Round” pitch deck should:
- Demonstrate how the offering fits into a targeted market
- Showcase how funds will enable the company to master a business model
- Explain how more funds will lead to more, or quicker, return
What is a “Series B Round” pitch deck
With a “Series B Round” pitch deck, unlike with a “Series A Round” pitch deck, the focus shifts from describing the vision and concept. Here it is key to provide evidence that the business is viable.
A “Series B Round” pitch deck should:
- Demonstrate what has been achieved with funding from early investors
- Offer a more mature view of the market, focussing on sustainable growth models that drive scale
- Showcase a mature revenue model and competitive analysis
What is an “IPO Roadshow” document?
After proving its viability and success, this is where the company generally would hand over the reins to investment banks who will develop extensive material to support the investment process. These IPO pitch decks are generally longer and are more detailed than the other pitch deck types.
An “IPO Roadshow” pitch deck document should:
- Focus significantly more on the financial details
- Remain clear and on-point with the message
- Showcase past and existing success
The 10 most common mistakes made with startup seed funding pitch decks
A poorly structured and formatted seed funding pitch deck can be a make or break moment. From design to content, here are the 10 most commonly made seed funding pitch deck mistakes we’ve gathered from our research.
Not using the generally expected format and content
Yes, keeping things fresh and creative is never a bad thing but there is a certain order and set of standards around creating an investor-ready pitch deck. Getting the structure of your pitch deck right helps overall.
Be sure to download an investor pitch deck template for the basics of what a pitch deck is, what to include, and more.
Not reviewing other seed funding pitch decks
Knowing what the current design trends are will surely help but so will focusing on what the top pitch decks in your industry place emphasis on.
Being unable to articulate the problem and solution clearly
Yes, you should show what problem your startup is solving with its offering. However, it’s not as simple as saying that X solves for Y.
Investors want to know how your solution is better with respect to cost, ease of use, functionality, features, etc. Too often, startups fail to show how their solution can tie in with substantial revenues. It is key to tie this into how you’re showcasing what the addressable market is versus the company’s total addressable market.
Presenting unrealistic financials for your company
Whether it be a valuation or general financials, investors are looking to you for a realistic grasp on what your company could achieve and present them with the figures to back it up. Utilising a solution like Brixx to compile your financial projections, you can model more realistic scenarios with ease.
Overlooking the “Overview”
“Don’t judge a book by its cover.” doesn’t apply when it comes to a pitch deck. The cover page of your slide deck is the first impression you’ll be making and provides the perfect place for you to list 4-6 bullet points summarising your business. Investors will know what to expect and take in information more easily if they’re able to put our data into context from the get-go. List the solution, management team, any previous traction, solution, etc. here to give investors a taste of what’s to come.
Not having a clear marketing strategy
It does not help if you have a great product or service offering if you aren’t able to market your product to the right audience. Investors need to know details like which outlets you’ll use, how you can reach customers cost-effectively, where your ideal audience spends their time, etc.
Failing to understand the relationship between customer lifetime value and customer acquisition costs
The Customer Lifetime Value to Customer Acquisition (LTV:CAC) ratio measures the relationship between the lifetime value of a customer and the cost of acquiring that customer. It is a signal of customer profitability, and of sales and marketing efficiency that investors take a keen interest in.
Not showing why your technology and intellectual property rights can be valuable
Too often people overlook the finer details of this section or skip it entirely when creating their pitch decks. Here, important elements of your technology and any key intellectual property rights the company has should be showcased. It should explain, for example, why the technology is or will be superior, why it would be challenging for a competitor to replicate it, etc.
Forgetting to tell a story
Your pitch, whether as a deck or presentation, should include strong story-telling. Generally, startups choose a generic formula or outline and expand on the story from there. For example:
- Identifing the problem
- Presenting the solution
- How the solution will be developed
- Who will build it
…and so on.
Having an unprofessional look and feel
Poor layouts, inconsistent fonts, poot titles, bad quality graphics. Each of these and more are easy slip-ups that can cause investors to think your seed pitch deck is unprofessional or messy. This translates to how they may see you and how you conduct business. It is always a good idea to have a few other sets of eyes check your slide deck before you sign it off.
What are investors looking for when it comes to a seed funding pitch deck?
A well-designed pitch deck goes a long way and in our post “Top 10 Pitch Deck Tips: Get Investor Ready” we go over the basic design best practices to make your pitch deck stand out.
However, using a well-designed seed funding pitch deck template is one thing, conducting data gathering and organising activities to prove that you can create a thriving and profitable business is another. So, doing your due diligence of studying the market and potential customer base will help you showcase that you’ve thought your business plan through.
By showcasing multiple financial scenarios within your pitch deck (the bulky data should be a supporting document, with the key metrics in your actual pitch deck), you can demonstrate your understanding of the fluctuations of the market and demonstrate to investors how thorough your research is.
As “numbers people” a focus should be on the financial aspects of your pitch, however, if you don’t have a good idea to begin with, even the best of financial projections may not be enough to convince an investor to invest. Brixx is an excellent tool you can use to create in-depth projections that can help back up your business model. Sign up for a free plan today with Brixx Foundations. We even have a Financial Projections Template you can download if you prefer to use a traditional spreadsheet.
Common reasons investors may not invest in your startup
Even if you’ve created what in your mind is the perfect seed funding pitch deck, there are still a number of possible reasons why investors may choose to pass on your startup idea. While this list is not exhaustive, we’ve included a few of the most commonly mentioned reasons below:
- It’s either too early for your idea to enter the market or it needs more development before they invest
- Your niche needs development or you don’t fully understand your niche
- There’s a portfolio overlap or potential overlap
- Your idea is untrustworthy or you’re unable to back up your claims
- Your business model is too similar or identical to others
- There’s no clear business plan for your idea
- There are concerns about you or your team
- The approach for funding isn’t being approached correctly
However, if an investor is not interested in funding your startup, there is an art to being able to understand the value of a rejection. Whether because they are unimpressed with your business model, you have an idea too similar to an existing product or have poorly laid out plans, every bit of feedback can be used to improve your efforts overall and should not be dismissed. Here, it is all about how you interpret the rejection.
Leverage specialised financial projections software for your seed funding pitch deck
When it comes to a seed funding pitch deck, it really all comes down to what your business and business model needs. Whether you’re creating a pitch deck from scratch or are using a Pitch Deck Template, here at Brixx we believe that with comprehensive financial projections, combined with the rest of your competition and market research, you can map a clear strategy for your company’s future.
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