The new era of validation
Let's take a look at your pitch deck and find out what might be highlighted – to not just sell a story but also start de-risking the potential investment for an investor at an early stage already.
Less than a year ago, founders were receiving cash from investors by selling a vision to tackle a large market with an innovative product created by an ambitious and knowledgeable team. Although a pitch deck that summarizes this story was needed, most startups did not need to validate the story and could simply put a problem/solution statement. Yet, these days are over for most startups. Validation with tangible results is key now.
Thus, let us investigate the effect this has on your pitch deck and what might be highlighted – to not just sell a story but also start de-risking the potential investment for an investor at an early stage already. Hence, we introduce the hypothesis - validation - scale model as the key message for your deck. The approach helps to ensure that you do not end up using many keywords in your deck without telling the real story of why your startup will grow substantially.
Hypothesis: Add a clear value proposition that goes beyond having nice features or being very abstract to your deck. Make sure that you can give a good estimation of what the solution’s effect is on the top or bottom line of a client. Otherwise, investors will question the need for this solution.
Example: Our solution helps construction companies save 80% admin costs yearly which results in approx. CHF 3 Mio for a typical target client.
Validation: Make sure to state traction that validates the need for your solution by the market. This does not necessarily need to be revenues – it may include successful pilot projects or testimonials although strict revenues are preferred these days. Add concrete examples and statements to make your story as tangible as possible.
Example: We have already sold our solution to three customers. All of them report substantial cost savings back and love the product.
Scale: Stress out that more demand for the solution exists and that you are currently filling up your pipeline to scale. Be clear that investors would like to see monthly updates of how your pipeline – and especially your client base – is developing before investing. Again do not lose focus on building more traction.
Example: We have 12 more companies interested in testing the solution. Some of these companies are well known in the construction industry.
The current standard structure for pitch decks (Problem – Solution – Product – etc.) is still relevant. Having our model as a guidance can help you to focus on giving relevant information to investors and boil down the equity story to its essentials.