Thanks to the first part of the guide for building a great investor deck you now have a great introduction slide. If this is not your case, you can check the first part here!
Also, thanks to the second part of this guide, you now have convinced the investor by answering the first big question: Why you? If not, check the second part here!
Now is your time to establish the need for your company’s solution and show the math:
(Clear) Problem + (Large) Market = (Great) Opportunity
We’ve created the «Builing the perfect Investor Deck» PDF to help you in this process based on the book «Entrepreneur Pitch Book», from HassoPlatner Ventures. Don’t forget to share it with Swanlaab once it’s finished!
You can download our PDF here:
Part 3: Opportunity
Lets dig a bit deeper into what investors love reading in the Opportunity slide. If you did well with the introduction and team slides, you now have got the investor’s attention and have proved why your team is the one. For proving there’s a clear problem in a huge market, you should use between 2 and 4 slides.
Purpose is what drives entrepreneurs and helps build large and successful organizations. Investors love founders who thing big and yet have a clear and realistic vision on what they can achieve. On this slides, you should prove that solving this clear problem is worth the effort and that you know your market perfectly well and can make realistic assumpitons.
What the investor wants to know
You should always put yourself in the shoes of the investor and think: «Is there really a pain? How big is this market?» Well, this is what we, as investors, would like to know:
When describing the problem that you’re trying to solve, you should mainly explain what’s the pain and how it affects a potential customer. Depending on how complex your industry is, you should dive deaper into this, as the investor might not be familiar with the sector.
You should explain how it’s currently being solved and outline how the customer addresses the issue today. Even if your industry is new or you’re entering a blue ocean where no competitors or similar solutions exist, you must always identify how that pain is being currently dealt with. Taking into to the extreme, it could even be an excel sheet you’re competing with!
It’s also important to identify and let the investor understand what’s the profile of your customer. Although you may be targeting a huge market, it’s obvious that not all players in that market can become potential customers, because their problems are different.
The last question at this point would be: Is this the right time? You should set-up the historical evolution of your sector. It’s vital to explain why we are at an inflection point now.
You must prove the investor that the market you’re trying to enter is big enough for a Venture Capital play. Never forget that investors, depending on the stage they invest in, seek for large returns on their investments, meaning your company can grow x10, x50, x100 or even more times its current size.
Investors love to see emerging and fast growing markets. The more global the problem is, the better. However, try to focus on the markets you will try to compete in for the mid and long term.
Size markets depend on money spent trying to tackle a problem. Therefore, explain the economics in a precise ways. For example, if you’re a Heal Tech company, it’s absolutely irrelevant how much is being spent in Healthcare worldwide. However, it’s really interesting to understand how many customers are in the market, what percentage is buying products or services to tackle that particular problem and how much they’re spending anually. To sum up:
# of customers x % who buy each year x average amount spent annually = market size
It’s also critical to explain how the evolution of this market size has been in the recent years and what is the projections for the next years are. How much has the market grown and how much will it grow in the next 5 years? The investor won’t be with you for more than 5/6 years maximum, so don’t mention the projections for 2050.
Establish the need for your company’s solution and convince the investor that solving the problem is worth the effort.
- State the problem and describe the pain
- Why does the problem persist? Define recent trends that make your solution possible, explain how it’s currently addressed and show why we are at an inflection point now.
- Indetify the market size
- How does this market change and grow over time?