From the Lionesses of Africa Operations Dept
The Pitch Book Series of Articles | Part 1. Hope is a 4-letter word! | Part 2. The Engine Room
So as we turn into the home stretch we have these left:
The Product
The Customers
Business Model
The Marketing Plan
The Ask
The Team
and finally
Company Overview
Mission/Vision of the Company
The Product
Surely the Product is everything? Why have we left it so late?
No! That little green widget you dreamt about is nothing without:
The Problem
The Solution
The Competition
This must have been at the fore-front of your mind as you sat in your bath and had your Archimedes’ ‘Eureka!’ moment.
Of course when you bring together your Pitch Book, the Product will slip in ahead of many of the other areas we discussed last weekend (you can see the order here where The Product is at No.5), but for you to design your Pitch Book, please don’t get hung up about the actual product itself. Too many Pitch Books get obsessed with the Product - when it’s not the fact that it glows in the dark or that it floats in the bath with a green squeaky coating - it’s the Solution and Technology that should be at the forefront of your mind and so we make no apologies for leaving the actual Product until now.
So here add the Key features of the product.
What will excite the customers?
Why does your product stand out from the competition?
Are there any extra bells and whistles in planning stage to keep the product relevant 12 months from now? Remember, a slow release of added technology allows for market testing, if you release all at once you will never know which bell or whistle resonated the most amongst your customer base to guide your future R&D thinking…
The Customers
If you have actual fee paying customers, here is where you can shout about it. Nothing is more impressive than someone putting their hands in their pocket to purchase your widget/service. If B2B, put the company’s logos on this page. Don’t be shy. If you have some great comments from customers these are perfect to grab the Investors’ minds, don’t waste them!
Plus - please continue to ask yourself: "Who am I building this product for? And do I have information to back up my theory?”
It is one of the most common mistakes made. Find the Problem, Solution, Competition and then get lost in the Product and forget about the ESSENTIAL Customers. Investors will want to see that you are all over your Customers like a rash (or ‘a cheap suit’ if you prefer a less ghastly metaphor, although for those brilliant Lionesses in the Fashion industry, we presume both metaphors will bring you out in hives, so apologies, we have been working with the Head of Finance far too long!
Business Model
Just how do you make money?
…so is it a subscription based model (which will give you a recurring revenue); a simple purchase model; a lease/rental etc?
What is the value of your customers in the long term, i.e. will they be drawn into a longer relationship with you and into more profitable items (think of that office photo-copier, the real juice was in the sale each month of paper and ‘expensive’ ink… but by then, you were hooked in).?
How is your sales team going to draw in your customers, Avon Lady style with door to door visits, or social media where customer acquisition is cheaper, but customers are less ‘sticky’ yet your market is far greater….?
The Marketing Plan
To back up the Business Model we have to show that we have thought carefully how we are going to grab the attention of the Customers. The film ‘Field of Dreams’ with Kevin Costner was one of the worst films from a marketing perspective ever made with the line:
“If you build it, they will come.” Seriously? In 5 seconds destroying what marketing gurus have been teaching us for centuries.
Think like that and 12 months from now the only company you will have is Tumbleweed rolling around in front of you, and believe us when we say, they make terrible dinner dates - we’ve been there!
Marketing these days is at it’s cheapest ever - use the modern tools, so social media must be at the top. Make those videos - we have been watching some incredibly powerful videos made recently for the amazing VW/Lioness Den competition (we are writing this the day before the winners are announced but seriously - these were fabulous and all 400 courageous Lionesses who created a video and put their hearts and souls into these should push them out onto social media “Here’s our entry into the VW/Lioness Den…”). Video gets a far greater viewership than simple blogs and is far more memorable. Next is paid search, but please seek advice on this as a great deal of money can be wasted, plus make sure you have as much control as possible over where your ads will pop up, there have been terrible occasions when adverts have turned up on very strange websites, the juxtaposition of fabulous products with terrible news images for example kills such campaigns.
What successes have you got so far, what is working and what costs have been involved (remember customer acquisition costs eat into your profits fast and that’s why Investors like to see that metric). Obviously how long you expect to keep customers and why, will therefore be important. Large upfront acquisition costs can be forgiven if that is a lifetime customer, so Pension/Life Insurance companies can afford a greater spend upfront as generally they capture the customer for a long time. Likewise we very rarely change Banks, yet change Mobile Phone companies far more often, which is they try to make us sign long 2 year deals. Interestingly it’s why mobile phone companies started to move into the Banking world as they were extremely jealous of the stickiness of Banks’ customer base (bit of extra information for free from our HoF there - how very kind!).
So you have now almost finished. Here is the $60million question.
What do you want from the Investor?
The Ask
Two things to keep in mind here:
The Value of your company. I want $5million for 1% of my company. You are valuing your company at $500 million…? Nice! Let’s be reasonable, that is either going to make the Investor laugh, or you really do have incredible solutions to the worldwide problem with a sleeping competition who have not recognised that you have just patented….(you get our drift).
However don’t undersell. If you need ‘x’ to ensure growth; to enable necessary top of the range R&D; a hermetically sealed dust free factory; to ensure global patents that will all in turn increase the value of your company tenfold; don’t be shy. However if you want cash to increase your salary, this ain’t gonna happen. (See here our Blog on PE and VC)
Expertise. Investors will want someone on the Board to keep control of their investment, but that does not mean that you cannot point out areas in which you believe you need extra help.
The Team
No one is going to take you seriously if you are just a one person band. Our HoF always talks about the No.32 bus (an unexpected event) that could wipe you out as you are going about your normal day (and simply crossing the road). You must have a Team around you because no investor (who is already taking a large risk on you) is going to be foolish enough to invest in a company that has only one person, that is simply too dangerous.
Personalize this with pictures of your Team members with their titles and a short bio. Add in advisors, consultants, and Board members - what have you got to lose? This is serious expertise on your side.
So there you have it!
Now read through it all and write your
Company Overview
A very short bullet point Executive Summary of these:
The problem you solve.
Where you are based.
The experience of the management team.
Any traction you have already achieved.
That’s it. Just enough to spark an interest and get the Investor to turn the page to look at you in more detail. And look - no ‘Product’ heading!
Finally your Mission/Vision of the Company which certainly should be very easy to write now (and indeed you may find that the mission/vision has changed given the problem that you solve is so central to all you do).
Now bring it all together in the original order, get someone to check it for spelling and punctuation issues (“Let’s eat, Grandma”, is very different to “Let’s eat Grandma”); work on the professional look (same fonts throughout please); inconsistent font sizes; low grade photos; outdated date on cover page (investor doesn’t want a 12 month old Pitch Book); Confusing charts.
Check that you have not tried to cram everything into every slide. It’s ok to leave things out. Far better to have the clear clean look than squeeze every little bit of information into every page. Remember this is only here to move you onto the next stage, which is a face to face meeting, so give the high level information that you can then expand upon during the meeting. If you slip over 15 slides (perhaps because there may be some essential charts for example), then never, ever take it over 20 pages.
Highlight only the top level financials, if you try to cram an entire budget or financials onto a slide it will be so small as to be meaningless. The request for full financials will come later.
Do include on the bottom left of the pitch deck cover page: “Confidential and Proprietary. Copyright:’Little Green Widget Co’. All Rights Reserved.”
Finally, please make it easy for the investor to receive this. Send via email in pdf format, do not send a link to google docs, dropbox, or another cloud based tool. If your pdf is too large to email, then consider using wetransfer.com, but really that is a last resort.
That’s it - Congratulations. Job done.
You have now thought of your business not from the angle of the green squishy thing that floats in the bath with a flashing light…(that you are so proud of), but from the Problem, Solution, Competition and then followed on with Market Opportunity; Technology; Traction; Business Model; Financials and then the home stretch today. By following this order, suddenly you are thinking of your business through the eyes of the Investor, not through the eyes of the proud product maker.
Not only have you now a fabulous new Pitch Book, but you have now started to think about your business in a completely new way. Congratulations!
As always - stay true to the problem you are solving & stay safe!