10 Slides to Funding Success
The Market Slide
Part 3 of 10
Startup Capital: 10 Slides to Funding Success – The Market Slide
One of my responsibilities as an Executive Coach is helping company founders with the creation of their Investor Pitch Deck. Throughout my career, I have created and helped create many Investor Pitch Decks. Some of our team’s Investor Pitch decks, especially early in my startup career, upon reflection, were “horrible”. Sometimes our teams were successful in raising monies from investors. Many times they were not. I never thought that the content and presentation style of the investor pitch deck might be hurting us. Boy, was I ever wrong! By working with many investors, I’ve learned what they want in an Investor Pitch Deck. In my last company, we raised $87M over rounds A, B and C. Today I will discuss “Startup Capital: 10 Slides to Funding Success – The Market Slide – Part 3 of 10”.
When an Entrepreneur is putting together their Investor Pitch Deck, they usually assemble a hoard of information. Sadly, often what they assemble is a “book” that is 20, 30, even as much as 80 pages in length! Most of us humans have a very short attention span. Even ad networks know that most ads longer than 30 seconds in length don’t work with consumers. For Investors, the successful length of an Investor Pitch Deck is about ten pages and 7-15 minutes in presentation length.
This 10-part series covers the ideal content, order, and verbiage of the ten Investor Pitch Deck pages. You’ll have learned how to craft your story into a successful ten-page Investor Pitch Deck that can get you funded!
The Market Slide – Why Is It Important?
Last week in Part 2 of “Startup Capital: 10 Slides to Funding Success“, I spoke about the Problem slide and its importance. This week I’m speaking to the Market Slide, the third page of every presentation and its importance. After your introductory Cover Slide, followed by your Problem slide, launch into describing the Market you are going to “Attack”!
Why? You’ve got their mind engaged with your “Big, Hairy Problem”. Now they want to know “How Big” the Market is that you’re going after. Earlier I commented about small markets rarely attract investors. For example, if there is a disease that 100 people worldwide die of each year. No investor, except one with a family member with the disease, is likely to “invest” in looking for a cure. However, let’s say you’ve developed a universal Takata airbag replacement that costs $10 to manufacture. With the millions of cars worldwide in need of a replacement airbag, you “might” have “investable company”.
Nearly every investor wants to invest in billion USD and larger market sizes. An investor’s big payday only happens when a buyer pays 5x to 50x what the investor paid. Small market products and services will not give that return rate, leading to greater difficulty in finding investors.
Market Slide – Content
Wow, in so many Investor Pitch Decks the Entrepreneurs really missed the mark when it came to presenting the Market! So many said “$10B USD Market!” yet gave no details to back up the claim. Some would claim “Just like Uber, except …”. Others confuse the Market with their Competitors. I find this slide to be one that Entrepreneurs and Small Business Owners do the least amount of research on! Why? The answer to that question really baffles me. Today with the internet so much information is available with a few key clicks. Most markets will have third party analysts that create annual, or even quarterly, reports on your market. Get them and link to them on this page. Linking to third party report shows you are using something other than your backside to report your market attributes.
Your Market Slide should convey a clear picture to both the “TAM” (Total Available Market” and the SAM (Serviceable (Sellable) Available Market). For example, in 2016 the total light vehicles sold worldwide was 88.1M (Macquarie Bank). This is a TAM number. If you’re making an automobile and in the first several years all/most of your sales are going to be in the USA, the total USA 2016 Sales were $17.55M (LA Times). This number a sub-TAM number. If you’re making an electric vehicle, the number sold in the USA was 159,000 (Fleetcarma). This number would be your SAM. Show the TAM over a 3-5 year period from reputable 3rd party numbers. Use a bar chart, not line, for a stronger visualization. Show your depth of knowledge.See the image associated with this article to see a great Market slide example.
Market Slide – What’s Your Story?
So, what do you say while your Market Slide is visible? If you’ve followed my lead on what your Content should be, that is what you’re going to speak to. Emphasize the (hopefully) fast growing Market. Speak to how large the Market is in the USA, Europe, Asia, the Middle East.
I love using a world map as the background for the Market slide. It instantly shows your audience several things. One, that your market is global and not local. Second, it shows your audience that “YOU” are a global thinker. Third, it sets the expectation that at some point you’re going to talk about how you’re “going to market” globally. Even a Mom and Pop Retail outlet should be thinking and are sold, globally. My first 25 apps I designed and built for the Apple app store back in 2013 are in 25+ languages. They are sold in every country Apple sells iPhones and iPads. Less that 18% of my annual players are located in the USA where I live. Allow me to give one example of your Marketing slide verbal pitch.
“Our market has an annual TAM of $270B USD from numbers supplied by NTP (National Philanthropic Trust). We see charitable giving as broken into four key segments. Charitable, Foundations, Religious and Political. With our service, we estimate that the SAM for our service is between 1% to 3% of the aggregate. This equates to $2.7B to $8.1B USD. As people handle more of their finances on mobile, this number will grow.”. You’ve talked about the TAM, your SAM and your over-time graph showing a rapidly growing market. That’s all you need to speak to and you’ve covered the topic in about one minute.
Presentation: We Can Read or Listen – Not Both!
Most of us humans can either “Read” or “Listen”, but cannot do both at the same time. Your Pitch Deck slide presentation exists to support “the story” you are going to be telling your audience. Does your Investor Pitch Deck has a lot of words, charts with numbers, or distracting images? Then your audience is going to switch their brain into “reading mode” and out of “listening mode”. As soon as that happens, you’ve lost your audience and will struggle to get them back to listening to YOU! To avoid this, use mostly images and as few words as possible, usually in bullet form. So absolutely, positively NO SENTENCES!
So, I suspect many of you were surprised with respect to the importance of the Market Slide. If you’re starting you create your first investor presentation, congratulations! You’re going to be starting off on the right foot if you follow my recommendations above. Go back and look at your Market slide and apply what you’ve learned above. If possible, you should wait to read the remainder of the series before you present again. I can almost promise you a better reaction from your audience.
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If you subscribe to my FREE Business Coaching Newsletter, I’ll also offer you a discount coupon to my book “Startup Capital: 10 Slides to Funding Success”. In the book, I do a more detailed dive into each of the ten slides. You’ll see both good and poor examples of each of the ten topic slides. I’ll also discuss good and poor examples of presentation techniques. You’ll learn how to identify “Lookie-Lou” investors from “serious investors” who will really write you a check. I’ll teach techniques for how to overcome nervousness, stuttering and “brain-freeze” during your presentation. You’ll learn appropriate attire and why showing up even a minute late can doom a presentation.
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Next time …
In the next blog post, I will write about “Startup Capital: 10 Slides to Funding Success! The Solution Slide – Part 4 of 10”.
Read a Previous Post: “Startup Capital: 10 Slides to Funding Success! The Problem Slide“
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