23 Nov The Investor Deck, the startup’s business card
Any entrepreneurial project needs funding to be developed and reach the market, and often involves the search for investors who will be committed to the project and who will see enough attractive opportunities in the return on investment to convince them to participate in it. Therefore, in the same way that when we meet someone at work we show them our business card, in the context of a project we show them the Investor Deck. So, the Investor Deck can be described as the business card of a entrepreneurship project where through an executive presentation, thus summarized, of between 10-15 slides the investor can obtain the essential information of the project that allows him to make a first analysis to assess whether to continue with a deeper analysis or to discard the project.
In these days when time is scarce and highly valued, private investors use the Investor Deck as a first filter or first screening of the projects they are analyzing. If time is valuable, it is clear that this deck has to be short, with the essential information to attract interest. Although there are multiple sources that describe the points that an investor deck should include, the reality is that they do not differ much from each other, and basically, they only differ in the order and in the way in which the points are grouped or not.
Below are some of the items that we suggest an Investor Deck should contain.
- The problem: It is important to describe “the pain” or unmet need that the development of the product can solve by defining very well the sector of the population at which it will be targeted. If we are talking about the scope of a disease, incidence and prevalence could be used to define this sector. We often use a funnel strategy in this context, starting with a more general term, where the disease is encompassed, to then move into the more specific term. For example, if we are developing a drug for HER2-breast cancer, we might start by indicating the incidence of the cancer, then narrowing it down to breast cancer and continue to focus it further on HER2-breast cancer.
- The solution: In this point it is important to describe the solution to the problem proposed by your technology or drug presented in the previous point. It is important to show the PoC (proof of concept) or the most relevant scientific results that may attract more investors.
- IP Protection: It is important to indicate whether the product is patented or in process, especially in the case of drugs or medical devices, but not so much in the case of Digital Health software where protection usually involves protection as a trade secret. For an investor, knowing whether the invention is protected or not can be a fundamental factor and can be a “GO” or “NO GO” in his decision-making tree.
- Market Analysis: As we have already mentioned, an investor seeks a return on investment, and it is difficult to have a return on investment if the market to access is small. For this reason, quantifying the market in millions of € or $ of sales in the sector that we are going to target is an important point to assess, in order to see whether or not the project is interesting enough. Another important point is to indicate the market forecasts or trends for the next few years.
- Competitors: Knowing the main competitors and their prices is important to define our competitive advantage and to identify the options we have to penetrate the market. At this point it is useful to include a competitor matrix that compares our product with those of our competitors.
- Comparable Deals: Define how other comparable companies have been able to reach the “exit scenario”, either through a license, an acquisition or other ways. This information will be crucial for the investor, who will see that if he invests in our company, he will probably reach an exit scenario, and will be able to get an idea of the exit amounts and valuations.
- Regulatory strategy and Development plan: It is important to define the regulatory plan because it will significantly define the development plan. It is interesting to show in the Deck a high-level Gantt of the main tasks to be developed and the time until the product reaches the market or until an exit scenario option can be presented to investors.
- Team of the project: It is important to indicate who is the founding team of the company, and the generic organizational chart that will be constituted as the project progresses. It is also interesting to indicate if there is an Advisory Board or mentor. The project team is not a trivial matter. Scientific excellence is assumed in a project and investors will ask for all the necessary information to ensure it in a later Due Diligence, but the team is the one that will allow to face the challenges and find solutions to reach the end of the project.
- Business Model and Financial Plan: Define the business model by which the product will generate revenues (SaaS, DaaS, HaaS, etc.) is necessary for preparing the financial plan with sales forecasts that will allow us to show it to investors as proof of the validity and robustness of our project. This sales forecast will help us to calculate a good financial valuation of the project. Finally, the financial plan will reveal the total cash requirements of the project and, as we know the development milestones, we will define the architecture of investment rounds needed to reach the exit scenario.
Main points of an Investor Deck
|Regulatory Strategy and Development plan|
|Team of the project|
|Business Model and Financial Plan|
Once the task of generating the Investor Deck has been completed, which is possibly the easiest task, the most complicated one remains, which is to look for investors who may be interested in the project. If this is your case, good luck …. and do not give up, although it is a complicated task it is not impossible. A good project, a good presentation letter and a good strategy will help you.