Preparing to Secure Your Startup Funding with Pitch Canvas

 

By Omodiaogbe Samuel

Last Updated: December 13, 2023

Introduction

A pitch deck is a concise presentation that give investors a quick overview of a business plan with the goal of getting funded. Pitch decks are most often used when pitching to potential investors such as angel investors and venture capitalists. However, before getting to the point of delivering the pitch, you need to make adequate preparation. Developing a winning pitch can be difficult because one has to consider different factors relating to the business, the target of the pitch, the content, etc. To that extent, the Pitch Canvas help you to brainstorm with your team to develop and test your script to determine whether it’s robust enough to meet the investor’s needs and generate the desired outcome. The Pitch Canvas was developed by David Beckett, and is mostly used for short pitch preparation. The goal is to find out what you can use for a quick and interesting overview, and what should be left to subsequent meeting that might require detailed pitch. The Pitch Canvas been a brainstorming framework has 11 building blocks, covering the major aspects of your business plan. Remember, the main aim of a pitch is not really to receive funding or sell your product, but to create enough interest in order to get more time with a potential investor to explain the details of your business. Therefore, the Pitch Canvas is a preparatory framework for convincing investors that your business is worth investing in, by highlighting the key factors of your business plan. Remember, investors are much more interested in how the entrepreneur think about the opportunity rather than assessing them based on presentation or prediction skills

 

Types of Pitches

 

There are different types of pitches depending on the stage of the startup and level of development. The following are different types of pitched to consider:

 

Elevator Pitch

An elevator pitch or Twitter pitch is a prime chance to make a good first impression and generate interest in the company. An elevator pitch must meet these key characteristics: the pitch must be concise (never more than 1 min), clear (no jargon), compelling (induces greed), and irrefutable (hard to deny statements). The idea is that within a minute, you should be able to tell your name, your industry, the problem, and the solution. After that, it’s up to the listener to ask for any follow up questions or not

 

The Two-Minute Pitch

 

There are a few ways of approaching a two-minute pitch.
1. A longer version of the elevator pitch (name, industry, customer in detail, solution in detail, price options, next steps)
2. A great 1-min story or case study, then a summary of the solution and next steps

 

The Five-Minute Pitch

The 5 minutes is used to explain the story, the solution, the model, the team and the future. A five-minute pitch can be roughly broken down into the following parts:
1.     Who you are
2.     The problem
3.     Your solution
4.     Examples of how it works
5.     An overview of the business model
6.     Who’s on your team

The Ten-Minute Pitch

Using this framework, you’ll touch on each of the following for 30-50 seconds each:

  • A simple statement about what you’ve built and why it exists
  • A description of the customer and the pain/gain they want resolved/created
  • An engaging summary of your product and how it works
  • A demonstration, through a prototype, video or case study
  • An explanation of what’s unique or different about this product
  • Stories and evidence of traction
  • A summary of your business model,
  • The investment or support you’re looking for
  • Who’s on your team and why they’re top-quality people
  • A closing statement and call to action

The 20–30-Minute Pitch

Similar to the 10-minute pitch, but with richer details at each point.
20 minutes gives you more time for examples, prototypes and case studies. On 20-30-Minutes pitch, we recommend Guy Kawasaki 10-20-30 rule:
10 slides
20 minutes delivery
30-point font on your slides

 

The Shark-Tank-Grilling Pitch

The Shark Tank grilling is a combination of three things:

  1. The 20-30-minute pitch
  2. A readiness to talk about the numbers in your business (sales, customers, prices, costs, margins, growth, trends, targets, etc.).
    3. A readiness to talk about your options for the future (partnerships, expansion, specialization, diversification, etc.).

An elevator pitch is a formal introduction to the investor. If an investor likes your pitch, they may invite you for a short form pitch where you will tell them more about your company. This short form pitch is typically 5-10 minutes long. If the investor is really excited about your product, they may then invite you to a long form pitch. The long form pitch is a formal pitch that tells investors everything they need to know about your company

 

Stages of Startup Funding

The various startup funding stages allow entrepreneurs to scale their startup at any stage of their entrepreneurial journey. This scaling practice allows them to identify where their startup stands and which potential investors would invest in them in order to help them grow. The following are the stages of startup funding:

 

The Pre-seed Funding Stage

The pre-seed funding stage generally refers to the time period in which a startup is getting their operations off the ground. The pre-seed funding stage is commonly known as bootstrapping. In simple terms, it means using your own existing resources in order to scale your startup. Startup owners invest from their own pocket and try to grow themselves in the most resourceful manner.

The most common pre-series investors are:

  • Startup Owners
  • Friends and Family

Valuation: During the pre-seed funding stage, startups value anywhere between $10,000 to $100,000.

 

Seed Funding Stage

After the pre-seeding stage, it’s time to actually plant the seed. Almost 29 percent of startups fail because they run out of capital while bootstrapping, which makes seed capital critical to get a business up and running. Seed funding allows a startup to fund costs of product launch, get early traction through marketing, initiate important hiring and further market research for developing product-market-fit.

The common types of investors who participate in seed funding are:

  • Friends and Family
  • Angel Investors
  • Early-Stage Venture Funds (Micro VCs)
  • Crowdfunding

Valuation: Startups that are eligible for seed funding have a business that values anywhere between $3 million to $6 million. The seed funding stage will facilitate funding from $50,000 up to $3 million for a promising startup.

 

Series A Funding Stage

Series A funding mostly comes from angel investors and traditional venture capital firms. By now, the startup must have a developed product and a customer base with consistent revenue flow. Now they opt for series A funding and optimize their value offerings. In the Series A funding round, it’s significant to have a plan that will generate long-term profits.

Potential Investors for Series A

  • Accelerators
  • Super Angel Investors
  • Venture Capitalists

Valuation: Startups with a good business plan valuing up to $10 million to $30 million are able to raise approximately $15 million during the Series A funding stage.

 

Series B Funding Stage

The series B funding stage allows startups to grow so that they can meet the various demands of their customers and also compete in tight markets in terms of competition. Here, investors assist startups to expand their horizons by funding their market reach activities, increasing their market share, and form operational teams. Series B funding stage may appear to be similar to the series A funding stage in terms of processes and key players, however, series B funding is often led by same characters, including a key anchor investor that helps you to attract other investors.

Potential Investors for Series B

  • Venture Capitalists
  • Late-stage VCs

Valuation: Startups with a revenue-generating model, valuing up to $30 million to $60 million are able to raise approximately $30 million during the Series B funding stage

 

Series C Funding Stage

The Series C funding stage is focused on scaling the startup as rapidly as possible. Those that make it to the series C funding stage should be on their growth path.  These are startups that are well-established, hold a strong customer base, have procured stable revenue streams alongside proven histories of their growth, and want to expand their operations on a global scale.

Potential Investors for Series C

  • Late-stage VCs
  • Private Equity Firms
  • Hedge Funds
  • Banks

Valuation: Startups with a good business growth valuing up to $100 million to $120 million are able to raise approximately $50 million during the Series C funding stage.

 

Series D Funding Stage and Beyond

A startup may consider series D funding if it hasn’t gone public yet, but is contemplating a merger with a competitor on agreeable terms. The Series D and beyond funding offers startups the most viable solutions allowing them to negotiate issues head-on by acquiring another startup as a merger. Also, if a startup was unable to achieve its growth landmark with series C funds, then it will find a need to get more funds through series D funding to keep afloat. The truth is that many startups do not make it to this stage

 

Potential Investors for Series D

  • Late-stage VCs
  • Private Equity Firms
  • Hedge Funds
  • Banks

Valuation: Startups in this stage may value around $150 million to $300 million are able to raise approximately $100 million during this startup funding stage.

 

Initial Public Offering (IPO)

IPO is the process of offering corporate shares to the general public for the first time. Growing startups that need funding often use this process to generate funds, whereas established organizations use it to allow startup owners to exit some or all of their ownership by selling the shares to the general public

 

Components of the Pitch Canvas

  • Simple Statement
  • Pain
  • Product
  • Product Demo
  • What’s Unique
  • Customer Traction
  • Business Model
  • Investment
  • Team
  • End Statement and Call to Action
  • Why You?

 

COMPONENTS

Simple Statement

This simple statement should clearly highlight what you stand for as a company. It should include:

  • All key words about the value you bring
  • Who you bring value for
  • The industry that you are in
  • Your highest mission

Try forming a single sentence out of these words to capture the change you are bringing into the world.

 

Pain

The reason why your business exists is to solve a pain point. What is that pain point? Articulate it well so that even if the people were not aware of it, thanks to you they will. Try to summarize the problem in plain language so investors quickly grasp the problem. By outlining what’s wrong with the current state and detailing the pain points that your target market is experiencing, you help build a case for the necessity of your solution.

You need to ask the following questions:

 

  • What is the problem you’re solving?
  • Who has that problem?
  • How is it affecting real people’s lives?
  • How big is that problem?
  • How many people have the pain?
  • What validation is there that people will pay to have it solved?

Product

You can also think of the Product as the Solution, where you explain how you and your company attempts to provide relief for the pains. Think of this as a chance to share the critical elements of what you do, how you do it, and how your solution addresses the currently unmet needs of your target audience.

You need to provide answer to the following questions:

  • What are the key features of the product?
  • Why do users care about the product?
  • What are the major product milestones?
  • What are the key differentiated features of the product?
  • What additional product features are planned?
  • How does it work?
  • Who is the product targeted at?

 

Product Demo

If you already have a prototype or MVP version of your product, then providing a demonstration at this stage is crucial. This is where you explain your product or service performance. If you have a working prototype of your solution, you would present it here. If a prototype is not relevant, do your best to convey your product to the investors.

Here, you need to provide:

  • The basic technology backbone
  • Key intellectual property rights the company has (patents, patents pending, copyrights, trademarks, domain names)
  • Why the technology is or will be superior
  • Why it will be difficult for a competitor to replicate the technology

In conveying these, you need to ask:

  • What are the various ways you could demo your product?
  • Which features or aspects of your product do you want to focus on?
  • Is there one killer functionality you must show?

What’s Unique

If you want to stand out in your field, your company must have something notable that sets it apart. What is unique provides answer to the question of how you are different from the existing alternatives. An effective Unique Value Proposition can be derived by focusing on the solution to the pains of the customers. Therefore, you need to use this block to show how your product differs from the existing ones and what makes it so attractive compared to the competition.

What’s Unique help you to answer the following questions

  • What is your product? Who is the customer?
  • What sets your product aside from current or alternative solutions?
  • Do you have any unique technology? Is the IP protected?
  • Have you got any unique partnerships or co-development agreements?

Customer Traction

Traction refers to conversions, not just intent or interest. Many people may be interested in your product, and lots of people might want your product, but that doesn’t necessarily mean they’ll become a buyer or user of your product. To show investors that there’s traction, you need to focus on the data points that show tangible and measurable success: number of sales, number of orders, total sales, revenue to date, number of users, wait-list signups, pre-orders, and other quantitative success indicators.

You need to answer the following questions here:

  • Do you have customers already? Who are they?
  • Is there growth in users and/or revenue?
  • What usage data do you have? How about customer retention, or usage frequency data?
  • If you have no sales yet, what have you done to validate the proposition? Customer interviews? Online experiments? How have you engaged with potential customers?
  • Do you have an announcement? Is there a recent success that you can share as a new milestone of development?

Business Model

Business Model describes the rationale of how your startup will create, deliver, and capture value. If you already have sales or early adopters using your offerings, talk about that here. Investors want to see that you have proven some aspect of your business model as that reduces risk. So, any proof you have that validates that your solution works to solve the problem you have identified is extremely powerful.

You need to provide answers to the following questions here:

  • What business critical problems do you solve for your customers? 
  • What trends and trigger events cause your prospects to search for solutions? 
  • What are your prospect’s alternative options? 
  • What is your unique value proposition and unfair advantage? 
  • What is your go to market strategy? 
  • What are your key costs of sale and sources of revenue? 
  • What are the key metrics you use to manage the business? 

 

Investment

The goal of most (investment) pitches is to convince an investor to provide capital for your startup. Consequently, you need to outline what financial resources you need, what you will use them for, and what you want to achieve with them. Remember to be strategic here. Let your investors know the amount you are asking for, but keep it real. You don’t want to lose out on a big investment simply by aiming too high. Cover your bases. When you justify your ask, it helps build trust and lets investors take you seriously. Also, instead of presenting a rigid number, you may want to include a range and show what you can achieve with different levels of funding.

 

Questions to ask here:

  • Have you invested money yourselves? If yes, how much?
  • Have you raised money in the past? How much?
  • How much are you looking for now?
  • What time and people do you need in addition to money? Do you need a sponsor for the project?
  • What will you spend the money on?
  • What milestone will this investment help you reach?
  • What are the specifics about the types of investors you are looking for?

Team

It’s not merely the business idea that convinces the investor to invest, the people who will be working to make the concept successful also acts as the driving force. The investor wants to know who is driving the bus and what makes them so unique to execute on the mission and vision. If you have the right people seated on the right seats of the bus, the company will find its direction to success.  A lot of times an amazing business idea never sees the light of the day due to poor execution, and so it is essential to have the right people in the right positions to really succeed. Ideally, even if you don’t have a complete team yet, identify the key positions that you still need to fill and why those positions are critical.

You need to provide answer these questions:

  • Who are the core team members?
  • What rational elements should be told? Think of experience and skills.
  • What binds you together, what’s your shared mission?
  • Are you long-time friends or family members?
  • What different skills, experience, and passion each team member brings on board?
  • Have you worked in startups together before? Or have you worked together on projects for a company?
  • Is there a Board of Advisors? Who in that Board stands out as a person with skills or network that will propel you to the next level/

 

End Statement and Call to Action

Your pitch should get investors excited about your startup, and therefore you need to leave them with a memorable statement that will always make them to think about you. A call to action is a statement designed to get an immediate response from the investors. The aim of a pitch is to generate interest and even excitement with investors about your company, and that can lead to another meeting or the potential for investment discussion. State clearly what you want the investors to do and what they stand to get if they do it. Make your call to action as solid and as actionable as possible.

Here you need to ask the following questions?

  • What is the final message you want your investors to remember?
  • What do you want them to think, feel and do?
  • What are you asking for? What do they get?
  • What is the first next step you want the investors to take?

Why You?

Every entrepreneur has a drive that make them do what they do. You need to understand that Investors invest in people first and ideas second. So, be sure to share details about yourself and your team and the passion behind establishing the company. Treat your pitch like a story you’re telling. Show passion and make your business memorable.

Let these questions be your guide:

  • What’s your personal motivation for solving this problem or creating this company? Is there a personal reason why you started this business?
  • Do you struggle with this problem personally and want to have it solved because you want the solution yourself?
  • What have been the turning points? What obstacles have you overcome, and what have been the best moments? When did you realize you might have a real shot at creating this company, and what did that mean to you?

Case Study

EasyLoan

EasyLoan is a startup Fintech Company established to provide solution to loan challenges of Small and Medium Enterprises (SMEs) in Nigeria. Commercial banks in Nigeria avoid offering smaller loan to SMEs primarily because of the low profits they can generate, and that is further exacerbated by high processing and recovery costs. In some situations where loans are offered, they come with steep interest rates, a lengthy application process, stringent collateral and guarantor requirements. Additionally, a traditional bank takes weeks or months for loan to be approved, and such loan could come with interest rate as high as 30%, coupled with onerous documentation requirements and hidden charges.  All these challenges make it difficult or practically impossible for SMEs and micro businesses to access loan in the country. It’s worthy to note that SMEs and micro businesses accounts for more than 60% of industries in the country. As a result, without access to loan, their progress is hampered. The only way out for them is to rely on equity from friends and family. Relying solely on organic growth means that they might not be able to scale to their desired level 

 

EasyLoan is Fintech company that is out to make SMEs and micro businesses to have access to loan in cost effective and efficient way. By offering loans on an App, we tend to save operational costs such as rentals, human resources, and administrative expenses.  And such saving would be transferred to the customers in form of lower interest rates than the commercial banks. Also, being a Fintech company, our operation will be data-driven. In Nigeria, where credit history and other traditional data sources are limited, we will deploy technology to pool and mine unconventional data to create a scoring and evaluation algorithms. Such predictive analytics will help us to create a paradigm shift in risk management. Apart from offering loans, we will equally provide saving services to the customers. Higher saving would enable them to have access to higher loan opportunities. The saving account will be interest bearing, a higher interest rate than what they could receive in the conventional commercial bank. EasyLoan primary goal is to provide its consumers an easy and hassle-free access to loan without paper documentation, collateral or guarantor. With App on their smartphones, they can have access to great services on the go.

 

At EasyLoan, we have gone through the bootstrapping stage where we raised funds from our saving, and pre-seed capital from friends and families. Now, we are at the process of raising funds from angel investors and early-stage venture capital to fund our costs of product launch, market development, initiate important hiring, further product development, and further research for developing product-market-fit of our App. As a result, we need to make adequate preparation to make a pitch to the investors, to let them know the problem we address, the targeted customers, how far we have gone, the investment we require, and what the investors stands to gain. Essentially, we need to touch on the various components of our business plan. However, we’re only limited to 5-10 pitch, and so, we need to make the best use of our time to deliver result-oriented pitch. For us to make effective preparation, all team members must be involved. That is where the Pitch Canvas becomes handy. The Pitch Canvas is a brainstorming framework that enables the team to determine the important factors to focus on given the limited time for the pitch. It’s a tool to help us highlight the key aspect of our business plan, as well as preparing for the potential question’s the investors might ask. By brainstorming on the 11 blocks of the canvas, we should be able to develop insights of what key points to focus on and prepare for any answer

 

The Pitch Canvas is an entrepreneurial brainstorming framework that help you to structure and visualize your pitch in one page. Our goal at EasyLoan is to highlight the key factor of your business plan while leaving the details to the subsequent meeting that might require extensive pitch. As a result, we walked through the 11 blocks to pinpoint the key factor that make us uniquely position to deliver on the objective. The canvas helps us to focus on the important points by convincing the investors that our business is worth investing in, and also to prepare for questions they might likely asked. Expectedly, we know the investors are likely to ask questions about our business plan. Therefore, the canvas enables us to prepare adequacy as the questions are most likely to be within the framework. As a result, apart from highlighting the points, we also use it as backup for questions.

                              Conclusion

The goal of the pitch deck is to show investors where you are, where you are going, and most important to get a meeting or start a conversation about getting funded. Therefore, the three critical aspects investors are looking for in a pitch, are:

  • Do I remember you after the pitch?
  • Do I remember your idea, product or service after the pitch?
  • Do I want to know more and meet you later?

Sometimes people think that they will go in front of the investors and start improvising. There is no room for improvising during the pitch. Pitch is very short and there are rules you need to follow, so every sentence need to be carefully planned. To that effect, prepare in advance and practice. Pitch Canvas is a brainstorming framework that help you prepare and finetune your pitch. Essentially, the Pitch Canvas is a preparatory framework for convincing investors that your business is worth investing in, by highlighting the key factors of your business plan.

Omodiaogbe Samuel, MSc. CMC, ChMC, FIMC

Omodiaogbe is a Strategic Management Consultant, and he the Principal Consultant/CEO at Vast Thinking Consults Ltd where he help organizations and business leaders to create superior value. Omodiaogbe holds BSc. and MSc. in Economics. Also, he is a Certified Management Consultant (CMC), a Chartered Management Consultant (ChMC), and a Fellow, Institute of Management Consultants, Nigeria. He is an Instructor on Coursera, where he teaches 25 courses in Strategic Management. Omodiaogbe is one of the world’s leading learners on Coursera and Edx with over 500 Certificates from top-ranked Universities, Business Schools, and Organizations.

Contact him:
Email; somodiaogbe@vastthinking.com.ng
Visit: www.vastthinking.com.ng

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