Anatomy of a Perfect Startup Pitch Deck – 11 Critical Pages
One of the questions I get a lot is...
"Which slides should I put in my startup pitch deck?"
And back in the day, I would start asking a lot of questions, get to know the business and then decide on an outline.
However, over time, these presentations migrated towards the same structure...
... and that structure, I'm going to show you today. This is the exact template we use every time, and if my words aren’t enough, then how about this:
It is the format recommended by the legendary venture capital firm Sequoia Capital.
Today, we are going to show a famous Airbnb pitch, but that is not all.
We make our own version, improving the original pitch based on the Sequoia guidelines.
And in other good news, the deck is only 10 slides long and I’m going to show you exactly how to make it yourself, step-by-step.
So, let’s dive in!
Download our Pitch Template
This article and the PowerPoint pitch took 20 hours to write and design. Twenty. Needless to say, there was a LOT I couldn’t include in the post. To make life easier, I’ve made the pitch presentation freely available. Plus, a little extra slide (*cough* a business model slide that’s too good to ignore suitable for SaaS companies).
What is the purpose and mission of the company?
On the first page of your slide deck, you should simply write the mission of your company in a single sentence.
To us, this concept can be quite high-flying so let’s look at some company purpose examples from their early investor presentations:
“When you first meet an investor, you’ve got to be able to say in one compelling sentence what your product does.”
- Ron Conway, angel investor (link)
“Making the world more open and connected”, (which was changed to “Give people the power to build community and bring the world closer together” in 2017)
“The mission is to live in this world where one day you can feel like you're home anywhere and not in a home, but truly home, where you belong”
“To become the primary outlet of user-generated video content on the Internet, and to allow anyone to upload, share, and browse this content."
As such, the first slide is quite simple, we have just a headline and a purpose statement. However, it is very important and showing your passion for the product or service you. After all, if you can’t be passionate about it how are you going to convince others it’s so great?
The problem you are trying to solve or the “nod your head” phase
Next up, you are going to describe the problem your product is trying to solve. We have also coined this “The Head-Nod Phase” because if your potential investors aren’t nodding their heads at this point… well, chances are they’ll not invest in you.
On the slide, you should describe the problem in a simple way investors can easily understand and here are some key pointers to have in mind:
- Is at a must-solve problem or a nice-to solve problem? In short, how painful is this for customers?
- How do customers and users solve the problem today? Some older technology or manually?
- What are the issues with the current solutions that enables you to capture this market?
- Is it an obvious problem? If, not then what is your proof that the problem exists?
- Ron Conway, angel investor
Now, that doesn’t sound so hard so let’s look at what Airbnb did:
- Price is an important concern for customers booking travel online
- Hotels leave you disconnected from the city and its culture
- No easy way exists to book a room with a local or become a host
Now, you’ll likely be nodding your head: Before Airbnb, this was an extremely common problem that most if not all people had experienced when traveling.
Also, notice that this opens several reasons why you should use Airbnb:
- The first reason is fully based on price, i.e. use Airbnb and save money: Speaks to the budget-oriented buyer
- Disconnect from the culture of the city. This speaks more to the culturally oriented and nomad type of customer, that usually stay longer at a place and engages with the locals
Having the latter angle ensured Airbnb got a lot of love from digital nomads and it became cool to use it – if they only had the budget angle, this probably wouldn’t have happened.
Now, this is one thing Airbnb postponed until later in their slide deck.
In line with Sequoia, we recommend also outlining how the customer addresses the issue today. Airbnb waited until later in their presentation. They didn’t do that directly, instead, they implicitly stated that people were using CouchSurfing.com and Craigslist to offer temporary housing.
Here’s what we would have done:
Today people are forced into one of two solutions for user-to-user housing:
- Craigslist: Serves as local classifieds for temporary housing à lacks validation for both buyer and seller
- Couchsurfing.com: Community based on sharing principles with no economic incentive to rent out.
And here’s the final slide we would have put together for Airbnb:
Note that this slide addresses all our bullets from the beginning:
- Level of pain: It is a very painful problem for both users and customers
- How’s the problem solved today? The problem is solved today with older technology
- What are the issues with current technology? Highlights several issues with the current technology
- Is it an obvious problem? Yes, as people are already solving it through other avenues
To sum up, slide #2 should address the following:
- Describe the pain of the customer (or the customer’s customer)
- Outline how the customer addresses the issue today
The solution you offer (or the let’s get excited slide!)
By this time, you should already have the attention of your audience – now it’s time to get them excited.
To do that, you need to blow them away with the solution you offer to the particular problem from slide #2.
Here’s how Airbnb did it:
What do you think of the slide? Before you make up your mind here is our take:
- It’s a bit underwhelming
- We get the idea, but we’re not particularly excited by it
So, what would make it better?
Well, for starters let’s look at the Sequoia guidelines again. For the solution slide they are:
- Demonstrate your company’s value proposition to make the customer’s life better
- Show where your product physically sits
- Provide use cases
As you can see, Airbnb only did the first and that’s why it becomes underwhelming.
Now, in our example, we would naturally include the two others on the slide as well and here’s the solution slide we would have made for Airbnb.
At least we’re excited by the idea now and it just shows how vital the information on where the company sits and especially the use cases are important. In our mind, a solution is good, but providing case examples is even better.
Summing up slide 3, here’s what it should contain:
- Demonstrate your company’s value proposition to make the customer’s life better
- Show where your product physically sits
- Provide use cases
The then and now slide, aka the why now slide
On slide #4, there’s probably a bit more digging to do, and this is where storytelling comes in. Basically, the investor wants to know two things:
- How has this market developed over time?
- If it’s such a great idea, why has no one ever done this? I also refer to this as “recent trends that have made this solution possible”.
Investors want to know: If this is such a great solution how come no one has developed this before?
How has the market developed over time?
In saying how this market has developed over time there are two options:
- A boring list of things that have happened over time
- A chance to already address market sizing, competitors, and validation of the idea
Naturally, I prefer going with option 2, where you can also bring some humor and edge into the presentation. This increases the chances of the investor’s remembering you.
Now, Airbnb didn’t have this slide in their presentation, but if they did, the historical evolution of the market could have been something like this:
- Staying with locals has been popular since the Birth of Christ. Mary and Joseph found no place at the Inn and stayed with a local
- In the last 50 years, bed and breakfasts have been popular with travelers. Here you are basically invited into the homes of people and get to share in their lives
- In the 2000’s, Couchsurfing has become popular which is based on people letting spare room for travelers
Recent trends that have made this possible
Moving on from that, we now need to define the recent trends that have made this possible. Again, this serves as a double chance to also demonstrate pain points that demonstrate, why the timing is so great.
I would set this up with a few “then and now columns”. This highlights the pain points that have previously been associated with the industry and shows why now is such a great time for Airbnb to become a major hit.
A few comments on the then and now boxes:
- There has been a security issue for hosts (and travelers). You have been letting people into your homes who might have bad intentions. This is solved with social vetting.
- Travelers have had no way to judge whether the host was good or not. Hotels.com has solved this for hotels while Airbnb solves this for user-to-user travel.
- The gig economy is making it socially acceptable to let out your rooms and make an extra dime on the side
Summing up slide #4, here’s what you need in it:
- Set-up the historical evolution of your category
- Define recent trends that make your solution possible
The prospective buyer and the size of the market
We are now getting to the slide in the deck you have the least control over: The size of the market.
And unfortunately, the size of the market is also a huge determinant in “how rich you can get”. Naturally, the larger the market you can serve, the higher a return the investor can get and the more they’ll pay for your company.
Let’s again start by seeing how Airbnb did this:
Again, a slide where the message gets across, however, several things are lacking.
But first off, let’s start with something Airbnb totally skipped: The typical customer. Here’s our take on the initial (early adopter) of Airbnb:
- Aged 20-40
- Culturally curious and aware of the budget
This should be relatively simple for most companies and believe us: If you don’t know your typical customer you won’t raise any money.
Market sizing: What is TAM, SAM, and SOM?
Next up we get to the size of the market. This section should include three things:
- Total Addressable Market (“TAM”). This is all the people who can use your product
- Serviceable Available Market (“SAM”). A part of TAM who are likely to use your product
- Serviceable Obtainable Market (“SOM”). The subset of your SAM, that you can reasonably expect to get as customers over the next 3 years
Now, a lot
of start-ups struggle with this so let’s take a step back to explain these.
First off, here’s a graphical interpretation of the three:
Still confused? No worry, and let’s again take Airbnb as an example:
Total addressable market
The TAM of Airbnb would be the worldwide hotel and bnb market.
Basically, if you could only book any kind of stay through Airbnb the revenue of the company would be equal to TAM…
… which is not going to happen.
Serviceable addressable market
Let’s be more realistic instead. As Airbnb was named Air Bed and Breakfast when it started, it would be more natural to say the SAM would be equal to the entire Bed and Breakfast market.
Now some of you might say this is too small a market because some hotel users will (and have) shifted to Airbnb – and you are right.
But meeting investors, it is a good idea to err on the side of caution if (for no other reason) than the fact that they have seen so many pitches where the market sizing is completely off (if you watch Shark Tank you’ve probably seen this and seen, how angry the sharks get at unrealistic expectations).
For TAM and SAM, you’ll probably have to find market reports or similar, to get a feel for the size of the market.
The bottom-up market sizing approach:
A lot of people struggle with the bottom-up approach of the SAM so here’s how we do it: The approach uses simple math to estimate the size of the market, combined with some market statistics. Investors love to see this as they can easily track your assumptions.
Be aware, that these assumptions can also be a trap, as investors will judge you hard if you are too optimistic about your assumptions.
Here’s how to do it:
- Start with the TAM
- Estimate the number of transactions in the market per year
- Estimate the average transaction value (this can be either a market figure or a figure based on your own numbers)
Serviceable Obtainable Market
The SOM is more forgiving. This is usually represented as a percentage of the SAM. This could, for example, be capturing 20% of the bed and breakfast market.
Now you might think you’re done, but investors love to see a growing market. For that, it’s a good idea to include the annual growth rate of the market (“CAGR”) – this will typically be included in the market reports where you have found your data.
Putting it all together, here’s how our final market slide would look for Airbnb.
To sum up, the market slide should contain:
- Identify/profile the customer you cater to
- Calculate the TAM (top-down), SAM (bottom-up) and SOM
Detailing competition and showing why you're superior
This is one slide where Airbnb did a good job, so let’s start with their example:
There are many ways to visualize the market, but the one Airbnb used is by far our favorite: The “Gartner Magic Quadrant”.
In this 2x2 matrix, you define the two most important points of differentiation in your industry and plot your competitors on this – and Airbnb did that well.
Airbnb highlights all transactions are online and that they are more affordable than their competitors which is easy to understand.
They also didn’t fall into one of the traps that many startups fall into: Not identifying any competitors.
They had already used Couchsurfing and Craigslist previously in the deck to show social proof, so naturally, these two are on the slide. They also addressed both Hostels.com and Hotels.com as clear competitors.
This is genius as it shows that their market could be much larger than just Couchsurfing and Craigslist and instead compete with the wider Hostel and Hotel markets as well.
Now, one thing that Airbnb didn’t have on their slide is listing their competitive advantages. This can be shown in a number of ways, but we like to set up a simple matrix highlighting the advantages over our product compared to each of our competitors.
Putting it all together, here’s how we would have made the Airbnb competition slide.
Summing up, here the two things your competition slide should contain:
- The 2x2 Gartner Magic Quadrant with your competitors
- Highlight your competitive advantages
Showcasing your superior product to get investors talking
Here’s how Airbnb described their product:
We think their product presentation is bad, and we would seriously enhance this page. Here’s why we think it fails:
- All three pictures are quite small and don’t seem very sexy
- They fail to highlight their uniqueness – to us, this could just as well have been a Hotels.com pitch.
Now, it’s easy to criticize, so here’s how we would fix these things:
- Use smartphone pictures instead of web pictures – these work much better in a presentation as they are optimized for smaller screens
- Add bullets to highlight what makes each step of the process unique
- Highlight building critical mass and network effect across the product
Especially the latter is very important, as it highlights the switching costs. Airbnb (to our knowledge) is not protected by intellectual property rights – instead, they are protected by their market power: People post homes on Airbnb because that’s where the customers are. If they switch to another provider chances are, they’ll lose money as there are fewer customers.
Here’s our product slide for Airbnb:
Summing up, here’s what the product page should contain:
- Product line-up including any relevant features such as (a) form factor, (b) functionality, (c) features, (d) architecture, (e) intellectual property), etc.
- Development roadmap for your product (not relevant for Airbnb)
Let’s make some money also known as your business model slide
And now to the really fun part: Making money!
Here’s how Airbnb rakes in the dough:
The Airbnb slide gets the message across and also shows significant proof of concept with revenue of USD 200m from 2008-2011. We would keep this information on the slide.
However, the slide also has some shortcomings. While they are correct in stating that their business model is “taking a 10% commission on each transaction”, they fail to show how this plays out in practice. We would break the information down in a different way, so you end up with a slide like below:
Now, let’s take a step back and highlight some things investors look for in the business model slide. Here are some things they like:
- Active revenue streams, i.e. customers paying for a product or service
- Recurring revenue streams such as monthly or annual subscriptions
- Proof that customers are willing to buy the product
- A growing customer base
To sum up, here’s what your business model slide should contain and how we addressed it in our Airbnb presentation:
- Revenue model – how revenue is generated
- Pricing – in this case, the commission on each booking
- Average account size and/or lifetime value – in this case, the average value of a booking to Airbnb
- Sales & distribution model – addressed on a previous slide
- Customer/pipeline list – could be included, but we decided not to include it. We will address this in the financials slide
The team slide and demonstrating why this team is superior
The team slide is one of the simplest slides in the deck but also one of the most important ones – and often one of the slides, that does not get the love it deserves. The slide is all about limiting execution risk and the smaller the execution risk, the larger the price an investor is willing to pay.
This makes perfect sense: If you were to invest in a coffee shop would you rather invest in some guy off the street or Jerry Baldwin (one of the founders of Starbucks)?...
So, here’s what investors look for in the team:
- Have they worked in a similar startup? And here there are of course bonus point if the previous startup was a success
- Have they worked in a similar market? Here there are especially bonus points for having people on board who has worked at any of your identified competitors
- Have they worked with similar technology? Of less importance to Airbnb as their code is not hard to write or anything groundbreaking, however, if you have a patented product this is huge
- Is the team diverse? Ideally, investors like to see at least a tech/product person, a salesperson and a financial person in the team.
- Has the team worked together before? The longer you’ve worked together, the less risk there is that things blow up and you leave because you hate the sight of each other.
On the team slide, you should include the executive management of the firm as well as your Board of Directors / Board of Advisors.
Now, most people just list the names of people and where they’ve worked before. However, they fail to address the issues of diversity and how long they’ve worked together before.
Unfortunately, Airbnb didn’t include the team section in their slide package, but here’s how we would do it for a random business:
Notice a few things here:
- We address all five points from above
- We divide code executive management and the Board of Directors, so investors can quickly see who’s who
- We highlight/color code any overlap the persons have previously had so it’s easy to spot for the investor
Financials including forecasted revenue for the next three years
On to the last slide of the deck: The financials of the firm, and what you are going to do if you get funding.
There are quite a few ways to do this and there is no exact recipe – you can make very simple or very elaborate models showing the forecasted revenue and profitability of the company.
Here at BlueTieSlides, we like to err on the side of caution and keep things simple, rather than getting lost in the intricate details of a model. We typically build a model based on assumptions about revenue, gross margin and cost levels going forward and work our way down to EBIT (Earnings Before Interest and Tax Payments).
The other part is what we all came for:
The capital you’re looking to raise and what it should be used for
This ties in with the three-year model you’ve made: What are you actually going to use the money for?
Here you should be very precise and list it in 3-4 bullets, and it should tie in with the forecast you’ve made in your model. I like to use the following format:
We are seeking $xxx in a Series A:
- When you target the money raised
- How much capital has already been committed
So we can:
- Reach $xxx in sales / monthly recurring revenue (“MRR”)
- Expand to other markets / improve customer acquisition/file for more patents
- Scale our infrastructure
This is very concise, and investors know exactly what the money’s for.
Putting it all together, here’s how we would have made the financial slide for Airbnb (numbers are made up):
Bonus slide: The summary slide
Now, hopefully, the investors have digested all the information and are ready to pounce.
However, as they’ve probably forgotten something along the way, it’s a good idea to highlight 4-6 key areas from your presentation in a summary slide to really hit it out of the ballpark.
Here’s what we would have done for Airbnb.
Now it’s your turn
We hope the article has given you a lot of good ideas for how you should present your pitch deck.
And if you want to use our template you can [download it free here].
If you have any questions you can leave them below or you can [email us here].