This is the fifth of many blogposts in a series that I’m calling the Investor Pitch Deck Series. I am creating a post about each investor pitch slide, why it is important, the common errors, and how to communicate that you have what it takes to achieve your goals for this company.
Posts in this series
(note, this is NOT a suggested order for sides in your deck)
The mantra for this series is, “Above all, make sense.”
The Problem Slide
You can convey more information in the discussion of the problem than with any other single topic in your deck. Your company, and presumably your game-changing technology, product, or service was created to solve a pain point for someone. In your discussion of the problem, investors will be listening for hints that this problem is worth solving, that someone is willing to pay to have it solved, and that there are enough of those people out there to support a viable business.
Interestingly, your goal here isn’t to talk about the problem in detail.
If you have years of data that suggest nurses spend an alarming amount of time filling out paperwork and not enough time treating patients, then say so with a single graph. Then, move on to tell your audience how much time and money it costs one hospital, or a conglomerate of hospitals, or the whole nation each year for nurses to get their paperwork done. These staggering numbers will support the notion that you are dealing with a potentially ginormous problem.
The fundamental point of your problem slide is to illustrate that you are able to solve a huge problem that will be supported by customers with the money to pay for your solution.
Cringe Factor #1 – You go into detail on the limits of the current technology.
Why this makes us cringe: This would be appropriate in an industry specific talk where everyone in the room can follow the oh-so obvious problems associated with the use of a reversed biased p+-n junction. But in mixed company, you must speak plainly or you risk losing important people.
How to do it right: Stick with an eight grade understanding of your industry technology when speaking to a mixed audience. Think PBS special. Even though you might be surrounded by very smart people with PhDs, MBAs, and MDs, they probably have not kept up with the fundamentals of your specific industry and will be a little overwhelmed with an in depth tech talk. Further, the point of your investor pitch is not to discuss the technology, but to discuss the deal. Remember, everything you talk about in an investor pitch comes back to money.
Cringe Factor #2 – The problem is oddly specific
Why this makes us cringe: If you solve a pain point for for a very small group of people, then your business seems limited from the start.
How to do it right: If your technology helps a small group of people (women over 6’4″ tall who drive small cars), then you will have to show that your company is actually a platform for future technologies that all add up to a large target market. The Problem is a fundamental basis for your business plan, but a small initial market doesn’t have to sink your company. It’s the messaging that is important. When the long limbed ladies represent an initial market and the rest of all American car divers represent your larger target market, you will be fine.
Cringe Factor #3 – Your technology is in search of a problem
Why this makes us cringe: This is a notoriously common problem with products that come out of universities. The research is so cutting-edge that the technology created actually precedes the need for itself. If you invent a hammer, but the world has not yet invented nails, you will have some trouble selling that hammer.
How to do it right: Most technologies can have alternate uses. You will have to identify a marketable use for your technology (or a subset of your technology). Look for big markets with a lot of money involved. You will absolutely have to call people or meet with the folks experiencing the pain point before you can claim that your technology will help them. Really understand the problem before you go forward with developing the technology into a product.
Cringe Factor #4 – The problem is big, but poorly supported by capital.
Why this makes us cringe: There are very large problems in this world that are not well funded. Clean water is a big one. Poverty, child abuse, malnutrition, etc. Unfortunately, the biggest problems in this world do not have payers attached to them.
How to do it right: You must show that someone is wiling to pay for the solution that you put forth. If your company cannot show that someone will pay for the product or service you provide, then you cannot claim to be able to return money back to the investors. Instead of investors, you should seek grants and philanthropists. Problems with a significant social impact do not have to be poorly funded. If you are creative, you can find a way to many many problems lucrative enough to pursue.
The problem slide should most likely be broken into two or three slides that handle the three sides of the problem. The slide to the right helps us understand the fundamental safety importance of identification in a hospital setting.
Outline the problem so the audience gets it
Show data supporting the size, extent, or number of people affected by the problem
List a few financial figures suggesting the potential return on investment for the customer to stop doing things the old way and switch to your product.
Article by Nicole Gravagna, PhD, Director of Operations for the Rockies Venture Club as part of a series on the elements of an investor pitch deck. The next in the series is the Customer ROI Slide.