Let’s continue our discussion on how to prepare compelling pitch decks. After explaining why the solution (product/service) is superior to competition (the Better, Faster, Cheaper theory), the following slides must bring out the competitive advantages. A detailed analysis in tabular form listing product features, the resulting benefits and why it scores over other products in the market is useful. It is important to call out features or benefits where competition is superior followed by timelines when such advantages would get neutralised.
The next step is to establish the opportunity. Many entrepreneurs simply put out a massive total market opportunity and estimate a market share they intend to capture. This is not good enough. What investors want to understand is the TAM (total available market – for example, all the people in a city who drink tea), SAM (serviceable addressable market – tea drinkers in the neighbourhood of the tea shop) and SOM (serviceable obtainable market – the per cent of customers out of SOM who are likely to visit Teasers and have a cuppa. There are standard methods of calculating TAM, SOM, SAM. Getting these distinctions sharp is important for investors to assess the actual opportunity.
Next, you must establish why your start-up is likely to win in the market. Investors call this a moat, the secret sauce, the right to win or an unfair advantage. As the name suggests, a moat is something that is unlikely to get breached easily. So, brewing tea fresh, having a wide selection of teas, offering no-sugar tea, two free cookies with every cup are not moats because any other tea cafe nearby can easily offer or surpass the same. In crowded cities, free parking/valet parking could be a strong moat because free parking is hard to compete against due to urban congestion. The moat and the SAM are key decision-making factors for investors.
Next comes the business model. In start-up parlance, this is the GTM (go to market) strategy where the distribution and sales models or sales channels reaching out to customers are explained in detail and how they are likely to evolve in future. In this particular case, the GTM is fairly simple - a retail cafe providing a comfortable atmosphere for folks to walk in, sip tea and hang out. The distribution model is probably replicating similar cafes across the city, choosing neighbourhoods carefully based on the residential profiles and over time developing similar chains in other cities.
These should be followed by current traction - how many customers are coming in daily, average number of cups per customer, average bill value, gross margins, top selling teas, customer feedback, what consumers loved, what they didn’t like, what actions and corrections have been implemented based on such feedback. This is also a good time to share details on how to build awareness for the cafe - social media, billboards, radio jingles, newspaper flyers, consumer testimonials, events inside the cafe etc.
We will conclude this topic on pitch decks in the next column.
Vaitheeswaran K is a serial entrepreneur and best-selling author of the book “Failing to Succeed” He tweets @vaitheek