Pitch Deck

What is a pitch deck?

Pitch deck (in German roughly Investorenpräsentation, also written Pitchdeck) denotes a slide presentation in which a company presents to potential equity providers its business model, market, development, team, financial planning and the capital requirement of a financing round. Equity providers are investors who make money available to the company in exchange for shares. The deck is meant to enable investors, in a short time, to decide whether to enter into deeper conversations and into the thorough examination of the company (due diligence). They decide on the investment itself only after examination and negotiation.

The pitch deck is the most important approach document of an equity round and is aimed at venture capital funds, growth investors, family offices and corporate investment units. It accompanies the process from the first investor meeting to the partners' meeting, in which the decision-makers of a fund deliberate on an offer. There is no form prescribed by law. The content becomes legally significant when the statements reappear in the examination and in the warranties of the participation agreement, that is, in the assurances for whose accuracy the company and the founders stand. Liability can arise for deliberately false statements even during contract negotiations.

Structure of a pitch deck: slides and order

A pitch deck follows a chain of argument in which each slide answers the question raised by the previous one. After the problem comes the solution, after the solution the question of market size and willingness to pay. The substantive core of this chain is the equity story; the deck is its form of presentation. This order is widespread:

• Title and key message: name, activity in one sentence and the most important metric, for example recurring revenue and growth.
• Problem: which customer group has which problem and what it costs today, quantified if possible in euros, working time or error rate.
• Solution and product: what the product does and what is already in use, separated from what is only planned.
• Market: the addressable market, derived bottom-up from number of customers and price, with sources.
• Business model: who pays, for what, in what pricing model and with what gross margin.
• Traction: demonstrated market acceptance as a time series, for example revenue, number of customers and customer retention over 18 to 24 months.
• Sales and go-to-market: channels, length of the sales cycle and cost of customer acquisition.
• Competition: direct competitors and substitute solutions, with a comprehensible justification of the company's own position.
• Team: founders and managers with the experience that is decisive for this venture, plus open key positions.
• Finances: actual figures and planning over three to five years with the key assumptions.
• Capital requirement: round size, use of funds by area, runway of the funds and the milestones until the next round.

Two slides carry particular weight. The traction slide decides whether the other statements are read as substantiated or as assertions. The capital slide shows whether amount, use and milestones fit together. An amount without a plan for its use looks like an estimate; a use plan without a milestone leaves open what the next round is to be justified with.

Detailed analyses such as cohort analyses (analyses by the start month of customers), price tiers or product architecture belong in an appendix. It is used in the conversation when a topic is to be explored in depth and keeps the main part lean.

Metrics in the pitch deck

Which metrics a deck shows depends on the business model. For software with recurring revenue, ARR (annual recurring revenue) is at the centre, the recurring revenue extrapolated to a year, together with its growth. Net revenue retention shows how revenue with existing customers develops after expansions and cancellations. Added to this are churn rate, gross margin and the ratio of customer value to customer acquisition cost. Marketplaces show the volume mediated and the share of it that remains as revenue. For hardware and industrial technology, order backlog, contribution margins and unit production cost count.

For credibility, the definition matters more than the selection. Every metric needs a cut-off date, an unambiguous basis of calculation and a clear separation of actual value and plan value. If ARR is extrapolated from monthly revenue, it must be evident whether one-off fees have been removed. Adjusted values are labelled as such and reconciled to the unadjusted value, because investors recalculate the most important metrics from the raw data in the examination.

All figures in the deck agree with the financial model and the monthly financial statements. Plan values are taken from the model and not smoothed for the presentation.

Send-out version and presentation version

In practice, two versions of the same deck are kept. The send-out version goes to the investor before the first meeting and must be understandable without explanation. It therefore contains more text, fully worded key messages and footnotes on definitions and sources. The presentation version is shown in the meeting while management speaks. It is visually reduced and carries only one message per slide; the explanation is provided by the talk.

Both versions have the same structure and the same figures. Deviations stand out as soon as an investor lays the two side by side. For the send-out version, the question of confidentiality also arises. Many venture capital investors do not sign a confidentiality agreement (NDA) before a first conversation, because they continually receive documents from similar markets. The send-out version therefore contains no trade secrets, no customer names without the customers' consent and no individual terms; these details follow in the data room.

The pitch deck in due diligence

When the examination begins, the deck turns from an approach document into a yardstick. Investors and their advisers reconcile the statements against the documents in the data room, a protected online repository of all examination documents. Typical points of examination are:

• revenue and recurring income against the trial balance (the overview of all accounting accounts), management accounts and contract database
• number of customers, customer retention and cancellations against reports from the billing system
• sales pipeline and planning against sales data and the assumptions in the financial model
• statements on team and key persons against employment and managing director contracts
• statements on technology and intellectual property rights against assignments of rights, licence agreements and registrations
• the shareholding structure against the list of shareholders filed with the commercial register

Minor deviations can be explained if they go back to a later cut-off date. Systematic deviations, for example a more generous definition of a metric in the deck than in the raw data, by contrast damage trust in all the other statements. It is therefore advisable to word every statement in the deck so that it would also stand up to a later warranty.

Practical example: ARR in the pitch deck of a Series A

A software company for maintenance planning is seeking EUR 8 million in a Series A, the first large financing round with institutional investors. The deck shows ARR of EUR 3.2 million, up from EUR 2.0 million twelve months earlier. In due diligence, the lead investor, which leads the round, reconciles the value with the contract database:

• ARR according to the deck: EUR 3.2 million
• one-off set-up fees included in it that were extrapolated to a year: EUR 0.25 million
• contracts included in it that had already been terminated at the cut-off date: EUR 0.15 million
• ARR after reconciliation: 3.2 minus 0.25 minus 0.15 = EUR 2.8 million
• Growth according to the deck: 3.2 divided by 2.0 = 1.6, that is, 60%
• Growth after reconciliation: 2.8 divided by 2.0 = 1.4, that is, 40%, since the prior-year value contained no comparable items
• Reduction of the valuation basis: EUR 0.4 million, that is, 0.4 divided by 3.2 = 12.5%

If the investor values the company with a revenue multiple, that is, a multiple of ARR, the reconciliation works twice over: the reference figure falls, and the lower growth often justifies a lower multiple. At a factor of 8, the deck would give an enterprise value of EUR 25.6 million, after reconciliation EUR 22.4 million. If the investor lowers the factor to 7 because of the lower growth, EUR 19.6 million remain, around 23% less than according to the deck. Had the deck shown ARR from the outset without one-off fees and terminated contracts, the same facts would have been a disclosed statement and not a correction in the ongoing negotiation.

Distinctions: pitch deck, teaser, business plan and financial model

• Teaser: a short profile for the first approach, as a one-pager or with at most around five slides. The pitch deck follows as soon as an investor shows interest.
• Business plan: the detailed overall document on strategy, market, organisation and planning. The deck condenses it to the statements that count first for an investment decision.
• Equity story: the substantive investment rationale, which also underlies teaser, management presentation and business plan. The deck is one of its forms of presentation.
• Financial model: the calculation basis with linked earnings, balance sheet and liquidity planning in several scenarios. The deck shows extracts from it but no figures of its own.
• Management presentation: the in-depth presentation in the examination phase, with robust figures and several managers. The deck stands at the start of the process.

Common mistakes

• Metrics without definition. An ARR without a cut-off date and without a statement whether one-off fees are included is recalculated in the examination and then often comes out lower.
• Customer logos instead of revenue data. A logo proves a contact, but neither willingness to pay nor contract term. Revenue per customer, retention and expansion over time are meaningful.
• Claimed absence of competition. The statement that there is no competition is read as ignorance of the market. Every customer problem is solved in some way today, even if with spreadsheets and manual work.
• Deck before the model. If plan figures first arise on slides, they must later be adjusted to the financial model. Every correction after sending costs credibility.

Frequently asked questions

How many slides should a pitch deck have?

As a guideline, 15 to 20 slides in the main part. Significantly more slides usually indicate that main part and appendix are not separated. The appendix may be more extensive because it is shown only when needed.

Are there templates and examples for a pitch deck?

There is no binding template. Common templates follow the order from problem to capital requirement and help with structure and design. Published example decks of well-known companies, by contrast, often come from other markets and stages; their metrics and length can rarely be transferred.

Is the pitch deck sent before the first conversation?

As a rule yes, as the send-out version. Investors use it to check in advance whether a meeting makes sense and to prepare the conversation in a targeted way. If the round is initially not to become known, a teaser precedes the deck.

Which financial figures belong in a pitch deck?

The actual figures of the past two to three financial years or, for young companies, of the past months. Added to this is the planning over three to five years in the base case, supplemented by the runway of the funds in the cautious case. More important than the number of figures is that the key assumptions are visible: new customers per month, price, churn rate and headcount build-up.

How often is the pitch deck updated?

The metrics with every monthly close, as long as the round is running. The argument is adjusted when the same questions come up in several conversations, because these questions show where the deck has a gap.

The Roemer Capital view

Roemer Capital prepares a pitch deck only once the financial model and equity story are in place. Every figure on the slides comes from the model, and every metric is given a definition that also stands up to examination in the data room. The appendix is built out with investors' questions, and the main part is kept at 15 to 20 slides.

The send-out version and the presentation version are maintained in parallel and reconciled after every monthly close. Before a deck is sent, its statements are checked against the documents that an investor will later request. In this way the figures in the deck are confirmed in due diligence rather than corrected.