The post covers slide #8 out of 10 in THIS outline of a minimal investor pitch deck.
Slide 8: The Customer, Partner, Pipeline Discussion
Perhaps more than any other slide, this example can take a variety of forms. The “punch line” for this slide is to communicate what ever progress your company has made relative to actual customers, the future customer pipeline, and partners that help your business be successful in some capacity. Logos are always nice to look at but don’t get hung-up on anything other than clearly communicating your current status.
You may not have customers yet; or your customer base may be every consumer in the world. In any case, you need to communicate the current status of how well your business is working and customers (because they pay or should pay you money) are a great metric for investors to use to judge your progress so far. Revenue is, of course, the most binary judge of success…but revenue from a top-tier, brand-name, market-leading customer is (to some real degree) more valuable than revenue from a no-name company because markets tend to follow (adopt the same solutions in a similar time frame) the market leaders. Alpha or Beta (or non-paying customers) should be called out explicity.
The discussion of your company’s “pipeline” is basically a description of how customer acquisition is going. Whether you’re an Internet consumer application or building widgets to sell directly to other businesses, how efficiently your company acquires new customers is material to investors as they judge the state of your business and what could / should happen if they choose to fund you. How, exactly, do you acquire customers? How much does it cost to acquire them? What is your average deal size? How could your business make the average deal size go UP? What is the average deal size of other companies in this same market? Does this information align with the Market Size / Market Context data from Slide #3 ? (hint: it should) Once you have a customer, can you sell them MORE stuff more easily? Why / why not / how much / when will you have it to sell? What is the expected life-time value of a customer (be careful to think about this relative to the cost to acquire a customer)?
Partners are a necessary evil in most businesses. “Evil,” because in general, a company’s life would be much easier if it ran and scaled just fine without help from any other company. Partners might be a critical part of your business/market ecosystem; they might give you efficient access to potential customers; they might provide a critical part of your overall solution; they might actually sell your product or service for you. What ever they “might” do, the one thing that is for certain is that they require some level of “care and feeding” and that equates to time and money for your business. Make SURE they are worth it. And remember that all partnerships tend to fail in the long term if both sides are not benefiting to approximately the same degree relative to their business. What did the partner commit to, if anything? What did your company commit to? Do you need more than one such partner? How long will it take for you to measure partnership success? What is required to ensure they are effective? How might this partner accelerate, add scale, or de-risk your business and your execution?
One concept that we’ll keep coming back to is the concept of scale and, in particular, scaling your business. Investor’s excitement about your business is predicated on their beliefs regarding how your business scales from where it is today to something much larger and much more valuable in the future. Desire for scale in your business is, without question, is applied most directly to revenue. That said, there are many other factors related to scaling your company: business processes (go-to-market, sales, manufacturing, testing, etc), hiring, geographical expansion, and general awareness of your company / product / service. Of course, all these factors are related to revenue scale in some direct or indirect way. Think through the discussion generated by this slide as a tool to proactively address questions regarding how your business scales.
…two more slides to go.