Hooray! You’re almost done with your business plan pitch deck. At this point, you’ve made a persuasive case for why there’s an attractive opportunity, and why you have the right vision and team for capitalizing on that opportunity. Now it’s time to close the deal (that is, if you are raising capital).
This slide should explain how much capital you need now, and in any future rounds. If you did not include a slide with details on your monthly financials during your seed round, provide a “use of proceeds” here, which is basically a chart showing that if you are raising $1 million, you’ll spend 30% to develop your technology, 25% on marketing, etc.
Then explain where the capital gets you. In other words, show what milestones will you hit, and when, facilitated by the money you’ve raised.
Next, discuss your exit strategy. Tell investors how you think (not promise) they’ll make a profit on their investment. If that strategy is to build something valuable and sell it to a larger company, explain just what you need to build, and who is most likely to buy it. A good way to do this is to look at recent acquisition activity in related markets. Be sure to look at (and think through) why companies made acquisitions. Were they looking to buy talented management teams? Hot, up-and-coming brands to add to their stables of mature brands? Relationships with distributors? Advanced technology?
Also, look at how the acquiring companies valued their acquisition targets. Their methods of valuation will help you predict what your company might be worth. Financial buyers might have bought a company for a price equal to some multiple of cash flow or profit (e.g., eight times earnings). Big companies with efficient sales and marketing processes might see a small company differently. Maybe the small company is growing their sales very quickly, but is barely eking out a profit. The big company might focus on some multiple of sales (such as 2x sales) because they know they can boost profits when they increase efficiencies. Finally, see whether there seem to be critical hurdles required before companies get acquired. Maybe in your industry, the last few companies acquired had recently hit $10 million in sales. That could be a “magic number” you’ll need to reach before companies consider buying you.