After building hundreds of pitch decks for startups, I can confidently say that the most critical slide a startup should focus on is the business model slide.
Unlike other slides, there's no fixed template, no set guidelines, and even the best examples can only offer limited inspiration. This is because a business model defines what sets your startup apart, making it valuable, competitive, and relevant to the market.
Much like your entire pitch deck, the business model slide requires meticulous attention. It's a 'make or break' slide that can either comprehensively address all of the investor's queries or introduce doubts that kill your entire pitch.
In this article, we'll get into the details of the business model slide, its role in your pitch deck, a good example, and provide a few simple do-it-yourself steps for founders to craft this slide effectively.
What on earth is this Business Model Slide?
If we go by the formal definition...
The "Business Model slide" in a pitch deck is a visual representation that outlines how a company plans to create, deliver, and capture value. It provides a clear and concise overview of the fundamental aspects of a business's operations, revenue generation, and sustainability. This slide typically covers key elements such as revenue streams, cost structure, customer segments, and the value proposition.
Now, let's come down to earth & talk more human...
For instance, if you have a lemonade stand, your Business Model slide might show that you make money by selling lemonade, and your costs include lemons, sugar, and cups. Your customers are thirsty people passing by, and what sets your "lemonade stand" apart is that you offer a unique, secret recipe that everyone loves. This slide helps investors understand how your business works and why it's a smart investment.
Why should you have a business model slide in your pitch deck?
Clarity for Investors
The Business Model slide provides an overview of how your business operates and generates revenue. This transparency helps investors understand your strategy and how their money will be used, instilling confidence in your venture.
It highlights what makes your business unique in the market. Whether it's your pricing strategy, customer segmentation, or distribution channels, this slide showcases the elements that set you apart from competitors.
By detailing your revenue streams, cost structure, and customer acquisition, the Business Model slide allows investors to assess potential risks and opportunities. It demonstrates that you've thoroughly thought through your business's financial sustainability.
How to make your pitch deck's business model slide?
From a technical standpoint, the Business Model slide is highly individualized for each business. However, by adhering to specific steps, you can streamline the process and achieve a meaningful outcome.
Step 1: Define Your Core Revenue Streams
Identify the primary sources of revenue for your business. For example, if you're a software-as-a-service (SaaS) company like Netflix, your core revenue stream is subscription fees paid by customers for access to your streaming service.
Step 2: Cost Structure Analysis
Break down your cost components. If you're an e-commerce business, your costs may include product sourcing, shipping, marketing, and website maintenance. Providing a cost structure helps investors understand how efficiently you manage expenses.
Step 3: Customer Segmentation
Define your target customer segments. Suppose you're a health and wellness startup; your segments might include fitness enthusiasts, busy professionals, and seniors looking to stay active.
Step 4: Value Proposition
Explain your unique value proposition. For example, if you're a food delivery platform, your value proposition could be "convenient, fast, and diverse food delivery choices for busy urbanites."
Step 5: Distribution Channels
Describe how you reach customers. If you're a B2B software company, your distribution channels might include direct sales teams, online marketing, and partnerships with software integrators.
Step 6: Revenue Model
Elaborate on your pricing strategy. If you're a mobile app offering in-app purchases, outline how pricing tiers work, e.g., "Free, Premium, and Pro versions with varying features."
Step 7: Traction and Milestones
Highlight your traction and milestones. If you're a fintech startup, you could showcase achievements like "100,000 app downloads, partnerships with three major banks, and 50% month-over-month user growth."
Example of a good business model slide
Over the years, I've seen many good business model slides in pitch decks. But for ease, let's consider the business model slide of a famous pitch deck. The Airbnb pitch deck's business model slide.
Why is it a good example?
Airbnb leads with transparency in its pitch deck, featuring the 10% commission rate in the title and proceeding with clear, calculated assumptions. To maintain a consistent flow, they reference the market slide, where 84 million users (representing 15% of the market share) become the focal point. Airbnb artfully constructs its business model, projecting revenue of approximately $200 million. What sets Airbnb apart is its knack for simplifying complex financial data. Instead of drowning investors in intricate models, they extract the most valuable numbers from their data, letting straightforward calculations shape their investment proposition.
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