As most cannabis operators know, starting a cannabis business is an expensive proposition.
Licensing fees and operating costs can be prohibitively expensive for some entrepreneurs, which is why many seek help from cannabis investors.
Approaching an investor, whether it’s friends and family or a venture capital fund, means putting together a condensed version of your vision into a cannabis investor pitch deck to help state your case.
A pitch deck is a short presentation that describes your cannabis business and how it will create value in the world.
It should provide high-level information that gives a potential investor financial information, as well as a description of your unique value proposition.
Here’s how to create a killer pitch deck to recruit financial support for your cannabis venture.
What Goes into a Pitch Deck?
Pitch decks are used in conjunction with a business plan and financial projections.
As a result, the pitch should be limited to only the most important information in 10-15 slides – a 20 minute presentation at MOST.
The following sections should be covered in one slide each:
- Introductory Slide
- What’s the problem?
- Your team’s solution
- The Business Model
- Market Overview
- Marketing and Selling
- Cost and Pricing Model
- Social Impact
- Competitive Advantage or Secret Sauce
The pitch deck is just one element of your overall presentation. Many investors will ask to see a breakdown of the financials of your business plan. Just an FYI, these are estimates and everyone knows it. What they will really be looking at are the assumptions that drive these financials.
Potential investors will ask for details such as:
- What is your customer acquisition cost (CAC)
- What is your customer lifetime value (LTV)
- Margins of your products/services
- Seasonality of sales
- Breakeven points
It's important to know how the nuts and bolts come together to create your machine (business). So how you really shine in a pitch though will be during the questions at the end.
You must be prepared to answer any and all questions about your business assumptions and how you will use the investor’s money.
Some questions to be ready for are:
- How much runway will this investment get?
- What's your plan for the next funding round?
- How will XYZ regulation impact your business?
- What valuation are you looking for and what are comparable companies?
Here are a few suggestions for each slide. Not everything needs to be ON the slide, but can be discussed while the slide is up.
- Present your logo, company name
- Include presenter names, job titles and contact information
- Include a picture of your product or service offering (if you have one)
What’s the problem?
- Describe the problem you are looking to address in simple, clear concise terms
- Current state, seriousness of problem
- Desired future state, benefit to customer
- Scale of the initial market
Your team’s solution
- Describe your solution in simple, clear, concise terms
- Key benefits, features for customers
- Product design template
- Timeline to develop or design
- Note that this should not be “magical” technology or anything illegal
The Business Model
- Clearly and concisely explain how you are going to make money
- Direct Sales
- What’s the value to the customer?
- Remember, it’s all about the customer!
- What is the market size and prospective growth potential?
- Who is your target customer?
- What is your product's positioning within the market?
- Are there any market trends that you are leveraging? This is the answer "Why Now?"
- What other possible applications are there for your products?
Marketing and Selling
- How will you reach your customers?
- Discuss 1 or 2 marketing strategies
- How long is the sales cycle & strategy for initial market?
- How will you get your first customer?
Cost and Pricing Model (Basic Financials)
- How will you develop product/service?
- Cost to develop and produce
- Potential sales price to your customer
- Competitive pricing analysis
- Cost/Margin calculation
- There is ALWAYS competition
- If there isn’t, there’s probably not a market
- Provide a competitive analysis
- Can be a table/chart comparing your solution to the current approach and major competitors
- Comparison is based on key benefits
- Note that the more realistic you are, the more believable your case
- List all the team members
- What UNIQUE skills, resources, experience, or knowledge do they bring to the team?
- Including a Board of Advisors can be key
- Include partnerships and even engaged professional service providers such as lawyers, CPAs, and more.
- What positions are you recruiting for?
- Most investors know that they are betting on the jockey (team), not the horse (business idea) so make this slide impactful
Not every business has a social impact, but it can be helpful to bring one up if you have one.
- What is the impact of your product or service on the environment?
- Will your venture have a positive social impact?
- Describe the values of your company
- Will this be a major shift for good in the marketplace?
Competitive Advantage or Secret Sauce
- What's the proprietary, underlying magic that gives your teams solution a clear, defensible advantage?
- Design improvements over current offerings
- What are you going to do particularly well that it will be difficult to copy?
- Do you have patents?
- Tie the presentation up nice and neat
- What are the next steps as a company?
- What information do you need to move forward?
- Be ready for further questions
Other Highlights in Your Pitch Deck
Investors, especially those who work in the cannabis industry, get asked for money nearly every day.
So how can you make your pitch deck stand out from the crowd?
Focus on the “why”
There are many entrepreneurs seeking to get a slice of the estimated $30 billion industry. By some estimates, 60% of prospective cannabis operators are first-time entrepreneurs who have no fundraising experience.
If you’re going to compete for an investor’s time, money, and attention, you must provide them with a reason why you’re different from every other investment opportunity. Make sure you highlight your unique value proposition – why your cannabis venture has more staying power than any other cannabis brand. What makes you different?
Also, don't forget the team! Investors are betting on them to adapt by figuring out the right time to pivot and change strategy whenever necessary.
Show how you will be compliant with regulations
The cannabis industry is one of the most regulated industries in the country. Operators face heavy penalties, steep fines, and being shut down if they don’t enact the proper standard operating procedures.
Make sure your pitch deck outlines your checks and balances, showing how you will be rigorous in guarding your profits and reducing risk in this precarious industry.
Offer a parallel investment opportunity
It’s extremely competitive to get both business licenses and real estate; as a result, many investors want to see if you have the ability to actually operate in your proposed jurisdiction.
Likewise, some investors will see investing in cannabis as too risky a proposition. Cannabis operators may get creative in how they pitch a way into this market. For example, some cannabis operators use real estate as an investment opportunity.
Tips for Pitching to Investors
First, you need to practice your running through your presentation. After at least 20 times of going through it, your confidence builds and your presentation of the pitch tightens up. You will figure out little sound bytes that ring well, and practicing gives you time to reflect on which aspects you think need more explaining.
Another tip for practicing is to time yourself. You can use the lap-timer on your smartphone and see how long you spend on each slide. This will give you guidance on what needs to be 'tightened up' for a more powerful presentation.
Of course, having the right things in your presentation is only part of the equation. There are some other things you can do to catch the attention of investors.
Don’t cold-pitch an investor. Mass emailing your pitch deck to cannabis investors is not going to give you good results.
One investor in the cannabis industry warns that cold pitching is one of his pet peeves:
“I usually never read these pitch decks. If a serious entrepreneur can’t reach out and network to obtain an introduction to me from a friend, business associate, contact, network, or company that I mentor or invest and get a warm lead before sending his/her deck, I probably will not read it.”
We suggest creating a list of qualified investors that you have researched. Reach out to them individually with a custom tailored email that is contextually relevant to why this is a great opportunity for them.
Never ask them for money, just ask them for feedback. If they are interested, they will ask deal terms and hopefully move along to a term sheet with you.
Also, your deck should be high level. Don’t go too far in explaining your message. It's a presentation, not a book! Also, sometimes pictures can help explain things a lot better than 50 words on a slide.
Cannabis investors are very familiar with the industry – “dumbing down” your pitch can make you look like a novice.
“The pitch deck needs to cater to new folks trying to learn, but also remain sensitive to advanced investors who want to get a real look under the hood and not have to run through a long deck telling them how much upside the cannabis industry has,” says another cannabis investor.
Looking for help attracting investors? Talk to our team – we can put our network to work for you and help you perfect your pitch to investors. Get in touch by clicking the button below.