Whether you need a pitch deck vs a business plan will depend a lot on the type of business you are running or planning to set up.
Both these documents help entrepreneurs navigate their businesses over the next few years. And both these documents help investors in deciding whether to fund the business or not. However, where business plans are essential for traditional businesses that have a more concrete pathway to success, startups don’t require business plans. A pitch deck is more appropriate for a startup as a lot will change in the course of business.
In this post, we will discuss the differences between pitch deck and business plan and help you determine which one is necessary for your business.
The purpose of a pitch deck is to raise money from venture capitalists and angel investors. The purpose of a business plan is for traditional businesses or late-stage companies to raise money from investors and banks and also to forge partnerships with other organizations.
A pitch deck is a summary to help investors get a decent understanding of the business and helps create opportunities for entrepreneurs to get meetings with venture capital firms and angel investors. Business plans on the other hand serve as full-proof research to help investors understand whether they should invest.
As mentioned previously, pitch decks are more apt for tech startup companies whereas business plans are prominently used by established businesses, small or big.
If I am an angel investor or a venture capitalist investing at a seed stage (up to $1 million), I am more interested in the team and the idea and how the business could disrupt a whole industry or create a new one. When the company has grown from an idea to a company with employees and millions of dollars in revenue, I am more interested in seeing how they will reach stability and become the number 1 or 2 player in the market, and I am interested in detailed strategies. That is when I want to look at the business plan and understand how they will execute their plans.
Pitch decks can range between 10-50 pages and depend on the stage of the startup. For example, investors who invest in very early-stage startups require not more than a 10-page pitch deck. However, as the startup grows and raises more money, investors who come in at a later stage would want more information and might require a detailed pitch deck that can range up to 70 pages.
Business plans on the other hand are very detailed as cover every aspect of the business and can easily be 100 pages long. A business plan can even contain forecasts for the next 5 years.
A typical investor will spend 2-3 minutes going through a pitch deck but needs to spend more time going through a business plan as there are more details.
A pitch deck focuses on the team, product, market, and traction metrics. These are 4 primary features investors look at to decide whether to invest or not. And these features can easily fit into a 10-page deck.
When the relevant audience looks at a business plan, they want to know if the business they are getting into is/can be profitable and also runs stable operations. In other words, since business plans look at a much longer-term, it includes a lot of details.
Pitch decks are more visual compared to business plans and are presented vocally to an audience or a set of investors. Business plans are presented verbally as they are read by the relevant audience. Since business plans are longer, they are not presented to an audience.
Pitch decks are usually created with software like Microsoft PowerPoint or Google slides. There is also other software like Prezi and Slidebean which specifically help in preparing pitch decks.
Business plans are usually prepared in Word format as they are heavily text-based.
These are the key differences between startup pitch decks vs business plans.
Pitch deck vs business plan, what comes first?
The pitch deck is a teaser and comes first. If you are running a business and have decided to raise funds from investors, it’s obvious that you probably don’t know most of them. So, a pitch deck is a great way to get your foot on the door and make a good first impression.
With many new entrepreneurs starting up, you can imagine that every investor gets plenty of pitch decks and business proposals to invest in. Probably hundreds, every month. So, if they have to read lengthy business plans, they won’t have time to actually make investments. That’s why it’s essential to capture their attention with a crisp 10-15 page pitch deck that introduces them to the team, the idea, and how the business can make investors rich.
Do you have all the elements of a good pitch deck?
A good pitch deck gives you the opportunity to grab the attention of investors. A good pitch deck contains most of the necessary information required for investors to make a decision on whether they should talk to you. Take the free assessment to find out if you have all the elements that should be included in your pitch deck.
Also, check out our post on how to create a good elevator pitch to get investors interested in what you’re building.