Capital Raising: What Do I Include in my Pitch Deck and Why?

So you want to issue shares in your company to raise capital? Congratulations! You may now ask yourself questions including what information should you disclose to investors? How much detail is required and what are the risks? In our three-part series, we set out the essentials of the three types of disclosure documents:

1. Pitch Deck;
2. Information Memorandum; and
3. Prospectus.

What is a Pitch Deck?

Chapter 6D of the Corporations Act (the Act) governs how companies can raise capital and says that certain types of security offerings (including options or shares) don’t require a prospectus or other disclosure documents (exempt offerings).

Does this mean that you don’t need disclosure? No! You require written disclosure to help you deliver a great pitch, provide the same information at each pitch, and confirm what you have said.

When Do You Use a Pitch Deck?

Start-ups seeking early stage investment including seed capital and Series A use pitch decks. Market practice is for a pitch deck to contain approximately 10 to 20 slides.

Which Type of Offers Can be Made With a Pitch Deck?

Companies looking to raise capital can only use a pitch deck for the exempt offerings set out in section 708 of the Act. Exempt offerings include small scale offerings (raising up to $2 million in 12 months from up to 20 investors), and for offers to sophisticated investors and professional investors. Other offerings of securities require disclosure under the Act.

What Goes Into A Pitch Deck?

Your goal is to succinctly outline the essential details about your business, in a way that engages potential investors, including:

• Solution: What problem am I solving? What is your solution? How is it better than your competitors?
• Market: What’s the competitive landscape? Who is the customer? What size is the market?
• Team: Who’s on your management team?
• Status: The status of your current financials, including whether you are making sales?
• Next steps: Specific details about what your company will spend the funds on and why.

What Is Your Risk?

It is an offence to make false or misleading statements about your company or securities, or engage in misleading or deceptive conduct about the company or securities including:

• Making false or misleading statements in writing or verbally; or
• Misleading or deceiving investors by omitting information.

Conclusion

Capital raising law is complex, and it’s important you have a start-up lawyer that can explain it clearly, so you know who you can offer shares to, and to ensure your offer is compliant. Having raised capital ourselves, we understand the challenges and can help with small scale offerings right through to large venture capital investment. 

Questions? Ask our capital raising team on 1300 544 755.