9 Easy Steps to Get Investment-Ready

Chapter 1: Problem & Solution Analysis

Author: Carlo Alberto Zucca

Estimated reading time: 7 min

Introduction

Problem & solution analysis is always the first challenge for entrepreneurs in building a convincing pitch deck.
 So, our aim in this article is to help you to improve your analysis and avoid common mistakes or pitfalls.

Raising capital from investors is difficult and time-consuming.
Therefore, it is essential for a startup to develop a compelling presentation in order to communicate the company’s value proposition in the best way possible.

On the internet, it is full of frameworks and guides on how to create a “winning pitch deck”. As you might have noticed after researching the topic, most of these guides always present a problem and a solution slide.

However, during our consulting and coaching sessions, we realized that, for founders, the problems and solutions are frequently harder than expected. Either the relevance of the problem and the relative solution is often ignored or not fully grasped. What is usually missing is the right approach to identify and analyse the existing problem and the necessary elements to solve it.

How the Problem and Solution Analysis Helps Your Pitch

The main purpose of a pitch deck is to draw in the audience and make them interested in your concept.
The problem and solution slides will be the incipit of your presentation and thus they need to emotionally attract the audience, but also engage them with a practical issue. The more you empathize with your audience, the easier it will be to increase the retention rate of their attention throughout the presentation.

At this point in your pitch, you should always remember that investors are not your enemies.
They want to finance ideas that solve real problems and work together with you towards a solution. So get them into your boat: it will help you a lot during the rest of your pitch!  The problem & solution section is where entrepreneurs paint a picture of why the company should exist and how strongly needed it is.

Essential to keep in mind is the degree to which the problem should be discussed and directed towards the audience.
There is a difference between pitching to investors and pitching to clients. A direct problem statement fits better investors rather than customers. Investors are always one step off from having that problem themselves in most cases. Customers need to be addressed in a more indirect way, letting them discover the problem according to their own personal experience.

Therefore, make sure to, first of all, follow the two steps listed below:

  • Make your deck persuasive
    Lay the problem out very clearly and persuasively. When formulating the problem statement, make it simple and powerful. Also, it is really important to always bear in mind to find supporting evidence for the problem statement, in order to make it more convincing to the investors.
  • Introduce your solution
    Once you have introduced the problem and defined all the major points of it, you should add a slide with a concrete solution to this problem.
    The sequence problem-solution makes the storytelling more powerful and allows the audience to understand why your product/service is valuable. This mixture of negative and positive storytelling creates a more dynamic presentation that is able to involve the audience beyond what is normal to be expected.

How to Conduct Problem & Solution Analysis

There are different frameworks that can be used to extrapolate these points.
Regardless of the method used, you need to define the problem your startup is solving through the analysis of the following questions:

  • What is the problem and how big is it?
    Describe the problem and define its scale, by indicating its range in a quantitative way (market size, number of companies/individuals affected, negative externalities per year et cetera) and industries affected.
  • Why is it important?
    State the relevance and importance of the existing challenge from the customers’ point of view and from the other stakeholders’ one.
    Then, explain what will be the issue if the problem remains unfixed.
  • Who are you solving the problem for?
    Analyze and define who are the benefited stakeholders and how/to what extent they will benefit from the innovation.
  • Who are the target customers?
    It is fundamental to define target customers before writing the problem statement, which should accurately indicate what are the pain points for them.

Since the prior step analysed the problem in detail, the solution section of your investor pitch deck should articulate your proposed solution, explaining why it is better than others on the market. This slide should be carefully coordinated with the product slide of the pitch deck, as there may be some overlap.

Final Thoughts on Problem Development in your Pitch

Developing your presentation starting from a proven problem, rather than a thought solution, is a more efficient strategy to retain your audience and make them believe in your idea. This is why the presentation should revolve firstly around the problem your startup is solving.

When you are creating and developing your presentation, always consider how your company as a whole understands the issue and deliver the message on how you want to solve it. Make sure the concept is clear and well defined at all the company levels, so that every stakeholder will have the possibility to assess the potential of your idea.

Always keep in mind the answer to this simple question: “What is the issue that my idea is solving in the world?”

The problem structuring is also an opportunity to refine your idea and to better align your company objectives to the most pressing emergencies. For example, your company might be able to solve a problem that is only secondary for the market you serve, or your company might be solving the consequences of a problem, rather than the problem itself.

Furtherly, the business idea behind the problem should always be supported by objective and proven research. Do not input subjective opinions or assumptions that you feel are right, without having supporting evidence.

A final consideration: make sure the audience can clearly understand the pain points you are trying to solve and can assess the benefit the customers will receive from your proposition. A lot of potentially great ideas don’t receive enough attention just because their presentations aren’t clear or appealing.

How will GründerAtelier help?

GründerAtelier‘s professional team has offered many successful sessions to help young startups better conduct problem and solution analysis within our framework. We will guide you through the steps of problem analysis, solution development and target customer identification to come up with a solid and convincing statement for both investors and clients.

We will have the first session focus on helping you to optimize problem/solution analysis.
Click here to know more details about the structure of the program and how we can help you scale.

We hope you’ve found this article useful. Get in touch with us on LinkedIn or Instagram!