Every day at Xartup, we receive tons of pitch decks from founders, but we found that more than 95% of these pitch decks, including the most important slide, i.e., the problem slide, were poorly written.
Throw half a dozen entrepreneurs in a room together with a whiteboard, and they’ll be able to come up with a thousand business ideas in a couple of hours. It’s the nature of entrepreneurship.
Our brains are wired to keep an eye on what could be better and how that gap in the market can be turned into an opportunity. In other words: Ideas are cheap, and nothing is so awesome that it couldn’t possibly be improved.
Being able to clearly outline the problem is a crucial first step toward explaining why people might want a solution. Explaining succinctly and clearly what the problem is can be surprisingly hard for some companies, while others have a much easier path toward a problem statement.
So what do investors want?
Investors are looking for a deep understanding of the problem you're solving. A clear and concise explanation of the issue is critical, but it's not enough.
You also need to demonstrate that you've thoroughly researched the problem and understand its scope and impact.
This means going beyond simply stating the problem to outlining the various factors that contribute to it and the negative consequences it has on your target audience.
Don't get bogged down in details, but provide enough context to set the stage for your solution. Briefly explain the problem and who it affects.
Highlight existing solutions (and their shortcomings). Show that you understand the current landscape and how your solution offers a better alternative. Quantify the drawbacks whenever possible to strengthen your case.
Quantify the impact of the problem. Show investors the potential return on investment (ROI) associated with solving this problem. The larger the impact, the more attractive your opportunity will be to investors.
The Problem Slide: A Make-or-Break Moment
The VC partner emphasizes that a well-crafted problem slide is essential for capturing investor attention. Many founders rush through this step, focusing instead on their solution. But a strong problem slide sets the stage for everything that follows.
Common Pitfalls to Avoid
Overly complex explanations. Don't use jargon or get bogged down in details about features or competitive analysis.
Assuming the problem is obvious. Even if the problem seems clear, explain how you view it.
Ignoring existing solutions. Acknowledge what people are currently doing to address the issue, and explain how your solution is better.
Crafting a Compelling Problem Statement
The newsletter provides a helpful framework for structuring your problem statement:
Clearly define the problem. What specific issue are you addressing?
Identify those affected. Who experiences this problem?
Highlight current solutions (and their drawbacks). How do people typically address this problem? What are the limitations of these solutions?
Quantify the impact. How widespread is this problem? What are the consequences of not solving it?
Examples Make the Difference
Your job as the founder is to draw a solid, realistic picture of the problem you’re about to solve, explain the pressing need people have for addressing the issue and give an indication of how prevalent the problem is.
Don’t forget to include the risks or costs of what happens if the question remains unsolved. If your “problem slide” ticks all of those boxes, you’re on the right path.”Strong examples make your problem relatable and underscore the need for your solution.
Remember, your problem slide is your chance to grab investor attention and convince them of the opportunity you're addressing.
By following the framework outlined above and crafting a clear, compelling problem statement, you'll be well on your way to securing the funding you need to turn your solution into a reality.
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