Rocking Investor Presentations: Dos and Don’ts
So, you have worked hard and have gained the chance to make a pitch to raise Angel investment capital for your business. How do you maximize your chances of success?
The subject of “how to make a successful presentation” has been written about endlessly. Every Venture Capital fund, business school and new company incubator h as a preferred approach. Most of the “rules” are simple and similar – i.e., keep your pitch short and focused. Some of this advice is counter to what you will hear from “professional” presenters. For example, the old professional dictum of “one idea per page” is well known. But not many “professional presenters” have ever started successful companies, so use your own good judgment.
Here is some specific advice on pitching to Angel or Accelerator groups.
Dos and Don’ts
- DO understand that the Objective of your presentation is to get a second meeting, not to raise all the money at this one event. Your presentation will be a rousing success if you are able to grab the attention of 3 investors in any room and pique their interest sufficiently for them to initiate follow-up. This is the beginning of a 3-6 month process.
- DO tell a story. Remember that all stories begin and end the same way – with “Once Upon a Time…” on page one and “Everybody Lived Happily Ever After” at the end of the story. You know why you started with the business and you know how the story ends – with a great return for you and your investors. All you have to do is fill in the middle. Think of your presentation as a Dr. Seuss book and you will never go wrong. Seriously. Go get one, read it out loud, and see how your “story” could follow the same pattern.
- DO be passionate about what you are presenting. You have to help people understand the problem you solve and your unique approach to solving it. Have “success stories” ready to tell about what you are doing, featuring real customers if possible.
- DO put more information in your presentation than you will talk about. The audience will read faster than you can present so they will pick up on the additional details without you having to spend presentation time on every item. Just don’t allow your “slides” to become cluttered and hard to read. And when you talk from the slides, just hit the high points – whatever is big and bold. You can always go back to explain something that needs more attention – if you get the big ideas across. And bring physical copies with you to hand out – in exchange for the business cards of the people who ask for one. This will allow you to FU: Follow Up.
- DO talk in specifics. Use quantitative information, estimates, and/or results to convey your points. You’ll be amazed at the audience’s ability to pick up and ask you about specific, juicy details.
- DO practice your presentation beforehand and time it until you can make the pitch in 80% of the allocated time. When you are pitching, you will generally slow down.
- DO anticipate the questions that the investors will ask during the Q&A session and have additional “slides” prepared to use in answering these questions. These slides should have details on them that you omitted in your original pitch because of the time constraints. As you give your presentation to different groups of investors, you should be able to add to your collection of backup slides based on previous questions. Write the question at the top: “Why Do Sales Slow in Year Two?” This way, the asker knows they are not the first and that you know how to anticipate issues. Having prepared slides in anticipation of questions will greatly enhance your credibility as the right leader for the business.
- DO keep your slide count for the main presentation to 12-15 slides. Here is a set of suggested topics to cover, though you have to decide what’s most important for your pitch.
- Start With Why – Watch the TED Talk by Simon Sinek (https://www.startwithwhy.com/). He will convince you to start by telling people why you are in business. Remember, your presentation is really just a story about what personally caused you to pick this problem and to come up with this solution.
- “My cousin has breast cancer and it occurred to me that there had to be a better way to provide patents with really great mastectomy supplies.”
- “I was working on a Habitat for Humanity project for a young family and it got me wondering: How could we protect them from the chemicals in the walls and flooring.”
- “My partner and I were working as bartenders and on a very busy night, we decided that a computer controlled wireless dispensing cap for liquor bottles could make life a lot easier.”
Remember the first law of Early Stage investing: people invest not in what you do, but in why you are doing it. As Sinek says in his presentations, Martin Luther King titled his famous speech, “I Have a Dream.” [See the speech at https://www.archives.gov/press/exhibits/dream-speech.pdf.] He did not stand in front of a million people to say, “I have a plan.” Start by selling your dream. If people don’t buy into your dream, your plan won’t matter.
Summarize the Market Need and Business Model – It is here that you need to capture the investor’s attention. What’s the overall size of your target market, the industry growth rate and your expected penetration? State what problem your solution solves and how you make money from it. How critical is the market problem and what is the impact of your solution?
- Investors want to know where you are in the financing life cycle and when you plan to exit.
- Here are some things NOT to do:Product and/or Service Offering – What do you offer, how do they uniquely solve the customer’s problem? What validation do you have of their acceptance by potential customers?
- Competitive Advantage – What do you have that others don’t? Who are your competitors? Said another way, explain your sustainable competitive advance. Large incumbents, other startups or providers of substitute solutions? What are their strengths and weaknesses? What are the barriers to entry for new competitors in your market?
- Go to Market Strategy – How will you sell your product and who will help you? As a branded product? As “Intel Inside®”? As a private label product or service, incorporate your offer into other brands? What will your marketing strategy be to sell into any of these channels? What are your sales and distribution channels? Who are your target customers? And how many do have to sell to break even at various prices? In short, how will you make money?
- Financial Expectations – What is your basic financial strategy in terms of revenue streams and margins? What is the plan for making the business profitable? When will the business be self-sustaining (cash flow positive)? Why are your revenues forecast to increase each year? Why are the assumptions in the year to year P&L projections to be believed?
- Funding Request – How much has already been invested in the company? Who are the current investors, their ownership shares, and composition? How much funding are you seeking now? What valuation are you assuming for the company for this funding request? How does that translate to percentage of the business you are selling? How many future rounds of capital do you expect to require and how will that affect the ownership of the position you are selling now? Have a detailed slide of how you arrived at the valuation available for the Q&A session.
- Use of Funds – How will you use the funds you raise? When do you forecast the various expenditures will occur? The more specifics, the better – even though you (and they) know this will change.
- Exit Strategy – What is the planned exit strategy and when? If the plan is a sale then who are the likely buyers and why? What is the forecast valuation of the company at the exit point? Don’t predict the investors’ expected return on their investment; this is making a “promise” you can’t keep. But do let investors know that you understand the value of time in the investment return calculus.
- The Management Team – Who are they, what are their areas of expertise? Their past successes are much more important than where they went to school. The importance of your management team differs by geography. On the West Coast, who you are and who you work with is judged absolutely critical to your business success—principally because it shapes your ability to raise investment capital from other investors. Broadly in software, Angels invest in people more than products and they want to be sure that your team can deliver. In the Midwest, the idea/technology itself is seen as somewhat more important; investors value the stability and work ethic of Midwest “stock.”
- DO NOT spend time explaining the details and complexities of your product and/or services. People are willing to trust that it works the way you say it will. Complexity is the entrepreneur’s drug of choice. Don’t get addicted.
- DO NOT be coy about how much you are looking to raise, why you need exactly that much and what pre-money valuation you propose. You are not presenting to Goldman Sachs! These are Early Stage investors, many of whom may have never invested before. Be specific and forthright. Do not be cute.
- DO NOT hide the names or affiliations of your current investors. If you have investors who want to remain anonymous, buy them out before you raise money. Everyone will know who the investors are when your capitalization table is disclosed in due diligence; never hide today what will be disclosed later anyhow.
- DO NOT conduct a product demonstration during your pitch. It interrupts the flow of your thinking and there’s a good chance it won’t work as you intend. Bring it to a follow-up meeting—ideally in your office, lab or garage – or do it after the meeting for those who want to stick around.
- DO NOT show a video of any nature, for any purpose. The reason? You can’t count on flawless execution and when it doesn’t run as you intended, you look dumb no matter who or what caused the technical issue.
- DO NOT leave the audience conclusions to chance. Tell them what you plan to tell them, then tell them what you plan to tell them, then tell them what you told them. Ask at the end for a specific next step. Tell them again what you want them to do.
- DO NOT come across as a solution looking for a problem. Your business needs to be solving the problems of genuine customers. Investors need to believe that your target market will quickly learn they cannot live without your product or service.
One other point. Have fun. People want to be with people who seem to be enjoying what they are doing – even when it is daunting! Your attitude towards your company will rub off on everyone in the room. Be sure it’s a positive rub!
Source: This list is built on top of work originally done in 2004 by Ralph Long at OROCA LLC.