So you’ve created a target list of prospective investors in your company, and you’re ready to pitch your idea. So what makes a killer pitch deck and what are the softer things you need to do to make it a terrific presentation? Here are seven tips that will really help.
Know Your Audience
Prior to getting in front of any investors, do your homework. Do some homework on the Angel investor. Know something about him or her. Ask them questions. Don’t be afraid to play to their vanity, but don’t overdo it. See my article 10 Key Steps of How to Get Angel Investors into Your Startup.
Know What You’re Talking About
Most of the focus will be on the customer and the problem you are solving. Is it a major pain point for the customer? Are they satisfied with their current solution? How much value would your solution offer? What are your customer acquisition costs? What are the uses for the money that you’re raising and what milestones can be reached in what timeframe? One of the most frustrating things in the world as an Angel investor myself, is to get in front of an entrepreneur when they don’t have a clue about their business, their market, or the realities of the competitive landscape. Watch my video: Key Elements of a Fundable Business Plan.
Have an Elevator Pitch to “Land the Meeting”
You should be able to give a two minute clear, crisp, articulate, enthusiastic “Elevator Pitch” that explains your target customers, the problem your solving, the size of the market opportunity, your unique value proposition, and your competitive advantage. Your elevator pitch should be grounded in a solid business plan that has some level of depth. In other words, be prepared for some level of due diligence. Watch my video on Elevator Pitch Basics.
Be Aware and Prepared to Highlight Yourself and Your Team
Early stage investors are investing in the founding team as much as the idea. Be transparent, communicate directly, and always follow-up on any actions in a prompt manner. Investors will not give their money to someone that they don’t trust. They will not invest in someone that does not have high integrity. They will expect a level of competency and expertise that is reflected in a track record. Don’t be afraid to leverage other peoples’ credibility. Watch my video Investors Look at YOU Personally When Making an Investment Decision.
Leave the Innovation to Your Product, NOT Your Pitch
Give the information to the investor in the order they like to see it, and in the detail that they are accustomed to seeing. Entrepreneurs want to take 80 to 90 percent of the meeting time talking about their product or solution. Investors want to spend 80 percent of the time talking about the business, and 20 percent on the product. My suggestion: talk about the business.
Nothing in business ever happens without a customer. Understand and articulate the customer and their problem. Do this before you discuss your solution.
The first thing that you need to do is to describe The BIG Picture. The best way to do this is by telling a story. Ideally, you want to cause a visceral reaction to the pain associated with the problem that your target customer if facing. You need to articulate how and why your target customer is frustrated, afraid, or losing sleep over this problem. Explain it is such a way that the investor feels the pain of the customer. If you need more tips then you could get in touch with someone like Lindsay Rosenwald, a financial advisor and investment expert.
Next, give a High Level Summary of your Solution and Plan. Do this in laymen’s terms. You can always go into deeper technical layers if the prospective investor has an interest.
Then talk about the business. What is your Marketing Strategy? How do you go to market and what is your customer acquisition cost? What is the value of your solution to your customer? What are your key milestones?
What is the Competition for your solution? Even if there is no direct competition, what are the alternative solutions, including nothing. Be honest. Be self critical. If you do a comparison with competition on features, then include all the key features and be honest about where your solution stands.
Give more detail about your target Customers. How do you get paid? What is your business model?
Discuss your Team. What is the track record of yourself and the other co-founders? What are your credentials? Do you have advisors that are highly strong credentials and a track record?
Outline your Financials and your Financial Projections. I personally think five-year forecasts are a waste of time at an early stage. It is better to talk about the market size and growth and give a three-year forecast. The key in all of this is first samples of your product, beta stage, and first revenue. How are you going to use the money that you raise? Product development? Market channel development? Marketing and promotion? Keep your team lean and keep your initial hires focused on the equity, not big cash compensation.
Give a Summary and make sure to “Ask for the Order”. Don’t be afraid to ask the investor for the investment. You don’t need to ask them if they have any questions. If they are interested, then they will ask questions.
It is important that the investors have an understanding of your Cap Table.
In seed stage deals, I would always make the assumption that the financing will be a convertible debt offering. Read my article on Startup Funding Basics: Alternatives and Deal Terms.
It is OK to tailor the verbal part of your presentation to the specific audience. If you have an investor that has a history that includes something that you can use as an analogy, then don’t be afraid to do that. Just know what you’re talking about.
A good investor presentation should take 20 to 30 minutes. You don’t want to go over! You should schedule the meeting for an hour, and if you are lucky, and they have lots of questions, you may take 45 to 50 minutes of their time.
Don’t Get Discouraged and Don’t Get Tired
Be prepared to deal with rejection. Be patient and be persistent. A “no” answer, doesn’t necessarily mean “no forever”, it may just mean “no, not right now”. Be realistic in the amount of time that it will take to raise a round of financing. It could take a few months.
I recall going to San Hill Road, the primary street in Silicon Valley were VCs have their offices, to speak with five or six VC firms a day. And even more-so, the IPO roadshow for Entropic where we were talking to 10 to 12 investor groups per day, not including breakfast, lunch and dinner meetings with large groups nearly every day for two weeks straight. It can be tiring. The story can be boring on the 27th time you tell it. Don’t let it get boring! Don’t let your energy level get low! Speak with enthusiasm, passion, and authority! Investors are looking as much as much at you, and your passion and your drive, as they are at the idea. Passion is essential to get a deal sold. It isn’t sufficient…you actually have a good idea and a strong business model. But you have to show passion and drive.
There is NO Substitute for Preparation
In my experience running companies, buying companies, and investing in companies, nothing impresses me more than an entrepreneur that is passionate, prepared, calm and cheerful. If you are prepared, then you are excited to answer questions, and you’ve thought through nearly everything, and have well thought-out and articulate answers. In the rare circumstance where you don’t know the answer, then you say so, and commit to follow-up, and do so promptly.
Before getting in front of real investors, do your presentation with friends and your significant other or spouse. Practice in front of the mirror. Present it to your pets. Rehearse it with your kids. If you have trusted advisors, then present the material to them. If you don’t have trusted advisors, then get some! Get someone who is willing to play devil’s advocate, and let them try to derail you and ask you difficult questions.
Practice your presentation in front of a video camera. You’ll be surprised how much you’ll learn! This used to be expensive, but with smart phones it can be cheap. Practice the presentation with extra enthusiasm. It is rare that I think someone is too enthusiastic, especially a technical founder.
Prepare a set of Frequently Asked Questions (FAQs) from your interactions with everyone. You may never hand these out. The FAQs are for you to deeply understand and practice the answers! Some people are better on “their feet” than others. Regardless, FAQs are a valuable tool, even if you are very good and having answers on the fly.
I work with entrepreneurs nearly every day. I see a lot of ridiculousness. Please don’t be ridiculous. Prepare and be excellent! It will save people like me a lot of time, and yourself a lot of embarrassment.
If you’d like to get a complementary assessment of your business plan or investor presentation, or you’d like to register for one of our virtual coaching workshops, please contact us at , or to QuestFusion Virtual Coaching to learn more about virtual coaching and to register for a workshop. At QuestFusion, we love working with entrepreneurs, and we will work hard to help your company become the next great startup success story.
This is Patrick Henry, the CEO of QuestFusion, with The Real Deal…What Matters.