Effective Investor Presentations

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1 Effective Investor Presentations What is effective? The purpose of an investor presentation is not to close a deal, but to get you to the next step. A two minute elevator pitch results in a request for an executive summary. An executive summary gets you invited to present to potential investors. A 10 slide presentation gets you invited to an in depth session with the funding group. Don t try to tell everything about your company and your strategy, this will overwhelm your audience. Tell them enough to arouse their interest. The following tips are from Tally Costa, investor in Boulder Colorado. Angels do typically invest within 1-2 hours of where they live. Colorado is an interesting state for angel investment, however, in that there is a bulk of money scattered throughout the state with part-time angels and investors out of NYC, SF, etc So.while you may have people spending the bulk of their time in NY or CA, they are keeping tabs on potential investment opportunities here in Colorado also. There are a bunch of smaller angel clubs throughout Colorado, with the largest being Rockies Venture Club (RVC). RVC gives potential small business the ability to present, pitch and get noticed with some of the investors that are also part of the other angel clubs. They are holding monthly forums in Boulder, Denver and Colorado Springs. I believe this to be an appropriate venue for the entrepreneur to look at for pitching their firm. The smaller angel clubs in Colorado typically will seek out businesses on their own. Usually, one of their members is raising money and has invested in a business already, and contacts the group, which includes business friends/acquaintances in the area and in the club, to help the business raise more money. In general, the angels are private people and do not like to get solicited unless it is through one of these forums or through another investor. Everyone seems to want access to the investors these days, which is why privacy is so critical for the angels. I myself review more than 20 to 50 business plans per month, and in Colorado, it is rare if I find ONE business per month on which I will take the time to investigate more. I typically spend less than 5 minutes initially on any business plan. Most of the businesses are lacking something critical for angels to get their return on investment (ROI) and it becomes apparent in the first 5 minutes exactly which duck is not in a row to get ROI. The trend currently for most angels is that the business be post-revenue, even if it has only generated $5,000 in revenue, it is better than a science project or great ideas which angels tend to shy away from. The following is a template for businesses to use to give potential investors a quick overview of their business. I hope that it helps. Also, I work with the Boulder SBDC, Sharon King, and help entrepreneurs from an investor s point of view to get all their ducks in a row before they seek funding and I point them to the angel groups, venture capitalists and private equity groups, where potential investors might be interested in their offering.

2 Business Summary Overview for Equity Funding Total of 2-4 pages 1. Executive Summary 2-3 sentences 2. Industry 3. Stage of Your Business (i.e. start-up/early, growth) 4. Problem that your company solves 2-4 sentences 5. What is your product or service? 1-2 sentences 6. What is your opportunity? 5-8 sentences usually includes total available market and sellable available market sizes by quantity and/or dollar amount 7. Competitive Landscape Perceptual map or list of competitors with their size, etc. 8. Your competitive advantage 2-4 bullets or sentences 9. Go-To-Market Strategy 10. Revenue Model How you make money should be detailed 11. Key Management Team 2-3 sentences on background/experience of each key member 12. Financials Budget for years 1-3 Show breakeven point, when you start getting cash flow positive 13. Dollar Amount Seeking to Raise & Valuation 14. Use of Funds 15. ROI 16. Exit Strategy

3 Formats Tips: The 10 slide investor presentation The 10 slide investor presentation is the best starting point for developing your presentations. It covers all the important investor needs. You should be able to deliver the presentation in as little as 8 minutes, as this is all some of the funding forums allow. If you have 10 or 12 minutes, you can verbally elaborate more detail; don t add more words to the slide. If you are given 20 minutes to present, you can add a few additional slides (more detailed financial projections, current customer details, more complete competitive analysis). You want the audience to listen to you, not read or think. Don t put everything on the slide, keep it simple. Add the detail verbally. Your audience can read at least 5 times faster than you can speak. Provide a lead title, 4 (optimum) to 6 (maximum) bullet points underneath and a concise conclusion. The lead title and theme is the conclusion you want the audience to remember from the slide, not just a topic; e.g. $5 billion addressable market growing at 20% annually, not Market Size. Each bullet point is a summary; you add the important detail verbally. Have all the bullet points presented at once if you are doing a power point presentation; adding them one at a time distracts the audience from listening. The audience will read each slide in 5 seconds, understand what they are going to be told, and then listen to what you are saying. Never read or repeat the written words verbatim. The audience has already done that. Use simple graphics and large fonts (24-32); many of the presentation rooms are quite large, and your most likely investor may be sitting in the back row. No cute animation unless that is your business. Executive Summary The executive summary is a 1-3 page text version of the 10 slide presentation. It includes many of the points you make verbally during your presentation. Again though, don t try to get to much detail: it s better to make the summary more readable by using bullet points, tables or graphs. Stick to facts, no platitudes. Elevator Pitch The elevator pitch is a 1-2 slide summary which you can easily verbalize in 2 minutes. It is a recap of the concise conclusion statements on each of the 10- slide presentation slides. Practice the verbal presentation until it flow easily and automatically. On all of these presentations, include a contact information line. Always store the presentation files using a complete description (e.g. ABC Inc Investor Presentation), as these are often submitted or transmitted electronically.

4 Investor Presentation Content (the 10 slide presentation) 1. Cover (usually shown as you walk up to the podium) Organization name Tagline value proposition: what you do, very simply stated Presenter s name and title Contact information (location and address) 2. Problem Identify your industry and describe the need of the marketplace (the pain you re alleviating) Size the potential addressable market Focus on current market not research on future size potential 3. Solution Describe your product/service and how it solves the problem Minimize in-depth technical explanations, focus on core benefits Compare to existing solutions 4. Business Model Explain how you make money, who pays, how much Discuss customer retention capabilities Highlight future product/market extensions Identify the stage of your business (startup/early, growth ) Discuss protectable position, core competencies, and competitive advantages 5. Marketing and Sales Explain target market penetration strategies Discuss channels of distribution and partners Discuss current customers Provide history of customers Convince your investors you can get paying customers without huge marketing expenditures 6. Competition Discuss current competitors, how they compete Discuss emerging competitors or technologies Convince audience why you re good and will succeed, not why competitors are poor, what s your sustainable advantage 7. Management Team Describe key players and their relevant experience Include outside board of directors/advisors if they have relevant expertise and backgrounds Include professional advisors only if they have obvious name recognition Discuss holes in the team, how and when you plan to fill them

5 8. Financial Projections Provide 3-5 year forecast of revenues, income and cash flow (EBITDA) Discuss key assumptions and metrics (number of customers, launch dates, headcount) Demonstrate it s a bottoms up forecast (numbers of customers) not a top down (3% of a $10 billion market) Add levels of detail (monthly breakout, gross margins, marketing costs) only if important to understanding profitability), save for in depth sessions 9. Funds Required and Use of Funds Indicate amount of funds to be raised and the ROI, use precise amount, not a range Indicate amount current investors are willing to provide (if significant) and related ROI Provide detail on how amounts will be used Avoid using new funds to pay old debts or payables if at all possible; at least just say it s for working capital 10. Recap and Milestones Restate current status and positive traction Indicate milestones new financing will support Recap cash flow breakeven and profitability timetables Indicate timing of exit event (avoid naming possible acquirers and don t estimate investors returns unless they are very unsophisticated) Close with expected timing of fund raising (not too optimistic) and a call to action step