Investment Pitch Guidance

Pitching for an investment is not an easy thing to do.  It is part art and part business acumen.  The short version is the pitch should mimic a great business plan in structure and flow, but be told as a story.  It ultimately depends on your style of presentation, but the most straightforward delivery is always the easiest on both parties (one slide per):

  1. Cover Page with logo – start with your background and WHY you are doing this.
  2. Statement and magnitude of the problem – what is the problem, how big is the pain, how are you addressing it?
  3. Product/service – what is your product, how does it address the problem, and why is it unique?
  4. Market overview – how big is the market (total addressable market) and what niches do you intend to exploit in what order (market segmentation, “beachhead” strategy)?
  5. Competitive landscape – who else is out there, what do they look like, and how will you win against them?
  6. Target customer value proposition – who is going to buy your product, why will they buy it, how much will they pay, and what is their ROI?
  7. Business model/marketing plan/sales plan – how will you make money, how will you get your message to your market, how will you sell to them?
  8. Financials – how much do you need, how will you use it, what are the projected returns, and how and when do I get my money back (read: exit strategy)?
  9. Team – why is this the right team to win in the marketplace, why should the investor trust you?
  10. Summary and thanks with contact information

What NOT to do!

DO NOT PUT VIDEOS IN YOUR PRESENTATION! EVER! They suck the life out of the room and distract from you. DO NOT DO A LIVE DEMO! EVER! Nothing wipes a potential investment off the table faster than a failed demo. DO NOT HAVE TWO PEOPLE GIVE THE PRESENTATION! EVER! Two speakers dilutes the message, breaks the engagement, and distracts the audience. DON’T RUN LONG! EVER! Being efficient with investors’ time shows maturity and respect. Otherwise, you will lose their engagement.

What to do

You want your audience focused on you, not reading your slides. Some presenters like more slides, some people like less.  Plan for 15 minutes (in this case, 1.5 minutes of talk per slide or adjust accordingly) of pitching and the same in Q&A (generally). Include only the relevant, salient facts that make your case most truthfully and appropriately. Do not put prose in your presentation, just bullet point the talking points – 5x5x30 is the rule: five bullet points of five words each in 30 point font.  Stay away from industry jargon and buzzwords, they sound trite or erudite and are off-putting.

Make sure you describe the product/service, but do not deliver a dissertation on your product. IF YOU CAN’T DESCRIBE YOUR PRODUCT IN ONE SENTENCE, START OVER. The first mistake most people make is focusing 90% on the product and 10% on the market, competition, business model, financial projections, and exit strategy. The opposite is the correct way to do it. Investor’s foremost desire, once they understand your product, is to know you understand how to compete, make money, and return capital. It is not about what you want to tell them, it is about what they want to hear. Strive for elegance in simplicity. In the investor’s mind complexity is not a barrier-to-entry for fast followers, it a barrier-to-entry for investors.

The investor does not care that a razor is a hollow cylinder that is approximately six inches long and .3 inches in diameter, which is the minimum physical requirement to hold a series of hardened steel blades that are .01 inches thick by one inch long honed with a diamond to incredible sharpness and durability.  He cares that it removes facial hair and makes him more attractive to the opposite sex.  Sell the value of your venture/technology/service, not the structure or nuts-and-bolts of the IP.

Raising capital is a relentless pursuit of credibility. Be respectful, be intelligent, be truthful, be succinct, keep it simple, and get to the point. Leave out the hyperbole, investors see through that immediately and you lose credibility. You need to illustrate the BIG picture in the form of a story with a logical flow that the investor can relate to (personal experience, industry example, business case). Use simple graphics and charts that are easy to understand to explain your venture whenever possible.  Nothing sells better than sales traction with a compelling marketing and sales plan.

Investors genuinely care and want to help you. Remember, you are pitching to folks that are experts in some sort of business, just not yours. Treat them with the respect they are due. Q&A is the MOST important part of the pitch. Leave more time for discussion than you use to pitch. Otherwise, you will lose your audience’s attention and investment. You want your audience to ask meaningful questions – this shows engagement.  If they don’t ask questions, you have lost their engagement and are not going to get their investment. Let them be the smartest people in the room, but have the answers. They will guide you to what is most important for them to make a decision on an investment. Once you have sold, stop selling….that is called “unselling” and it works marvelously.

Final Thoughts

We strongly recommend watching Simon Sinek’s TED talk: http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html. It will change your concept of sales and marketing….and raising capital, which is essentially marketing and selling shares of your company!

Practice delivering this presentation in the mirror and time yourself. If you don’t like your presentation, no else will.

This is not rocket-science. Give investors what they want.

Good hunting!

Copyright Eric L. Dobson, 2016

@edobson865 | @angelcapitalgr | www.linkedin.com/in/ericdobsontnwww.facebook/angelcapitalgroup

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  • Leonard Knight
    Reply

    Great advice! Are there any deal breakers if I’m interested in pitching for seed capital to someone like ACG? For example: is there a low limit for exit that would not work for the investors? Does there have to be an exit (liquidity event)? Of course I know these answers but thought others might not.

  • Eric Dobson
    Reply

    Great questions! Typical deal breakers are absurd valuations, one-man band startup teams, poor financial projections. We typically expect to see a company that can command $15 – $30M in top line revenue in five years before we will consider them seriously. There are a few markets that we simply don’t investing, like real-estate, fashion, or food/bev. That is not so say those are not great opportunities, it is to say we don’t understand the market forces in those areas. We know what we do best.

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