Wednesday, June 1, 2011

How To Make an Effective Investment Presentation

Special to the Idaho Statesman

Published: 05/04/11

In my last article I wrote about getting the interest of investors by clearly stating the problem your product or service addresses. So if investors say they are interested in learning more, then what?

Typically the next step is an investment presentation, or pitch.

Your pitch is a sales presentation. You are selling your belief that you can execute a business plan that will make the investors money. Of the 60 entrepreneurs who made pitches to the Boise Angel Fund over the past four years, only 25 moved to the next step. More than half didn’t inspire the confidence of investors. Here’s some of what I’ve learned from listening to all 60 pitches:

BE PREPARED

I have been surprised how many entrepreneurs treat this step casually and come underprepared. They stumble through their pitches, they read their PowerPoint slides and they make a disjointed presentation.

BE SUCCINCT

Typically the time allocated to the pitch is short, perhaps 15 minutes or less. Funding Universe of Salt Lake (in which local VC Highway 12 Ventures invested) gives entrepreneurs only four minutes.

You’ve got to get directly to the point of the business proposition quickly. Guy Kawasaki, in his excellent book “The Art of the Start,” says, “I’ve never heard a pitch that was too short … a good one will motivate listeners to ask questions that extend it.”

AVOID THE LIFE STORY

One angel said, “Never have I sat in a pitch wishing the entrepreneur had told me more about his life.” Yes, of course you should be passionate about your business. But get to the point. The investors don’t need to know much about how you came up with your idea, just what it is and what problem it solves.

LESS POWERPOINT

The point of your presentation is not to demonstrate your prowess with PowerPoint. While slides may be helpful in reinforcing your points, the investors are primarily interested in your ability to explain your proposition. If you are going to use slides, avoid distracting dissolving and flying transitions. Put a maximum of three points on a slide. Remember that slides are best used to present bullets, not long dissertations.

DEVOTE ONE SLIDE TO YOUR PRODUCT

Investors want to know first about the problem you are solving — what it is and how big it is.

After you have convinced them that such a problem exists, you can tell them briefly how or why your product or service addresses this problem.

HOW WILL YOU REACH THE MARKET?

Once you have addressed the problem and your product, the next question will be, “How will you get a customer?” Entrepreneurs frequently believe that if they make the product, the market will somehow miraculously come.

The investors know better. You must convince the investors that you have a reasonable plan to distribute your product or service and the cost of going to the market (advertising, sales personnel, distributors, etc.) will be low enough that the business will be profitable.

The entrepreneur who makes a concise and thoughtful pitch that addresses the magnitude of the problem being solved, how his or her product solves the problem and how the product will be taken to the market, will have potential investors saying, “That’s interesting. Tell me more.”

Kevin Learned is a counselor at the Idaho Small Business Development Center, a member of the Boise Angel Fund and the finance committee of the Idaho Technology Council. You can reach him by email to kevinlearned@boisestate.edu.

1 comment:

  1. Recent times when net has so often gossip mongering and clog; your proportion really refreshes me.

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