Someone told me that me that the Bravo “Start-Ups” TV show had been rehearsed, which included a presentation to a potential Angel investor. What I observed was that the presentation was so weak and spontaneous, it couldn’t have been rehearsed. And sadly, the style and content for the Angel presentation were so weak, I knew that the Angel would not be attracted at all and that these entrepreneurs were fund raising neophytes.
All fund raising presentations follow a simple formula. I have witnessed many Wall Street presentations by CEOs of publicly traded companies to investment bankers, and the same by start-ups to Angels and VCs. They are in no way different. All contain common critical keys to a successful PowerPoint presentation. And they are structured with the following stringent rules:
- Time Alloted: 58 minutes. Even though technically the time dedicated is usually one hour, I generally anticipate 58 minutes, because 1 minute is wasted through introductions at the beginning, and the final minute is dedicated to the closing.
- Actual Presentation Time: 12-15 minutes. The presenter should practice the presentation assuming no interruptions, and, when measuring against the clock while speaking at moderate speed, the methodical presentation should not last more than 12-15 minutes! The presenter should practice sufficient times to get a feel of the time being used never to exceed 15 minutes. I always place my wristwatch in front of me to keep track.
- Complete the Presentation!: I am a strong believer that there will be interruptions and questions being addressed to the presenter. There could be countless banter or serious questions on specific slides. Regardless of the interruptions, one always needs to reach to the end, even though the presentation might be rushed once the hour is nearly exhausted. One should articulate every slide and the most important slides at the very end always show financial pro-forma and the capital being sought.
- Don’t Read from the Slides!: A common mistake is to read word for word from each slide. Don’t assume that the audience is illiterate. The best presentation practice is to address the major points of each slide, and articulate statistics, details, sources, and any other supporting information that relates to each slide from memory. This procedure means that the presenter is well prepared, has done his/her homework with regard to any information directly related to the company, competitors and the industry. Investors are always impressed when the presenter can come up with data reinforcing the business plan without looking at the slides or explaining statistics not even shown on the slides. Obviously, if challenged by the audience, the presenter must know the sources.
- Focus on the Company!: The audience arrived to hear about the company at hand, not about other companies, not about the family, not about the weather or even the traffic or travelling conditions of the day. These are mental detours that will distract or even dissuade the investors – and certainly no “ass kissing.” That audience has heard every story imaginable. Stay focused on the Company.
- Use an overhead projector: There is nothing more distracting than looking at a notebook computer or a small screen for an investment presentation. Second, one cannot anticipate the number of guests arriving with the investor. So, if one has several participants of an investment team, a small screen is not an effective presentation tool. Don’t ever do a presentation without a projector. One can borrow or rent a LED projector or even purchase one that can serve multiple purposes if the budget allows the expenditure. Projector prices have dropped tremendously; these units are very affordable.
- Make each slide simple and to the point!: Whether one is raising $300k or millions of dollars, every slide is designed with the right color background and content to get a simple message across. Wall Street banks hire professional A/V personnel specifically to design their presentations for limited partners, including the selection of the “right” background hues and a standard industry accepted typeface. The slides should include the business plan major points but not have any distracting or superfluous graphics.
- 2 Critical Slides Should Show Sources and Uses of Funds and Capital Being Sought: These numbers should be near the tail end, but should be simplified for the audience. The closing slide should bullet point the total presentation.
- Only One Presenter: At each Wall Street presentation, the CEO solely makes the presentation. It should be same even for a start-up. He/she will make that presentation from beginning to the end.
Going back the Bravo TV show, now you can see why I felt that the presentation by the brother-sister team violated every hard fast rule above. First, the brother speaks about 42 other companies. Why would anyone say that? Imagine going on a first date with a beautiful woman, who immediately tells you before you finish dessert, that she has 42 other boyfriends. Not a way to start a relationship! Most importantly, the potential investor only cares about the company he came to do due diligence. He is focused on that company alone and his potential investment will be relegated to that company. Now he is concerned that this manager will be distracted by the 42 companies.
The presentation was jointly done by the brother and sister, not by one person. In a corporation, only one person is in charge – the CEO. No company is a partnership. It is a pyramidal management structure. Further investors need to know who is in charge – that is why they request the presentation – to see how this person handles himself/herself. Any other attendees from the company cannot volunteer any information unless specifically requested by the CEO. The best example is the movie, the “Godfather”, when the Godfather told Sonny never to volunteer any information in front of non-family members. The Godfather must show that he is always in charge. The same rule applies here.
The presentation originated from a notebook on a conference desk. The advantage of the overhead, no one can interrupt the CEO’s slide presentation. The CEO is in charge and has control over the content and the timing. As the TV program showed, the Angel took over the notebook and began to flip through the slides – another problem that hurt any chances for fund raising. That action suggested that the Angel wanted to get this matter over with.
The brother-sister team ends the presentation by indicating the funds needed were $500k. In an earlier blog, I stated that fund raising is another form of marketing – marketing for capital. Part of marketing is understanding the profile of angel investors. Angel rounds tend invest rounds smaller than $500k. The brother-sister team failed to inquire what was the standard angel round for this particular investor – information that could be obtained from the Angel’s website or by simply inquiring around town. The Web is an excellent source to find that specific investment profile. Most importantly there was no specific Source/Uses spreadsheet and the burn rate to support the $500k number.
Not one rule is complicated. And it only takes a week to prepare an effective presentation that will deliver results. It is best to have a perfect presentation that follows these rules and practice with the team. Bad presentations might have the domino effect to reduce the chances for fund raising– any Angel has friends and might discuss the weaknesses of the bad presentation to friends who might be other potential investors – and reduce
the available population of investors. And that becomes a disaster. It pays to do the presentation right the first time.