If you get an opportunity to present to either an individual business angel, or a group of investors, then you’ve done well already. Investors see hundreds of business plans, but can only personally see a few potential opportunities.
You need to have done your home-work to prepare, since you have to make the most of these chances. We’ve put together a few of the key elements that Investors have said would influence their decision to invest or not.
1. Know who you are presenting to
Every investor has preferences on which sector, or at what stage of the business they wish to invest. The chances are that if you’ve got this far you are already a good match, but check. Clearly if you are just one of many presenting to an unknown group from a “speed-pitching” or other conveyor belt event you don’t know who is in the audience.
Otherwise always find out as much as you can ahead of time about names of attendees, where that investor/group have invested before and their backgrounds.
You can shape your presentation to then strengthen your case, rather than undermining it with inappropriate statements, playing to the Investors preferences & hot buttons, instead of inadvertently rubbing a sore point.
Ask ahead of time what their investment criteria are. Larger groups will often have specific investment rules. Putting the question to an individual investor may cause them to give an insight into what they think is important, but if they aren’t sure, don’t push them.
2. Find out the format of the presentation
- How long have you got?
- Is it a more of a round-table meeting to discuss, or are they expecting you to stand up and do a presentation?
- Are they expecting a full power-point presentation?
- Do they just want you to talk them through the opportunity?
3. The presenters
Ideally it would be not just you attending, an additional person can give you a break in order to think and add detail knowledge. You should not go “mob-handed” though, check what the investor may prefer.
What to wear? Well it does depend on the sector that you are in and the background of the Investors. A suit and tie is appropriate for many industries and even now days shows professionalism. However, “smart casual” is appropriate for technology or entertainment businesses. Torn jeans and scruffy tee-shirts are never right.
Attitude – never be arrogant, it switches investors off immediately. A positive, confident style without being cocky.
Rehearse your presentation. Avoid continual “umms” and “ahhhs”, listen to yourself as you talk. Look relaxed, alert and alive. Bright-eyed and bushy tailed. It’s often all in the mind, you can look like that, take notice of your mannerisms in the rehearsal. Don’t over do it and look manic!
KNOW, your market sector thoroughly. Such that you can explain why your assumptions, strategies and forecasts are accurate.
The investors should already have an Exec Summary or business plan already (unless you are on a conveyor-belt event), but bring spare copies anyway.
Have hard-copies of any material/slides that you refer to in your presentation that you can leave with them. Don’t give them before the presentation, or they will be reading rather than listening.
Whether you are simply talking round a table, or standing up with a more formal presentation, there are key elements that you must cover:
- If not already done, introduce yourself and any others attending. Thank the Investors for their time. Create friendly but professional atmosphere.
- Tell them succinctly what the business does, where it is based, legal status (ie limited company), who owns it and briefly why it is different. You’d be surprised how often at the end of a presentation it’s still not clear what the business is about. Clarity but not verboseness.
- Facts about the market. Size, growth rates, demographics. Show you are an expert in your market.
- Describe yourself/management team. Show why they can trust that you have the capabilities to deliver what you say. Are there any gaps in your team, describe how will you fill them.
- Present your financials. Don’t take too long to get to this point – Investors are often impatient to get to the numbers. If an existing business, show past revenue & profit. Give your forecast for the next 12 months and then a yearly total for each of the next 2 years. By forecast, we mean Sales, Costs, Profits/losses. Explain any assumptions and why you have forecast these numbers.
- Explain what investment you are looking for and how you will use that money. Are you also looking for them to contribute time, expertise or contacts? Get a feeling beforehand if possible, whether they are looking just for a straight investment, or want to play a more active role.
- Say what you are prepared to exchange for their investment. 75% of deals break down on the valuation of the business. Be realistic, if you want 100k for say 10% of a business that hasn’t even started, you are valuing it right now at 1M. If it is a complete start-up, you may be talking about 20-40% of the company. One that is already trading will be able to negotiate much less.
- Show you have thought about how the Investor will get their investment back. Not many young businesses float on the stock market now days. Perhaps you are aiming to sell it to a larger company, maybe you will offer to buy back the shares at some point at a higher rate. Business Angels tend to want to stay longer than Venture Capital, perhaps 3 – 5 years, up to 7 years in some cases.
- Avoid over hyping. Investors have seen all the same claims before and are cynical. Always use evidence and state where numbers come from.
- Show you have done work to prove your product/service will sell. Investors know that not every great idea will turn out to be commercial. Show market research if not yet in a position to show sales. Make sure it is objective, not that you simply asked your family & friends.