Preparing for your next investor presentation

09 Nov Preparing for your next investor presentation

With a number of venture conferences this fall, including the upcoming MidAmerica Healthcare Venture Forum that is being held in Madison this year, several companies we are working with are preparing for investor presentations.  This column covers a number of best practices for presenting to investors, whether they be angel, venture capital, or strategic investors.
Identify your Objectives
Many companies try to accomplish too much with their initial investor presentation.  Rarely do term sheets get prepared after the first presentation, let alone checks, unless it is a modest sum of money from an angel investor who is already inclined to invest.  So what is a good objective for an initial investor presentation?  In most cases, a good objective is merely to get to the next stage of the investor’s evaluation process. In some situations, the next stage could be a second presentation to a broader audience or a different group within a strategic investor’s organization.  In other cases, it could be to start a formal due diligence process.  Try to identify the prospective investor’s evaluation process prior to the initial meeting to help shape your objective for the presentation.
Know your Audience
As is true for most presentations, your investor presentation should be tailored to your audience.  Prior to the meeting, try to identify who from the investor’s organization will be present during the meeting.  If it is going to be primarily business or finance people (as opposed to technical or scientific), you can expect the questions and discussions to center around their areas of focus and expertise.  Also, see if you can identify who in the room is the ultimate decision maker, gatekeeper, or influencer who can enable you to get to the next stage in the evaluation process.  Adjust your presentation accordingly.
Adhere to the Investor’s Rules and Be Respectful of your Audience’s Time
Sometimes, investor groups or forums have particular rules about presentations.  They can limit companies, for example, to a certain number of slides, certain types of slides, or a specified presentation duration.  Adhere to their rules.  If you have a one-hour meeting with a VC or strategic investor, don’t bring a 50-minute slide deck to the meeting (more on this in a bit).  Unless going over the agreed upon time slot is driven by investor questions or two-way discussions, don’t be guilty of holding the investor audience hostage by continuing on with a presentation that seems to never end; a long presentation won’t make your case for investment more compelling. 
Presentation Format and Investor Slide Deck Composition
Assuming you have identified your objectives for the presentation, you know your audience and the restrictions you are under for the presentation, what should the presentation look like?  Usually, the presentation is given by one or two members of the management team (e.g., the CEO and CSO/CTO or CFO).  The appropriate number of slides of an initial one-hour meeting is somewhere between 15 and 25 and should take no longer than fifteen to twenty minutes to present, without interruption. Some people even advocate that 10-15 slides is more appropriate. Regardless, for most people, it is a time consuming process to get the presentation that short and succinct.  If the investor is interested, you will have no problem taking the entire hour.  If the investor is not interested, well, everyone can spend the balance of the hour answering emails.
The breakdown of the slides typically works something like this:

• Speaker introduction and the investment that you are looking for  (1 Slide)
• Company introduction and “elevator pitch” (1-2 Slide)
• Identify market(s) and current market problems/opportunities (2-3 Slides)
• Company solutions and product(s) to address market opportunities (2-6 Slides)
• Current development status of solution/product line (1-2 Slides)
• Competition (1-3 Slides)
• Marketing and distribution/regulatory approval process (1-3 Slides)
• Revenue model(s) and financial history and projections (1-3 Slides)
• Use of funds (1 Slide)
• Management team (1-2 Slides)
• Anticipated Exit and Timing (1 Slide)
• Recap the 2-3 main points and state the investor “call to action” (1 Slide)

Of course, there can be variations to this format.  For example, a presentation to a potential strategic investor technical team should include less on market opportunities and more on product and technology.
Many times, the initial presentation is the first opportunity that an investor has to evaluate you, which for most early stage angel and VC investors is more important than your product or technology. Presumably, if a prospective investor has read your executive summary/business plan and wants a presentation, you’ve passed the initial screen and the investor is already at least somewhat interested in your company.  So, it is important to remember that you are not only selling them your product or technology, but also you and your management team.
Backup Slides for Investor Questions and Areas of Focus
It is generally a good idea to prepare backup slides to address the key questions that you anticipate or areas that you are likely to be asked to elaborate on if the investor is interested.  This goes back to knowing your audience.  You may also want to develop a system to figure out how to access particular backup slides so that you are not fumbling through the PowerPoint while the investor has to wait.
Miscellaneous Best Practices for Investor Presentations
Finally, here are some miscellaneous nuggets to consider, based on the investor presentations I’ve seen over the years:

• Coordinate in advance the audiovisual requirements (who is going to have/bring what)
• Have a backup plan (e.g., hard copy of slides)
• Use the PowerPoint slides as a guide to the discussion, not as cue cards
• Maintain eye contact with your audience, not the screen
• Let your passion and excitement about your business show through
• Do not say that your company does not have competition or any other naive faux pas
• Walk the fine line between exuding confidence without appearing overconfident
• Address any 800 pound guerillas positively in the presentation rather than waiting for the inevitable questions and what could be construed as defensive responses
• Avoid eye charts (e.g., detailed spreadsheets, elaborate process or flowchart diagrams); more text does not yield a more compelling case for investment
• Similarly, convey no more than 2-3 points per slide, with font no smaller than 24 pt
• If possible, use a good mix of images and text
• And lastly, rehearse, rehearse, rehearse

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