Dec
24
2008

Angel Investment Presentations

I just got an email from another young entrepreneur and he asked a good question that I wanted to answer on my blog. His question was a pretty broad one, but it related to how best to pitch to an Angel Investment Group. First off, let me start by explaining what an Angel Investment Group is. Usually these groups, from my experience, are 15-75 members, they meet every month or two and consist of “qualified” investors that listen to 3-5 investment pitches every meeting. These groups on occasion also hold events to educate both investors and entrepreneurs on issues relating to investment capital.

So before I jump right into my advice on pitching to Angel Groups, let me shed some light onto the process of how you get to that point. The first step is the application process. Sometimes there is an application fee of $80 - $150, and from my experience, most Angel Groups are using an online website http://www.angelsoft.net to accept their applications. This website is a great tool for the entrepreneur as you can upload all your documents, create a quick video pitch and even auto populate other Angel Group applications with the information and documents from past applications. Depending on the group size and the meeting frequency, the group will evaluate the applications and select 5-8 companies to present to the investment screening committee. During the screening process, the company presents a powerpoint presentation to a small portion of the group’s members, and finishes off with a Q&A session and time for the members to give you feedback and advice. Then the screening committee will select 3-4 companies to present to the entire membership with a Q&A portion, which sometimes can come with presentation fees up to $1,500.

In this blog post I’m not going to go into how to structure the slides in your presentations, there is already enough good information out there on this, that I would just be repeating what has already been said. I have found that the Seattle Alliance of Angels have the best instructional guide to structuring your powerpoint presentation. You can download the guide they have created here.

Below I am going to focus on the stuff that I wish I would have know when I started pitching to Angel Groups, as I think some of these things can make or break an investment pitch. In addition to giving you my thoughts, I also asked Eric Pratum, a past applicant screener and part of the screening committee for the Bellingham Angel Group to give his thoughts, which are below mine and in blue italic font.

 

Get Connected - Before you apply to an Angel Group, make sure someone on the screening committee knows you. These Angel Groups get hundreds of investment applications and you need to make sure you have someone on the inside that is batting for you when the members are evaluating those initial applications. I found two ways work really well to get connected with someone within the group, the first is to simply email the group and see if you can get a sit down with one of the members to see if your investment opportunity meets their criteria, or second, ask for an introduction from another investor or company that has been invested in by that specific group.

Derek is absolutely right.  I can’t tell you how many often screening committees turn down applicants only to have a member come back at the next meeting and argue for reconsideration.  I’ve done it.  Other screeners did it.  A lot of times, it’s a matter of you, as the entrepreneur, getting someone to take an interest in your opportunity and then getting them to better explain it to the decision makers.

Relate - Our company is focused around a product (text messaging) which appeals mainly to the 18-28 year old crowd. I have even been to some investment presentations where I am presenting to investors that have never received a text message in their life. With these crowds the first thing I do is put our product into perspective, allowing the investor the ability to see how our product could help them in their day to day life. For our product, which is group text messaging, I simply explain to investors that if their group had to cancel their meeting for something like snow, the head of the group would be able to send a “message” (see how I didn’t say text message, that would confuse people who don’t know what a text message is) to everyone’s mobile phone within seconds to make sure everyone knew about the canceled meeting.

Tie your product or service to as many applicable things in the investors’ lives that you can.  These relations help to build a better understanding of what you are offering.  I can guarantee that an investor that does not ‘get’ your company will not invest in it.

Copy Apple - Have you seen a Steve Jobs keynote? Look at the slides, you see how much information there is on each slide? I feel if you are talking about what each slide says, rather then talking about what each slide means, you are boring people. Remember, people can read, so don’t read them what you already have written on your slides, talk about what isn’t in the slides. (Insert image http://dvice.com/pics/macworlddvicepr.jpg )

Sometimes, it helps to print your presentation and pass it out.  I’m still on the fence about that, but try to follow the 8×8 rule (or less).  No more than 8 lines with 8 words maximum per line.  Really, you need to talk to me.  If I’m a responsible investor, I will read up on your company pre- and post-meeting.  This is potentially your only chance to actually talk to these investors face-to-face.

K.I.S. - Keep It Simple, remember these investors most likely aren’t experts within your industry and if they don’t get what your company does, there is no way they are going to invest in it, no matter how good the deal is.

Derek does a great job of this.  Even though the underlying framework of Tatango is difficult to understand, the premise that they’re trying to connect groups in the best way possible is very easy to understand.  Find something like that about your company and start from their when you deal with investors.

Investors Time Is Valuable - Be grateful for their time both during the application process and after the full membership presentation, as these investors are usually very busy, so make sure they know you appreciate their time.

Once you’ve hooked an investor, he’s going to be hard to shake, but if you do something wrong and he loses interest, you will not get him back.  Like your presentation, your dealings with investors should deal with the most important points first, and if they have time for anything else after that, great.  If not, at least you dealt with the most important issues first.

Practice, Practice, Practice - I’m not joking here, I must have rehearsed my investment presentation at least 200+ times. You should have your investment presentation down to memory, being able to speak to each slide even if they are not there. I’ve had a presentation where my slides were completely messed up, and it didn’t phase me one bit as I had practiced so much that I went through my presentation as if everything was in place, I didn’t need the slides to guide me.

Poor presentation prep will lose everyone.  Great idea, great management, great traction, poor presentation = no investment.  I’ve seen it happen, and it hurts everyone.

Get Comfortable - Getting up in front of a large audience is scary, but if you can pull it off like a pro, this will help build confidence in potential investors. Usually it’s hard to find a big audience to practice an investment presentation, so I usually settle for getting the experience of presenting to large audiences by going to speak at high schools and colleges about my experience as a young entrepreneur.

I was once told that Derek gave the slickest presentation our group had ever seen.  I agree.  He was comfortable and confident, and he definitely knew his stuff.  If you’re the CEO, but you’re a poor presenter, ask someone else to do it for you.

Move Around - Nothing is worse then a presenter being forced to stand behind a computer when they are clicking through slides. If you are doing powerpoint presentations you must have your own remote clicker to operate the slide transitions. This will allow you to move about the room while making your presentation, which will cut investor fatigue issues if you are standing in the same place the whole time. Make sure you also practice with the clicker.

Definitely, you need to have your hands free enough to move so that you can point, make hand gestures, and demonstrate any body language associated with your product or service.  If they hand you a mic, ask if there’s a clip mic or if you can simply go without.  Get both hands free.

Mind Your Time - Most Angel Groups only allow you 10-12 minutes to pitch to their group, I would recommend you build your deck to fit within the shortest time alloted which in my experience is 10 minutes. I’m always amazed that some entrepreneurs get cut off with slides remaining, especially as the last few slides are usually the most important slides as they propose ”the deal” to the group. This comes back to practicing, make sure you are practicing with a timer every time. My investment presentation is 9 minutes, 30 seconds to the tee, the extra 30 seconds allows me to go off on a tangent if I think it can improve the presentation to that specific group. This extra 30 seconds also allows for any unforeseeable things that may happen during your presentation.

There are always questions.  If you’re going to burn Q&A time, make it minimal.  If you can stop your presentation within a few seconds of the 10 minute buzzer without someone having to signal you, that lets me know you’re a pro.

Make It Pop - I know, I know, content is everything, but at least make it look good. What I do is once I am finished creating our powerpoint presentation, I hand it off to our graphic designer to give it the magic touch. This takes no less then an hour of their time and is definitely worth it.

Moving graphics can get annoying and/or just take up time, but a pretty presentation will stick in their heads.  The same goes for video.  It will just eat time, but great pictures can be digested in a split second.

Graphics & Charts Kick Ass - When giving an investment pitch, you are up their to inform and ENTERTAIN your audience. No investor that falls asleep halfway through your presentation is going to invest, so make you slides interesting. Let me preface this by saying this doesn’t mean use clip art or just insert graphs and images that have no relevance.

YES!  Find someone great in Excel and have them make you some good, meaningful charts if you can.

Bring Backup - No need for the A-Team, but you do need an extra copy of the powerpoint presentation emailed to a web hosted email (Yahoo Mail, GMail etc.) on a portable USB drive, a CD and on your laptop, which you have the right adaptors for any visual hookup situation that may arise.

If something goes wrong and there’s no backup, you’re screwed.  You might not get a chance to come back.  Sorry, no investment for you.

Create A Show - I’ve learned this the hard way, whenever you save a powerpoint presentation that you will be using on another persons computer, make sure you save it as a Powerpoint Show, which is abbreviated as .pps This format will save all your images, charts etc. to match what you see on your own computer.

When you’ve spent more time doing presentations, you get used to these things.  It’s painful to watch someone try and explain what the slide was really supposed to look like.

Charts & Graphs NOT Numbers - I always laugh when I see a presenter with a full projected P&L statement embedded into their presentation. You have got to be kidding, how the hell is anyone in the back going to see any of those numbers, or grasp the most important aspect of a P&L which is the trends you are trying to express. When you are trying to show trends in numbers, users, growth, financials etc. make sure you do it with charts and graphs.

If you want to give me some numbers, that’s fine.  What have you already measured?  After that, give me a few anchor numbers, but not too many.  Year-over-Year visuals really help.

Prepare For Questions - Once you have done a few Angel presentations, you will start to notice a few common questions that are always being asked. First, see if you can pre-answer the question, by addressing it within your presentation, if not, make sure you have a well thought out answer and don’t be afraid to have appendix slides which you can reference.

The worst question is “So, what’s the deal?”  Investors want to know: what need you address, why you’re better than other options, what’s the potential, and what you’re offering them.  Get to that in the presentation and then have friends, family members, etc grill you like they’ve never heard of the company.

Get Advice/Reflect - Always ask others for feedback regarding your presentation and always take a few minutes after a presentation to reflect on what went well and what you can work on in the future.

It’s really tough to get investors to respond to you if they pass on the opportunity to invest, but get any feedback you can.  It could be the difference between getting investment after 2 presentations or after 30 presentations.

 

To contact Eric Pratum about helping with your next funding round, see below…

Eric’s Blog: ericpratum.com

Eric’s Email: contact@ericpratum.com

Eric’s Twitter: twitter.com/ericpratum

Viewing 11 Comments

    • ^
    • v
    Hello there. I've got to ask you one thing about the easy saver complaints . did you have any so far? Are you receiving these kind of complaints as well? Thank you for enlightening me and tole me how to invest my money.
    • ^
    • v
    I know well about the angels group and the advice on pitching to Angel Groups which you have given is great..Get connected and copy apple segments very good and acts as a navigator or mentor for the users..Thanks for the writing up and sharing such a good article with us..
    portable screening
    • ^
    • v
    Just to add regarding the relevant topics for investor presentation (taken from www.investmentslides.com) :
    1. Company introduction: Venture Capital and Private Equity funds don’t invest in
    companies or technologies – they invest in people. That means you! Therefore the initial
    section of the investment presentation must present to the prospective investors that you
    and your team can execute the plan – present your experience and expertise and what
    makes you a great team.

    2. Mission statement: Start-up's should use one sentence to state their goal. Don’t be
    afraid to be bold – you are expected to, but keep it short and avoid generalized
    statements. More mature companies, company presentations to private equity funds,
    should include a short description of the company's business and positioning.

    3. Pain and value proposition: whether it is a technological edge, a strong client base
    or amazing manufacturing power - both start-ups and mature companies should state
    their value proposition in a clear (preferably visual) manner. Very often (particularly in the
    event of a startup) it is recommended to introduce the value proposition slide with a
    preliminary slide describing the specific market failure you address.

    4. The product/solution/service: investor presentations should include 2-3 slides
    describing your specific offering. When presenting a technological solution, it is
    important to consider the technical aptitude of the audience ahead of time – investment
    presentation delivered to financial oriented audience should cover your relative
    advantages, but shouldn’t be too specific on technical subjects

    5. The market and competition: describe your market and competitors honestly in 2-5
    slides. Do not try to underplay your competition, investors see many venture capital
    presentations and may have met with your competition… In mature companies,
    investment presentations may contain references to the company's status in the form of a
    Porter 5 forces model analysis.

    6. Business Model: a venture capital presentation delivered by a start up company
    needs to convince that the company has a solid business model that will empower actual
    gains.

    7. Case study/Client base: a VC presentation can be empowered by actual proof of
    concept in a form of an actual client or (preferably in many cases) a canned demo. In an
    investor presentation aimed at raising funds from private equity, a description of current
    client base is important, as it is typically the major asset the company holds.

    8. SWAT analysis (Strength, Weaknesses, Opportunities and Threats): this slide is
    important in mature company's analysis. Nevertheless, it can also be useful in certain VC
    presentation cases

    9. Financials: the message delivered in this section changes from private equity and
    venture capital presentation. In the case of a start-up, the company should prove that it
    can gain significant cash flow from its activity. Mature companies need to provide further
    information beyond future cash flow analysis, as this information is needed for the
    company valuation. This additional information can include balance analysis, changes in
    working capital etc.

    10. Summary: provide one slide describing your offering. Remember to emphasize the
    top key issues you want investors to remember from your venture capital presentation

    You can visit www.investmentslides.com for a full coverage of this specific niche.

    Derek - your opinion?
    • ^
    • v
    Great advice, thanks for contributing to this blog post!
    • ^
    • v
    Thanks Derek and Eric for the great info and David Rose (commenter) for the link to the video (I took notes).

    The "Get Connected" part was very helpful. If you want your company and presentation to stand out, you need as many slight edges as you can get. Definitely a Money-Maker Tip.

    I appreciate the overview of how the Process works as well. That was a big time saver.

    Fyi, because my venture (the one that would need future funding) is still in it's very beginning stages, I think the pitch clinic might not be the best use of time and resources. In the future though, I'll definitely look into it.

    And if anyone was wondering, I was the "young entrepreneur" who asked the (broad) question.
    • ^
    • v
    Thanks. How many presentations have you made this year? What's your batting average Mr. CEO?
    • ^
    • v
    I did my first Angel presentation at the beginning of 2008, and we raised our entire round from that presentation. This current round which we are raising, I've done maybe 10+ angel presentations, and we doing very well in regards to filling the round, especially with the current economic state.
    • ^
    • v
    Thanks again for the chance to post with you, Derek. Something tells me that you could start charging for your own pitch clinics... Now that I think about, how about a joint venture? ;-)

    Reposted over at my site in case anyone's interested in reading this again. :-D
    • ^
    • v
    Thanks again Eric for helping out with this post, greatly appreciated!
    • ^
    • v
    Derek, Excellent points! At New York Angels, we now insist on mandatory presentation training before any entrepreneur is allowed to pitch to our group. I did a version of that training for the TED conference a few years ago, which they filmed and have recently posted on their web site. It is an excellent way to learn all about pitching angels and VCs in 14 fast minutes [grin].

    http://www.ted.com/index.php/talks/david_s_rose...

    Also, not only is Angelsoft the platform used by just about all of the world's angel investment groups to process their funding applications, but it also hosts a free Group Finder which will point you to the angel groups closest to you, and let you fill out a 'Common App' which can then be sent to whichever groups you want.

    http://www.angelsoft.net

    Thanks for your useful advice. The better everyone understands the process, the better for both entrepreneurs AND investors!
    • ^
    • v
    Thanks David for posting that link to your TED presentation, very useful! I have seen more groups require training before pitching, very good idea in most cases. Keep in touch and thanks again for the comment!
 

Trackbacks

(Trackback URL)

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus