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What do investors look for in a good pitch?

Tuesday, 5 March 2013 | By Steve Torso

Do you have any good tips on how to present to a potential investor?

 

Are there certain things they really like or dislike in pitches?

 

In the last four years, Wholesale Investor has held close to 50 investor events for companies who are in the capital raising phase.

 

What always fascinate me are the different responses between poor presentations and great presentations.

 

Below are some tips garnered from these presentations to ensure you stand out from the crowd for your first presentation:

 

1. Quality information is more important than quantity

 

When companies present at our events, they are provided 10 minutes to showcase their company in front of 100 to 200 investors and industry participants. Often, due to their enthusiasm, they cram their PowerPoint slides with far too much detail.

 

The best way to think of an investor is as someone with Attention Deficit Disorder. Your role when you present is to simply capture their attention, to have them wanting more information.

 

2. Know your audience

 

One of the biggest mistakes companies make is that they expect investors to have the same level of technical knowledge as you do. We see this with scientists, geologists and programmers who always get tied down in detail.

 

One of the great lesson pitching lessons to remember is that entrepreneurs need to be able to explain their business and opportunity without going into technical details.

 

3. Connect the known to the unknown

 

With many technology-based companies, you may need to explain to investors something which is quite complex; however, your job is to make it simple to explain.

 

A great example is one of our biotech clients. They have a very complex technology which is aimed at targeting cancer cells.

 

To demonstrate their technology, they use a tennis ball and describe how their technology works in targeting the furs on the tennis ball (the cancer).

 

It is a great and simple way for you to understand how their technology works.

 

4. Showcase your management team

 

According to our surveys, one of the key aspects investors look at is your management team and their experience. In a lot of ways this is the branding aspect of capital raising. Investors want to see who else is involved with the company, their experience and their credibility.

 

When you present your management team, ensure that you highlight their credentials in relation to how it serves your company and the objectives you are aiming to achieve.

 

5. Present with energy, clarity and enthusiasm

 

Whilst this tip may sound obvious, we have unfortunately sat through many boring presentations.

 

One of the biggest mistakes I have seen entrepreneurs make is reading their presentation from an iPad and forgetting to connect and engage the audience.

 

One thing you must remember is that investors like to see you present because they are fully aware that over the course of your business life you will be presenting/pitching your business hundreds and thousands of times to investors, clients, suppliers, new staff members, etc.

 

The reflection of how you have pitched your business to them, will translate to their thoughts on how it will be presented to other people who come across the company.

 

6. Be clear on the opportunity for the investor

 

a) What’s the opportunity for the investor?

 

What you don’t want is to get to the end of your presentation and investors ask, “So what was the offer?”

 

b) Be clear about how much you are raising, what you intend to use it for and the additional ways a potential investor can add value.

 

7. Deal-breaker statements

 

These are some statements and actions to avoid:

  • If we just capture 1% of the global market
  • Our company will be the next Google
  • I am raising the money so that I can leave my full time job
  • Our financial projections are conservative
  • It’s an odds on gain
  • We have no competition and are the only ones doing it
  • I needed the investment yesterday

Summary

 

The underlying elements an investor is looking for are trust and respect. You could do everything perfectly in your presentation, but if they don’t trust and respect you, there will be no deal.

 

One of the best presentations I have seen in recent times was by one of our recently ASX-listed companies called Indoor Skydiving Australia Group.

 

The company presented with confidence, energy and passion. The presenters were well prepared, highlighted the main areas of the offering and connected with the investors.

 

The slides were professionally prepared and reflected the quality of the business.

 

Before and after the presentation, they went to as many guests who were there and introduced themselves and every guest as a potential investor.

 

They have raised just under $8 million and have now successfully listed on the ASX.