If you find yourself presenting to investors, here are a couple of tips. These are in addition to market opportunity-competitive matrix-deal issues, which I assume would also be covered. These are the items I hope will be covered because they present me with a comfort level that will lead to a partner-based relationship with you, the entrepreneur.
1. Understand the principle of risk reduction and its role in your business. Explain how, since the beginning of the company, you have identified the critical risks that you face and how you have successfully and quantifiably reduced or eliminated them. “Reduce the biggest risks with the smallest dollars,” is the underlying idea. Tell me that the next level of funding will reduce specific, measurable risks quantifiably beyond the value of the investment. This is your added value. Identify the next level of funding, if there is one. Tell me what they would consider to be the biggest risk reducers. Explain how you will get there. A lot of “why this is a great product” in place of this kind of thinking makes me nervous.
2. Understand the testing concept as it relates to reducing risk. Show me that you have thought about these critical risks and have ways to test them swiftly, accurately and cheaply. The most probable outcome is that the product will need tailoring or even alterations. That’s fine when it’s swift, less fine when it’s six months and $100,000 later.
3. Explain your valuation in terms of others in your industry/market/stage. While I suppose there is a place for a breakthrough idea by a first time entrepreneur that’s a good bet at $12MM preval, I have yet to see it. It’s a shame to see a potentially good idea dragged all over town because the entrepreneur is peeing in the well. If you have a good grasp of comparables for your industry and stage of business that’s great and will make a more interesting conversation.
4. Do have reasonable skin in the game expectations. Don’t show up looking for a $250,000 salary and the repayment of the $100,000 of working capital you’ve put in the company up until now. If you do ask for this you may as well ask for a ride on the investor’s flying pig, as well.
5. Know your audience. If your product is a new surgical appliance try not to get into a knowledge debate with the surgeon in the audience. Work hard to inform yourself of who is in the audience. Talk to their expertise; engage them in discussion.
6. Pass the “Congruity and Integrity” test. Bet that someone in your audience will know everyone you’re referring to. If they are interested in your business, they’ll make those calls. Better to understate. Modesty isn’t a virtue for nothing.