GUEST POST By Tim Taylor "The Pitch Coach" from Silicon Valley (http://www.mypitchcoach.com/
The key to a successful angel group presentation is to keep in mind that your objective is to get people in the audience thinking to themselves “This is interesting enough to go to due diligence”.
Given that, in a 10 minute presentation you have the best chance if investors of all backgrounds (not just experts in your business) remember the following three things:
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There’s a big problem
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You have a unique solution and, if applicable, customers buying it
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You have a team that can do it
You have 10 minutes with 10 minutes Q&A, they are most likely only going to remember those three things. In my opinion, you are better off making three points two times rather than six different points in the same time frame.
To that end, we suggest that you include the following slides in your presentation (excluding title slide):
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Problem (2 minutes): Explain the problem in a way that a smart business person who knows zero about your field gets it (think explaining a social networking measurement software to a medical device expert).
It’s most effective when you get to the relatable business or human problem that EVERY company I’ve worked with over the last 15 years faces. In simplest of terms describe how difficult or ineffective it is to handle the problem with current solutions. -
Solution (2 minutes): The most effective way to describe problem and solution is to think in its most basic form about what life is like for someone (be it a business or consumer) before and after your solution.
Most commonly, it’s things like:
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wasted time or money,
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medical and resulting health and financial risks
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suboptimal entertainment experiences (think LP vs. .mp4),
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difficulty connecting needs to solutions (like traveler to travel info) etc.
which characterize the problems with the before and when you fit your story through that lens the after becomes easier to articulate.
Once you articulate the solution, that’s the time to tell them how big the market is. Whether your market is $100 Million or $100 Billion or anything in between, I believe that every Total Available Market (TAM) calculation is flimsy. I’ve seen entrepreneurs spend days trying to figure it out, which is almost a total waste of time.
Spend a little time and make a reasonable estimate. Remember, you are solving for getting them to due diligence. And precision of TAM is not a determinant of making that happen.
It’s worth noting that these two slides, BY FAR, are the hardest slides of your presentation. First, because it requires you to step outside the details of your business and articulate with words that you typically don’t use amongst your team. Second, because you understand how important this part of the presentation is.
You get that if you don’t pitch these clearly and compellingly you’ll get the dreaded “I’m sorry, what do you actually do?” questions which I’ve seen SO many times!!
I promise there’s a near direct relationship between simplicity and engagement in angel investor presentations.
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Competition (2 minutes): Think about the two major reasons your customers have or will buy your solution. Commonly these reasons include:
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Holistic vs. Point Solutions: I’ve seen hundreds where the key value add is instead of using 5 cobbled together solutions you can now use one, yours!
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Simple vs. Complex: This can be either in implementation (where often the company promises a $5k implementation with no consultants vs. a $500k implementation)
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Effective vs. Ineffective: At its simplest level this means that your solution actually works or works way better than what’s out there, often I see this with medical device or solar companies (but not limited to that)
There are a ton of others but there’s one giant one missing: Expensive vs. Cheap. Most times cost is an element that companies can compete on. And it’s a choice I see made because you haven’t clearly articulated the first two slides.
Whatever two attributes you choose they should be mostly the exact same points you made on Slides 1 & 2. (Remember, re-emphasizing those points are CRITICAL!). And finally, you control the narrative so whatever attributes you choose you can describe it how you like (meaning Simple vs. Complex can be explained a million ways!).
There’s good news and bad news at this point. The bad news is that these three slides are the hardest and most important to engagement so they aren’t easy.
The really good news is that if you nailed them, the rest of an angel group presentation is a business school exercise mostly.
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Go to Market (1 minute): In my 15 years of doing this, there has been little to nothing new invented in the world of Go to Market. In most every case it’s your company selling through sales people (inside or out), internet marketing or channel partners through to a big target market that you’ve loosely defined in Slide 2.
There’s not much more info needed on the slide, however there’s a major point here. If you have someone on your team who has managed a Go to Market or Marketing/Sales Channel model like you are presenting then you MUST mention that. Nothing gives investor more comfort than investing in people who have successful experience in what they are doing.
That being said, if you don’t have that person, it seems simple, but don’t say that you do. Often start-ups have early momentum because of the CEO or investor connections, etc. It’s not a sustainable approach. If you are raising money to hire that key exec, just tell them. If you have someone in the wings waiting for funding, it’s fine to mention them. -
Financials (1 minute): I have a Wharton MBA and am a CPA and I can say the only thing you know about financial projections with 100% certainty is: every number is wrong.
Given that, I suggest on a financial slide you present/cover the following: -
5 years of Revenue: I suggest you use a simple 2D stacked bar graph. Snazzy cool looking graphics are a waste of your energy here. And when I suggest stacked, it most often works if you have 2 or at most 3 meaningful sources of revenue. If any one source is less than 10-20% of the total, combine it with another.
I should note here that anything beyond Revenue is most appropriate for due diligence. They will eventually want to see some version of P&L and Cash Flow, just not in a 10 minute pitch. Nothing so derails a presentation like talk of COGS or headcount during a pitch that you want them focused on the business.
On a side note, I don’t subscribe to the “These numbers are conservative” garbage as a way to engage investors to due diligence. Present exciting defensible numbers on this slide and prepare to speak about it in more detail in due diligence. -
Key Revenue Drivers: Highlight at most 3 levers (preferably 2) that drive the business. Usually it includes things like set up fees or machine purchases, per user or monthly fees, ongoing materials purchasing, consulting, etc.
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Acquirers (not necessary presented on slide): Yes, you are building a company to last AND yes, the investors in the audience are often thinking how fast will I get my money back and at what multiple. Speaking briefly to the M&A environment in your business means you get both of these things.
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Deal (not necessarily presented on slide): Punch out the main points of the deal which are traditionally:
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How much money you are raising at what valuation
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How much you’ve raised to date
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What you will use the funds for
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Management Team (2 minutes): My suggestion is you put no more than 4 people on the slide, 3 works just fine. The 3 MUST haves are:
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CEO
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Technology/Science, etc. Genius
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Sales/Marketing/Thought Leadership Person
I get that you might not have the third and the first might be the second too. My point is that investors are investing in you. These three are the most important people in any start up.
I suggest you use logos whenever possible! They look way cooler than words!
I’m leery when a start-up loads the slide up with advisors in an effort to beef up the staff. For advisors I recommend including an advisor who may be an investor who is part of the group or a professional who provides specific identifiable value.
If you are a software company in the travel business and a former high ranking Expedia exec is an active advisor yes. If you are a medical device company and you have an expert in the field with large influence that can help the sales of your product, yes.
If you have a fairly well known advisor in a non-related business or who is completely uninvolved with your effort and will likely not return due diligence calls, definite NO!
If you nail the above six slides, clearly and compellingly, you give yourself the best chance to make that next meeting, which is the name of the game.