Investor Presentations

Related Terms: Business Plan

Investor presentations are an important but often overlooked aspect of entrepreneurial efforts to secure financing for their businesses. Presentations are particularly important to small business owners hoping to raise money from private investors. Whereas institutional investors such as banks rely primarily on financial statements, business plans, etc., in making their lending decisions, private investors are more likely to be swayed by other factors, such as the owner's vision of a new product's appeal, knowledge of the marketplace, or ability to present a compelling picture of future profits for both the owner and the investor.

Poor investor presentation may close the door on potential avenues of financing, even if the entrepreneur's idea for a new business or product is a good one. "Putting together a winning presentation isn't as easy as it might seem," said David R. Evanson in Nation's Business. "Whatever the forum—a formal dog-and-pony show before a roomful or institutional investors, a clubby luncheon with 10 to 15 wealthy individuals, or a one-on-one meeting with a venture capitalist—founders '¦ have often shown they can shoot themselves in the foot with deadly accuracy." Entrepreneurs and small business owners seeking expansion capital need to make certain that their presentations grab the attention of investors and inspire them.

KEYS TO SUCCESSFUL INVESTOR PRESENTATIONS

Several considerations should be kept in mind when planning a presentation to potential investors. These considerations range from tips on public speaking to recommendations on presentation content.

Tailor Presentation to Audience

Some business owners make investor presentations that are only negligibly different from presentations that they make to internal salespeople or to customers. This choice—which is often a byproduct of laziness more than anything else—can have a negative impact on the owner's chances of landing an investor. "Topics such as product features, new technology and customer service—the things that matter to customers—are of interest to investors only as part of an overall menu of competitive advantages that will help drive sales," said Evanson. Moreover, no two investors are alike; one individual may have a reputation for daring business initiatives; another may be predisposed toward (or away from) involvement in a specific industry; still another may be most interested in receiving assurances about the competence of the enterprise's management team. Entrepreneurs preparing to make a pitch toward private investors should find out as much as possible about their audience's interests and investment philosophies beforehand.

Judicious Use of Visual Aids

Visual aids should augment the presentation, not dominate it. Slides and overheads can be valuable tools in a presentation, but their use contains a number of potential pitfalls for entrepreneurs. Some people place so much importance on the visual component of their presentation that they flounder in situations where they have to deviate from their script. Others cram their visual aids so full of information that viewers are unable to digest it all, which merely triggers resentment or annoyance from potential investors. However, visual support—when intelligently utilized—can be most helpful in providing context and illustrating key points.

Presentation software programs, like Microsoft's Power Point, for example, are utilized frequently today for public speaking events. Such programs have several advantages. They can compose impressive displays and their content can be altered quickly to reflect needed changes. Moreover, their portability is a big improvement over big slide carousels, overhead projectors, and display boards. But many of the advantages associated with computer displays hinge on a certain level of program mastery and design skill. Always remember: a visually interesting presentation is a very good idea, but substance should always trump style.

Live Demonstrations

It may be tempting for an entrepreneur to make a live demonstration or his or her product as part of the total presentation package, but demonstrations have a pretty hefty downside. This is especially true of technology products, which can end up looking hopeless because of some minor glitch. "As people with sales experience will tell you, the customer has a picture in mind of what the product is and what it's supposed to do," wrote Evanson. "Any uncontrolled situation that distorts that image is ultimately counterproductive to closing the sale." Of course, there may be situations wherein the presenter is pointedly asked for a live demonstration by a potential investor. Not granting such a request may throw prospects for financial assistance in jeopardy as well, so entrepreneurs should be prepared to make such a demonstration if it seems necessary. Finally, there are certain categories of products (generally involving simpler, non-technological designs) that can be demonstrated with less worry for a negative outcome because of a technical glitch. Each presenter has to judge the potential risks of a live demonstration for him or herself.

Relevance

Presentations that spend excessive amounts of time on relatively unimportant points are unlikely to attract investors. Instead, presentations should remain focused on the basic information that investors are likely to want to hear, such as company background, ownership/management background, key employees, product development, market opportunities, existing competition, present and future marketing plans, and financial analysis.

Communication Abilities

This element of presentation encompasses several different areas. First of all, the presenter should ideally be able to speak in an authoritative, confident, and smooth manner. Fairly or not, public speaking ability can make a profound difference in an entrepreneur's success in securing investors for his or her business or product. "There are a number of golden rules in making a presentation and plenty of speakers break them all," observed Sue Bryant in Marketing. "No eye contact. No pauses. Patronizing the audience by putting text on screen and reading it out loud. Writing a speech, failing to rehearse and reading it woodenly. Fumbling with equipment and muttering: 'Now, how do I work this thing. Indeed, Bryant pointed out that excessive use of visual aids can often be traced to a presenter's discomfort with public speaking. Given the importance of a good delivery, an entrepreneur who is uncomfortable with speaking in public should consider investing in a course designed to help people with public speaking and presentation skills.

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