I continue to be shocked by the number of so-called investor presentations that I get that are really repurposed customer presentations that focus primarily on a detailed technical description of the product and they give a detailed product features-benefits analysis. These presentations then bolt-on some information about the market, the competition, the team, and some financial projections. This is the Frankenstein approach to the investor presentation, and it just doesn't work. I made many of these same mistakes early in my entrepreneurial journey, until I had lots of experience with professional investors and what they are seeking in an investment.
Focus on how you will make money.
Investors do care about your product and your idea, but they care more about how you are going to make money, and, in turn, how they will make money on an investment in your company. This deals with your business model.
The keys to a successful business model are a potentially large and rapidly growing market, solving a big problem for target customers, a value proposition that can drive profitable growth, and a sustainable competitive advantage. If all those things are involved, then you need to show why you and your team can win, and why the market opportunity is imminent.
Speak to investors in their language.
Angel investors and venture capitalists want to know about your business model. This means that you need communicate about key financial metrics that your company has achieved and will achieve in a give timeframe. They will want to know why and how you can accomplish these things in a given timeframe and how much it will cost to make that progress.
How much money do you need and what will it be used for? What progress can you make with those resources? Investors expect you to answer these questions.
Do your homework and learn about target investors.
It is critically important that you know your audience. Not all prospective investors are the same. Be willing to tailor your executive summary for your audience, at least for the most important target investors. For example, if you are talking to a purely financial investor, you tailor what you are saying to that audience, and likewise with a technical specialist. Different investors may have a different basis of knowledge that they are operating from. The executive summary should keep your target audience in mind.
Present a cohesive plan for the future.
If you are beyond the idea validation phase of a company, you need to have a three-year strategic plan and an annual operating plan with key milestones and budget. You must package the information in a way that is digestible for investors.
For investor marketing purposes, your elevator pitch is the first key marketing tool. The next is the executive summary. Third is the overview presentation for investors, and fourth is an in-depth presentation for investors.
Many companies do not even need the business plan in a document. A sufficiently in-depth presentation along with a set of financials and a capitalization table, or cap table is likely enough in most cases.
Relay your goals and future results.
The key to building credibility with investors is to have the information and knowledge necessary to run the business including resource requirements in terms of people, skill set and money. Investors will then want to know what specific financial and non-financial result you expect to achieve over time and in what timeframe.
Raising outside capital is a process, not an event. It takes about six months on average. Investors will want to see progress against your plan during that time and not just lip service and excuses.