The Investor Presentation: Making the Perfect Pitch

by Martin Livingston of Breakthrough Communications

It’s 9:00 a.m. on Monday. An analyst and two investment bankers in crisp navy blue suits sit impatiently at your boardroom table. The PowerPoint projector bursts to life and your heart starts racing. It’s show time! You have 20 minutes to convince them that your company is worthy of their time and money.

Relentless competition for capital among private and public companies has made courting investors an integral part of building a successful company. Of all the communication channels available, the investor presentation stands out as one of the most direct and effective ways to get on a money manager’s radar screen.

A presentation is often an investor’s first introduction to a company. To make a favourable impression you must persuade investors in a very short time that your company has the technical expertise, business acumen and potential to develop innovative products for a ready market, or in the case of mining, to uncover and identify a promising deposit and take it to the feasibility stage. While a flawless presentation alone will not open the purse strings, a poor one will certainly limit your chances of securing a second meeting or a cash infusion.

The overall objective of the presentation is to make a sound business case for your company. Outline the value of investment proposition and demonstrate how investors are going to benefit from the company’s progress through a handful of well-placed key messages that resonate with your audience.

Venture capitalists, retail investors, analysts, portfolio managers and fund managers all have different information requirements and varying degrees of knowledge about your industry. A fund manager who specializes in your sector will naturally require a higher-level briefing than a money manager who includes companies in your space as just one component of a larger portfolio. Know what will interest your audience and tailor the pitch accordingly.

Research and qualify prospective investors well before your presentation. Identify their investment style and criteria, portfolio of companies, stage and focus of investment and other parameters.

Before you set up a meeting, draw up a list of “hardball” questions that could arise and develop some credible answers. Above all, rehearse the presentation beforehand, particularly if other members of the management team will be speaking.

The presentation should flow seamlessly, using clear and assertive words that tell a compelling story to capture and maintain investor interest. The key is to simplify the story, limiting each slide to one take-away point, paring down excessive verbiage on slides and adding visuals to illustrate important points. Be sure to maintain a consistent level of disclosure, and tone down any blatant promotion.

Arouse interest immediately by hooking the audience with your “elevator pitch” — a clear, 30-second description of the company and its investment attributes — along with a noteworthy accomplishment or milestone that establishes credibility at the outset. The entire presentation should be structured to support these key messages. Limit your presentation to less than 20 minutes — that’s 20 to 25 slides, maximum — and allow an additional 10 minutes for questions, but be prepared to go longer if required. Limit each slide to one take-away point, pare down the text to essentials, and add visuals to illustrate important points.

Design your presentation so it’s easy to follow. Succinctly explain your business, products and technology or, in the case of resource companies, your exploration and development strategy.  Choose key investment strengths and reinforce them throughout the presentation. Describe your target market, business strategy and management expertise concluding with financials and a strong, confident close.

Be sure to provide investors with a hard copy of the presentation so they can take notes. You may also want to hand out an investor package providing more details on the technology, development program or the market opportunity. Investors can refer to this if an applicable question comes up.

The Target Market

Define the market opportunity in realistic terms. Investors want to know that you understand your company’s or product’s true market potential. Describe the market’s size, characteristics, growth potential and trends.

One common mistake company executives make in an investor presentation is displaying the multi-billion-dollar international market they’re targeting without identifying what part of that market they can realistically capture. Be specific about your strategy for penetrating that market.

Innovation

Technology investors are looking for undiscovered companies with leading science and intellectual property that addresses an unmet need. Explain the technology in very simple terms. Where possible, use analogies to drive the point home. Focus on the novelty of the technology, how it works, proof of concept, how it compares to the gold-standard in the industry and the company’s product development and marketing plan.

Investors want to know that senior executives have a good understanding of the market and their competition. Anticipate the inevitable questions: Who else is pursuing this market? What, in particular, is unique about this technology? Always be prepared to explain diplomatically who your competitors are and your sustainable competitive advantage. Describe your ownership of any patents, proprietary process or technology, exclusive licences or agreements. Discuss core competencies that give you a clear advantage over the competition.

In the case of mineral exploration, investors like to acquire shares in companies during the early stages of discovery, betting that geologists with past successes will continue their winning streak. Early geophysical or geochemical evaluations indicating mineralization on a property may initially pique the interest of the market. But each progressive stage of exploration will also raise new questions that management should be prepared to address concerning the size, continuity and grade of the deposit, risk factors, potential native or environmental conflicts, infrastructure, the economic viability of extraction and the company’s strategy for moving forward.

Business Strategy

Whatever stage a company is at, you must be able to clearly articulate its goals and long-term business plan. If, for example, the company is working to expand its portfolio of products, how is management going to finance and manage the growth?

If management is looking to sell or license rights to a product, development rights to a property, or enter into a joint venture, they should be able to confidently convey their strategy for doing so. What is management’s track record of negotiating similar deals under favourable terms? Is the background and expertise of management suited to their stated business strategy?

Management Expertise

Investors like management teams that can get results, ideally made up of professionals with a track record of successful discovery, expertise in taking a product or project beyond the feasibility stage, as well as experience forming partnerships and raising capital.

Briefly highlight management’s track record and expertise by pointing out relevant past accomplishments. Don’t just rattle off credentials — be specific. How exactly did they help their former company achieve its goals?

Financials and Milestones

Given that few start-up companies are profitable, conventional valuation guidelines such as price/earnings ratios rarely apply. Instead, valuation may revolve around discovery, intellectual property, or management expertise. Investors pay close attention to the progress of product/project development, partnerships, associated news flow, and, in particular, the amount of cash a company has on hand compared with its quarterly expenditures.

Always end the presentation on a high note by either recapping the company’s investment highlights or showing a timeline detailing business milestones. If you’re looking for financing, specify how much you need in this round and how it will be used, with emphasis on the company’s investment merits.

Finally, it’s always a good idea to follow up with investors after a presentation. Feedback surveys or a follow-up call from an independent third party will likely elicit candid responses from investors on what they thought of the company, its management and the presentation.

At the very least, send the investor a letter or handwritten note, as opposed to an e-mail. The personal touch will leave a more lasting impression, which can help keep the lines of communication open whether the final decision is favourable or not.

A massive effort to create a giant nerd

Just Saying by Paul Sullivan published in Metro Canada

Watson is some machine.

Named after the founder of IBM, Watson is a supercomputer worthy of the title. Built from 10 racks of IBM servers, it has 15 terabytes of RAM and the processing power of 2,800 of the most powerful computers on the market.

Watson is a humdinger, all right. But even with all that firepower, so far it has only managed to tie a human contestant on Jeopardy!. As I write, there are two nights left to go, and Watson better get game or it’s going to lose to some guy named Brad.

Watson is a quantum leap ahead of the most famous IBM computer to date, Deep Blue, which humbled world chess champ Garry Kasparov in 1997.

But as impressive as Watson is, it still has trouble with trivia. During a dry run before its appearance on Jeopardy!, it answered the question: “What do grasshoppers eat?” with “Kosher!” causing its programmers to choke on their pastrami sandwich and write another million lines of codes to correct the problem.

Is it just me, or is this a massive amount of effort to create nothing more than a giant nerd? A nerd that can answer most trivia questions in three to five seconds, but a nerd nonetheless.

Consider the evidence. It plays chess. It competes on Jeopardy!, the exclusive domain of nerds.
If these IBM scientists had a life, maybe they could create a machine that does something useful: Pick stocks that only increase in value; remember where I left my car keys; or find a decent restaurant in Nanaimo.

Instead, it’s really good at identifying the names of Beatles songs from their lyrics. Big deal. I already know how to do that.

According to some experts, Watson’s ability to answer questions will revolutionize call centres. Great. Instead of getting some bozo from South Carolina, we’ll get some bozo from the cloud answering the question: “What’s this $350 charge on my cellphone bill?” with “Would you like to speak to my supervisor?” and then hang up.

Our desire to create a machine that’s smarter than we are is kind of pathetic. After all, we’re limited by that fundamental law of computing: Garbage in, garbage out. We can only create a reflection of ourselves. Which explains why Watson is so easily confused. It’s one of us.
Meanwhile, Watson and Brad conclude their epic battle tonight. May the best nerd win.

Minister of everything has nothing

Urban Compass by Paul Sullivan published in Metro Vancouver

As we watch the B.C. Liberal leadership hopefuls peck each others’ eyes out, the one man who is most qualified to be B.C.’s next premier beavers away in humble obscurity, forever shut out of the political Promised Land.

Remember Colin Hansen? Not too long ago he was considered Gordon Campbell’s logical successor.

But that was before he got tangled up in the web of deceit that is the HST debacle. Campbell resigned; Hansen may as well have. His chances of becoming B.C.’s next leader went the way of all those sales tax exemptions we used to enjoy.

As far as I can tell, his punishment for backing up the boss on HST is to be forced to work his butt off as Minister of Everything while his fellow cabinet ministers take several months off to play politics.

Campbell resigned and went to Maui, his (mostly) happy place.

So, as finance minister, Hansen has to table a budget tomorrow to open the first session of the legislature in 256 days.

As health minister, he has launched an investigation into how two unqualified radiologists managed to review thousands of CT scans.

As finance minister, he has appointed a panel of experts to examine the virtues of the HST. (Good luck with that).

Busy, busy.

I wonder how he feels watching the mayor of Parksville duke it out with a CKNW talk show host for a job that could have been, should have been, his.

Whatever he thinks, in a couple of weeks Christy Clark or George Abbott or Kevin Falcon or somebody will be the premier of the province and he won’t.

Maybe it’s a good thing he doesn’t have too much time to think.

What’s sad is that Colin Hansen is the right man for the job. He’s been humbled by defeat, forged by fire, and is probably the one person in government who really knows what’s going on. The others are too busy fending off the threat of Clark.

As for the NDP, are you kidding? If you think Colin Hansen displays questionable political ethics, how about the Gang of 13? Not to mention Adrian Dix and his (alleged) political dirty tricks.

As the rest of our elected representatives wear themselves out doing the Funky Political Chicken, Colin Hansen just quietly goes about the business of government, a big “L” for Liar or Loser, or both, pasted on his forehead.

But how long will it be before all is forgiven and a solid majority of British Columbians, plus or minus four per cent, wonder where the Minister of Everything went when we need him?

Considering the alternatives, not long.

Cue the geeks for the Goldilocks zone

Just Saying by Paul Sullivan, published in Metro Canada

It wasn’t too long ago, 1995, in fact, when the idea of finding planets outside our own solar system was science fiction, so even if you wanted to boldly go where no one has gone before, you couldn’t.

But since then, planets have proven as prolific as peanuts, and the space-based Kepler scope, launched in 2009, has found more than 1,200. And here’s big news: 54 of them are in the so-called Goldilocks zone, not so hot that we’ll fry like bird poop on the roof of a car on a sizzling summer day, not so cold that it’s perpetually Jan. 27 in Winnipeg – but just right. Mild enough to hang out, watch the stars, and wonder if ET’s doing the same thing on Planet Cubic Zirconium.

More good news. Kepler can view about one per cent of the sky. If it could see the whole enchilada, it could identify another 400,000 planets, many of them habitable by humans.

We’ve fouled our own nest so badly that even the notion of a second chance is welcome relief. Just imagine, a new home without Kim Kardashian or Donald Trump, where we can start replacing indigenous inhabitants right away!

It’s a good idea not to get too carried away. That the planets in question exist at all is based on mainly circumstantial evidence, and using current technology, it would take a zillion years to get there (300,000 to be precise). But the point is, there’s now a “there.” We’ve got something to shoot for.

Humans are a resourceful bunch. Columbus thought he would find a passage to India, instead, he found a “new world” and exploited the indigenous people there instead. Smiles all around, except, of course, for the exploited indigenous peoples.

Even if we never get there, planets fire the imagination. Mars, Jupiter and Saturn have turned out to be big disappointments, ET-wise, but no matter. Now we have at least 54 new outlets for our ridiculous notions of alien beings, and that should be enough to keep our minds expanded for generations to come.

Getting there is half the fun. It’s time to cue the geeks, stock up on their favourite snacks, and get them planning the warp drive that will get us there, faster than it takes Capt. Jean-Picard (the thinking man’s Star Trek captain) to say: “Make it so.”

Look out galaxy, here we come …

Reliving the Party of the Century

Urban Compass by Paul Sullivan, published in Metro Vancouver

I’m having flashbacks.

No, I’m not ready for the Charlie Sheen Memorial Rehab Ward just yet. It’s this magnificent burst of Wet Coast sunshine that’s taking me back to the same time last year when the sun came out and turned the 2010 Vancouver Winter Olympics into the Party Of The Century.

And now we get to remember them every year, right around Groundhog Day. If the sun comes out every year at exactly the same time — bonus.

As these anniversary stories go, there will be a lot of talk about the legacy of the Winter Olympics, and that legacy will be compared to Expo 86 and so on.

Expo 86 was the Miracle Of Yaletown, multicultural diversity, tourism and convention business, not to mention that Vancouver was thrust onto the world stage, liked it and has stayed there ever since.

It’s still a bit early to figure out the 2010 legacy since it’s still a work-in-progress. But the trend is good: My contacts at Tourism Vancouver tell me 2011 will be our biggest year ever in terms of convention business, likely a combination of the convention centre getting built in time for the Olympic media and all those beauty shots of Vancouver on NBC.

(For those of you who are lucky enough to hold your convention in sunshine enjoy the seawall. For everyone else, welcome to the Wet Coast.)

By the time we’re done analyzing, we’ll probably conclude the legacy of 2010 is like 1986, just more: More condos, more cultural diversity, and even higher prices for teardowns.

But there is one vital difference: 2010 showed the world that Canadians, and especially Vancouverites, really know how to have a good time. All the problems and anxieties of the first couple of days were overwhelmed by a tsunami of celebration.

I’m still blown away by that YouTube video of 10,000 people flash-dancing in the street.

The other thing that’s clear: Robson Square is the heart of this city. If we really want to wave our red mittens high, we’ll do everything we can to build on that legacy. If that means preserving the square for sidewalk cafés, street vendors, pedestrians and zip rides, let’s do it. If that means keeping at least part of the Vancouver Art Gallery in the square, let’s do it. If that means reliving the Party Of The Century same time every year in the square, let’s do it.

In a world where taking to the streets usually means something different, what greater Olympic legacy could we hope to have?