TheInvestorPresentation
TheculminationoftheNewVentureChallenge(NVC)isa15minutepresentationtoagroupofdistinguishedinvestors.Fifteenminutesisaveryshorttimetodistillanentirebusinessplananddescribeallthekeyaspectsofyourbusiness.Leavethedetailsforyourwrittenbusinessplan.Thepresentationshouldfocusonthemostimportantpartsofyourbusiness.Becarefulnottospendtoomuchtimedescribingtheproductorservice.Theinvestorsaremoreinterestedinthebusinessmodelandhowyouwillmakemoney.Beclear,conciseandcompelling!
Thepurposeofthistutorialistoprovideyouwithanoutlineforyourpresentationthatwillinsurethatyoucoverthemostrelevantpointsin15minutes.ThetutorialwillalsoprovidefilmclipsofpastNVCpresentationsasexamplesofhowtoconveyyourstorywithpassionandconciseinformation.
Pleasenote:Thisisasuggestedoutline.Giventhenatureofyourbusinessandtherelativestrengthsandweaknessesofyourbusiness,youmaychoosetochangetheorderofthefollowingkeyelements.
Keyelementsofaninvestorpresentation:
1. TheOpening2. ProblemandSolution3. Market4. Competition5. SalesStrategy6. BusinessModel7. Management8. FundingRequest/ExitStrategy9. Closing
Thistutorialwillalsopresentinformationon:
QuestionandAnswersession/AppendixSlides PresentationTechniquesandTips
1. TheOpening
Theopeningofyourpresentationisveryimportant.Peoplemakeadecisioninthefirst30secondsaboutwhetherthey'regoingtolistentoyou.MalcolmGladwellinBlinkdiscusseshowonesmindtakesabouttwosecondstojumptoaseriesofconclusions.Gladwellbelievesthoseinstantconclusionsthatwereachareverypowerfulandreallyimportant.Sobemindfulasyouapproachthefrontoftheclassandbegintomakeeyecontactwiththeaudience.Evenintheseveryfirstmomentsofyourpresentationyouaremakingsomesortofimpressionwiththejudges.
Goalsforyouropening:
Gettheirattention(positivereaction) Givethemareasontolistenfurther Establishcredibility Buildrapport
TypesofOpenings:
a) TheElevatorPitchProvideaquickoverviewofwhatthecompanydoes,howitisdifferentandhowitwillmakemoney.Useananalogytoquicklyconveywhatthebusinessdoesandhowitispositionedinthemarketplace.Example:GreenBuildwillbetoHomeDepotasWholeFoodsistoSafeway.
b) TellaStoryTellastory,apersonalanecdotetodescribeasituationwhereyourproduct/servicecanbeused.Makesurethatyouraudiencecanidentifywiththissituation.Thistypeofopeningdrawsyouraudienceintothestoryofthebusiness.Youcaneasilybuildrapportwithyouraudience.Makesureyourstoryishardhittingandverysuccinct.
c) BuildCredibility:InvestorsforgetthatstudentsoftencometoaMBAprogramwithconsiderableexperience.Ifyouhaverelevantentrepreneurialstartupexperience,takeafewsecondsatthebeginningofthepresentationtointroducetheteamandstateinonesentenceyourexperience.Youwillhavemoretimelateroninthepresentationtoelaborateonthemanagementteam,soatthebeginning,justbuildcredibility.
2. TheProblemandtheSolution
Whatisthecurrentproblem?Andhowdoesyourbusinesssolvethisproblem?
Thesetwoquestionsmustbeaddressedattheveryoutsetofthepresentation.Forsomebusinessesthiscanbequicklyaddressedwithanexample.Formoretechnicalbusinesses,thiscanbeachallenge.Youhavetoassumethattherewillbesomejudges/investorswhodonotunderstandyourtechnologyoryourindustry.Consequently,youwillneedtodescribetheproblemandyourproduct/serviceinaverycomprehensiblemanner.Analogiescanbeusedverywellinthissituation.
Trytoaddresshowpainfulthisproblemis.Themorepainful,themorelikelyyouwillhavecustomerstobuyyourproductorservice.Quantifythepainputadollarvalueonit.
Havingidentifiedtheproblem,nowyoucanpresentthesolution.Determinehowmuchinformationyouraudienceactuallyneedstounderstandyoursolution.Inmanycasestheydonotneedtoknowthedetailsofhowatechnology,productorserviceworks.Throughtheuseofagraphic,picture,anecdoteorsimpleexplanation,succinctlyprovideenoughinformationforyour
audiencetounderstandthebasicprinciplesofyourproductorserviceandhowitsolvestheproblem.
3. TheMarketOpportunity
Nomatterhowgreatyourproductandserviceis,youdonothaveaviablebusinessunlessyouhaveasizablecustomerbaseormarket.Investorswanttoinsurethatyouhavetargetedthemostlucrativemarketsegmentandthatthemarketisbigenoughtoallowforsignificantgrowthandafavorablereturnontheirinvestment.Herearethetopicsthatshouldbeaddressedinthemarketopportunitysectionofyourpresentation.
1. IndustryDynamicsSuccinctlydiscussthefollowingquestionstoprovideanoverviewofthetrendsinthisindustry.
Isthismarketgrowing? Atwhatrate? Whatfactorsareaffectingthisindustry?Technology,regulations,globalization,
consolidation?(Cautiondontdiscusstheveryhighlevelbroadtrendsthatdontaddvalue.Mostinvestorsgetirritatediftheyfeellikeyouareeducatingthemonamarket.Tellthemsomethingtheydontknowthatisveryrelevanttoyourbusiness.)
2. MarketSizeTherearetwonumbersthatshouldbeaddressedtodeterminemarketsize.
a)TheBigPictureNumberThisnumberdescribesthesizeofthisindustrycurrentlyand/orinthenearfuture.Thisnumbershouldgrabtheinvestorsattentionandindicatetothemthatthereishugeopportunitywithinthisindustry.Userevenuenumbers.
Example:Thisindustrywillgrowto$6billionin2010.
b) AddressableMarketItisunlikelythatyourbusinesswilltargetcustomersthroughouttheentireindustry.Consequently,itisimportanttosegmentthemarkettoshowthesetofcustomerswhowillmostlikelybuyyourproductorserviceyouraddressablemarket.Inapresentation,oftenaslideisincludedthatshowsthistopdownmarketsizing.[ViewPowerPointslide#1]
Avoidstatingthatthemarketforyourproductorserviceishugeandifyoujustcapturex%,youwillbea$Xbillioncompany.Suchastatementdoesnotshowtheinvestorsthatyoutrulyunderstandyourtargetmarketorhowyouintendtocapturethatx%.
MarketingandSalesStrategy
Nowthatyouhaveidentifiedyourcustomer,howareyougoingtoselltothem?Willyoubeusinganinhousesalesforce,resellers,theinternet?Whatchannel(s)isoraremostappropriateforthisbusiness?Howdoyouknowthis?Whatdoesyourcompetitionuse?
Outlineyourmarketingstrategyandtheuseoftradeshows,collateralmaterial,directmail,PR,salesincentives,etc.Thisinformationwillprovidetheassumptionsbehindyourmarketingcosts.
Doesyourproductneedsupportandservice?Doyouneedtohelpyourcustomerunderstandyourproductbeforebuying,duringinstallationandinuse?Whowillprovidepreandpostsalesupport?
4.Competition
Avoidthesestatements!Wehavenocompetition.Wehavethefirstmoveradvantage
Ifyoudonothaveanycompetitionitmeansthatyoudonthaveanycustomers,youhavenotdoneenoughresearchoryouwillhavecompetitionsoon.
Inmanycases,themostcriticalcompetitioniscurrentbehavior.Whatdopeopleusenow?Willtheychangeandadoptyourproductorservice?Also,beawareofsubstitutes.Howelsecanthecustomersolvetheproblemyourproduct/serviceaddresses?
Analyzeyourcompetitionwithrespecttokeyfeaturesandbenefitsofyourproduct/service.Howdoesyourcompetitionrateacrossthesefactors?Includethosebusinessesthatarenotonlyindirectcompetitionwithyourbusiness,butalsoothercompaniesalongthesupplychainthatcouldbeyourcompetitioninthefuture.Inaddition,rememberthatsomeofthecompetitioncouldturnintopartnersoracquireyourbusinessinthefuture.Discussthesepossibilitiesaswell.[ViewPowerPointslides#2and#3]
5.BarrierstoEntry
Whatareyourbarriers to entrythatwillkeepothersfromduplicatingyoursolution?Whatdoyouhavethatisproprietary?Barrierstoentrycanincludeintellectualproperty,customercontacts,timealreadysunkintodevelopment,etc.
6.BusinessModel
Thissectionisoneofthemostimportantsectionsofyourpresentation.Howareyougoingtomakemoney?Howwillyougenerateenoughprofittointerestaninvestor?
1) Revenue:Thereareseveralquestionsthatmustbeaddressedinordertoconvinceinvestorsthatyouwillgeneratesignificantrevenue:
a) Pricing:Howdoyoupriceyourproduct/service?Howdoesthiscomparetoyourcompetitionortoothersubstitutesinthemarketplace?Example:Ifyouareasoftwarecompany,youmighthaveapriceforcustomizationandinstallation,anannualsubscriptionorlicensingfeebasedonthenumberofusers,andanotherfee
forupdatesandmaintenance.Areyourcustomersalreadyfamiliarwiththispricingscheme?Haveyoutestedthemarkettoseeifcustomerswouldpaythisprice?
b) SalesCycle:Howlongdoesittaketoconvertaleadtoasale?Ifyouunderestimatethelengthoftimetocompleteasale,youcouldrunoutofmoneyveryquickly.
c) RevenueAssumptions:Baseyourassumptionsonbottomsupmarketsizing.Inotherwords,lookatyourtargetmarketandprovideassumptionsonhowmanysalesyoucanactuallymake.Example:Youaretargeting10clientsinYear2andfrompasthistory,youknowyoucanconvert40%ofyourleadstosales.Themorespecificyourrevenueassumptions,themorebelievabletheyaretothejudges/investors.
d) Scale:Howwillthisbusinessmakemoneyovertime?Willthegrossmarginscontinuallyincreaseovertime?Howwillthebusinessexpandgeographically?
2) ExpensesShowoneslidethatshowstheuniteconomicsofonetransaction.[ViewPowerPointslide#4].Iftheproductrequiresfurtherdevelopment,youmaywishtoshowaproductdevelopmenttimelineandthecoststhatwilloccuratdifferentpointsintime.
3) ProjectionsNowthatyouhaveprovidedtheassumptionsforyourrevenuemodel,youcanpresentthefinancialprojectionsforthenextfewyears.Itisrecommendedthatyouillustratetheprojectionsgraphicallyinthepresentation.Showtheprojectedrevenue,expensesandnetincome.Linegraphsofthesethreeelementswillindicatethegapincashflowandthebreakevenpoint.Youcanincludemoredetailedfinancialsintheappendixincasethereisaquestionregardingyourprojections.[ViewPowerPointslide#5].
Ifyouhavedifferentstreamsofrevenuethatvaryovertime,youmaywishtopresentthisrevenuegrowthinadifferentway.[ViewPowerPointslide#6].
7.FundingRequest
Yourfinancialprojectionsshouldillustratethegapincashflowandthereforeapproximatetheamountoffundingyourequire.Itisprudenttoaskformoremoneythanisindicatedsinceformostbusinessesthisamountisalwaysunderestimated.Youshouldalsomentionthatyouareaskingforafirstroundoffinancingthatshouldtakeyoutoaparticularbenchmarkandthatyouknowyouwillrequireadditionalroundsoffinancinglater.
Prepareaslidethatshowstheuseoffundsandthesourceoffunds.Thetotalsforboththesetablesshouldbeequal.Intheuseoffunds,itisbestnottoaggregatethesalaryfigure.Instead,assumethatsalaryamountsarecontainedwithinthebudgetsallocatedformarketing,technologydevelopment,etc.Intheuseoffundstable,theinvestorswillwanttoseehowmuchthemanagementteamhasinvestedtodateinthebusiness.
8.ExitStrategy
Theinvestorsultimatelywanttoknowhowtheywillobtainsubstantialreturnontheirinvestmentiftheyinvestinthecompany.Ifyoucan,providecomparablesofsimilarcompaniesthathavebeensoldordoneanIPO.
9.ManagementTeam
Youhavefinishedpresentingwhatyouwanttoaccomplish,nowyoumustconvincethejudges/investorsthatyouhavethemanagementteamthathastherightexpertiseandexperiencetoexecutesuccessfully.
Toooften,presentationsspendtoomuchtimeondescribingalltheaccomplishmentsoftheirmanagementteamandtheirboardofdirectorsand/oradvisors.Itisimperativethatyoufocusonthoseachievementsorexperiencesthatrelatedirectlytothebusiness.Thereisalsoatendencytoplacetoomuchtextonthemanagementslideaspeopletrytorecreatefullresumesontheslide.Onceagainhighlightkeypastpositionsandnotetheircurrentpositioninthebusiness.Verballyyoucanhighlightthekeyachievements.
CreateoneslideforthemanagementteamandoneslidefortheBoardofDirectors/Advisors.ItisappropriatetodiscussaholeinyourmanagementteamoronyourBoardthatyouhopetofillwiththeassistanceofyournewinvestors.
10.Closing
Theclosingisoneofthemostimportantpartsofyourpresentation.Thisisthepartwhereyoucancreatealastingimpressionwiththejudges/investors.Startwithaveryquicksummaryofyouraccomplishmentstodateand/orthekeyfactsthatyouwanttheinvestorstoremember.Showyourstrengthandpassionandconvincetheinvestors/judgesthatyourcompanyprovidesanopportunityforreturnsthattheycannotaffordtomiss.
11.QuestionandAnswerSession
ThereisalimitedamountoftimefortheQ&Asessionafteryourpresentation.Itisimportanttousethistimewisely.Thelastthingyouwanttodoistobelaboroneissue.Haveonepersonontheteamansweraquestionsuccinctlyandtothepoint.Forsomeanswersabriefcommentcanbeaddedonbyateammembertoshowthatyouareworkingasateam.Thenmoveontothenextquestion.
Anticipatequestionsandprepareforthem.Someappendixslidesyoumightconsiderpreparinginclude:
1) RisksandMitigation.Thejudges/investorsoftenaskaboutpossibleriskstothebusiness.Prepareaslidethatliststhekeyrisksforyourbusinessandhowyouwillmitigatethem.
2) FinancialStatementsandProjections:Havethedetailsofyourfinancialsonaslidesoyouarereadytoansweraparticularfinancialquestion.
3) Technology:Duringyourpresentationyouwilltalkaboutyourtechnologyonahighlevel.Ifyouhaveinvestorsthataresavvyaboutyourtechnology,youcanpreparesomeslidesthatprovidemoreindepthdescriptionaboutyourproductorservice.
Theinvestorsalsorealizethatthebusinessisstillindevelopment.Acknowledgethatthereareholesinthemanagementteam,resources,sublicensestoadditionaltechnology,etc.
12.PresentationTechniquesandTips
Youmusthavepresenceandshowpassion!
Showyouarecommittedandengagedinyourface,voice,gesturesandyourstance.
Theimpactofatypicalpresentationis55%visual(howyoulook),38%vocal(howyoutalk),andonly7%verbal(whatyousay).Inotherwords,youdon'tdeliverpresentations,youperformthem.
a) VerbalKeepsentencesshortandtothepoint.Youneedtosoundintelligent,powerful,polished,articulate,andconfident.Intoday'scompetitivemarketthesequalitiesarenotoptional,theyareessential.Atechniqueforbeingmoreprofoundistouseshort,simpledeclarativesentencesandtocutoutuselesswords. Usesimplelanguage.Avoidacronymsandjargon Useactiveverbs Usecolorfulimagesandusefulanalogies Practicepausingtogivetheaudiencetimetoabsorbwhattheyjusthaveheard Voice/verbalenergizing Slowdown Varypace
VoiceTools
o Pitchhighorlowo Tonesomber,enthusiastico Inflectionhowoftenyouchangeyourpitchorvolumeofawordforemphasis
lendscolorandinterestinyourvoiceo Articulationclearpronunciationhelpseffectivecommunication
b) Bodylanguage:WheredoIputmyhands?
Dos
Usenaturalmovementsyouwoulduseinconversation Varyyourhandgestures Standinfrontoforonthesideofthepodium,closertoyouraudience Move
StandtallandconfidentDonts
Dontforceasmile Dontrockbackandforth Dontletarmsdroopatyourside Dontcrossyourarmsinfrontofyourchest Dontjigglecoinsinyourpocket
c)Eyecontact
Dos
Lookonepersonsquareintheeyeandholdthatcontactforatleastfiveseconds,oronecompletethought."It'salmostlikehavingminiconversationswithspecificmembersoftheaudience."
Donts
Dontstareaboveeveryonesheads Dontpickononefriendlyface Don'ttrytomakeeyecontactbybecomingasprinklersystemthatscanstheaudience
fromlefttorightandbackagain.d)Slides
Dos
AvisualaidshouldAid. Useslidestosupportandenhance,notduplicateordominate. Useslidestodramatizeandclarify Becreative Uselightlettersondarkbackground,orviceversa Uselargefonts Projectyourslidesonascreentotestthecolorandreadabilityoftheslide
Donts
Donthavetoomuchtext Maketheslidescomplicatedandthereforedistracting Dontmaketheslidebackgroundtoobusy Dontreadslides
e)Prepare
Prepare,prepare,prepare
WinstonChurchillsaidthathewouldprepare6to8hoursfora45minutepresentation
Practicewithyourgroupandthenpresentinfrontofpeoplewhodonotknowyourbusiness.Practicewithyourmentors.
Knowyouraudience.Dosomeduediligenceontheinvestors/judges.Knowwhattypesofbusinessesthattheyhaveinvestedinthepastandwhichonesweresuccessfulandwhichoneswerenot.