and Business Resources
magazine - September
By David R. Evanson & Art Beroff
Your Feature Presentation
Be a star when you audition in front of investors for a role in their
The appointment of Steven W. Pasko as the chief executive of VentureHighway.com
represents the changing of the guard in entrepreneurial finance. Pasko
has spent a 20-year career with some of the leading firms in finance,
including powerhouse Deutsche Banc Alex. Brown, a high-tech worldwide
Now Pasko has gone digital at VentureHighway.com, where entrepreneurs
looking for capital can meet with angel investors, corporations and traditional
venture capitalists looking for deals. "Historically," says Pasko, "one
of the great challenges of raising capital privately was inefficiency.
There was no way to get the word out that you had a deal. An entrepreneur's
ability to raise the money was tied to his or her ability to network."
With the Internet explosion, all that's changed. VentureHighway.com,
for instance, has some 1,500 accredited investors entrepreneurs can reach
through a simple registration process and a small processing fee. Once
a deal is posted on the site, investors can access a summary of the company,
and if they're interested, authorize VentureHighway.com to release contact
details to the entrepreneur. En-trepreneurs get warm leads via e-mail
without ever taking their eyes off running their companies.
Pasko admits, however, that the more things change, the more they stay
the same. "You can find investors more easily these days," he says, "but
the time-honored tradition of closing a deal by pitching the investors
live and in person remains." He adds that entrepreneurs who have mastered
this skill are still the winners when it comes to raising money, while
those who have a fear of flying may be forced to run their companies a
Below, Pasko points out the most common presentation gaffes that stand
between entrepreneurs and the capital they need to grow their businesses:
Poor timing. "Entrepreneurs generally
say too much or too little. Unfortunately, either extreme can kill a deal,"
says Pasko. If you bore your investors to tears, your presentation is
far too long and indicates to the savvy investor that you are unsophisticated
when it comes to the rules of engagement. It also tells your audience
you have doubts as to what information is critical and what is simply
fluff. On the other hand, you'll give investors the impression that you're
unwilling to share important information if your presentation doesn't
go on long enough. You want your presentation to last about 20 minutes—unless,
of course, your company is sure to be the next Microsoft, in which case
you can tack on an extra five minutes.
Live demonstrations. These are almost
always failures, particularly for technology-based products that rely
on a PC, a laptop or a network. Murphy's Law has a funny way of creeping
into investor presentations. And if your demonstration does go wrong when
you're pitching your deal, it may kill your prospects for raising capital
on the spot.
You should save live demonstrations for a later date. "If an investor
made some investment of time and formed some sort of emotional tie to
the company, no matter how slight, he or she is more likely to overcome
a momentary twitch in the technology," says Pasko.
Your best bet is to use videotape for perfect demonstrations every time.
Suspect numbers. It's not uncommon
for entrepreneurs to sport a set of financial statements which, on further
examination, actually indicate a loss. Aggressive revenue-recognition
policies, unrealistic reserves for returns or bad debts, the presence
of deferred expenses or overzealous capitalization of expenditures can
turn apparent profits into losses. Don't think you can slip these numbers
by investors. Says Pasko, "When the slides start showing outlandish numbers,
investors start leaving the room."
Technology overexplanation. What
many entrepreneurs forget, especially those who are also scientists or
engineers, is that technical details of companies' products or services
are important only inasmuch as they deliver competitive advantages, open
new markets or change the balance of power in an existing market. To the
average investor, technology in and of itself just isn't that important—or
exciting. "If you focus on mips and bips, you'll lose your audience,"
says Pasko. "And once you lose investors' attention, it can be hard to
get it back." It almost goes without saying that if you can't get investors'
interest back, you'll never get them to reach for their checkbooks. Spend
no more than three to five minutes discussing technology. Any more time
spent on science is less time devoted to selling the deal.
Poor attitude. You can't afford
to make the mistake of confusing equity investors with bankers. While
bankers might tolerate fractious borrowers—if they can pay back a loan,
hey, they can pay back a loan—equity investors are more akin to partners.
And partners want to have their say, not be ignored. "An engaging, congenial
entrepreneur will be far more successful than one who is perceived to
be rude, condescending or unhelpful," points out Pasko. After all, you
can draw more flies with honey than you can with vinegar.
Poor response to questions. "The
question-and-answer session is generally the most important part of the
presentation," says Pasko. The truth is, in the same way you can train
a monkey to do just about anything, you can train an entrepreneur to make
Of course, investors know this, so they rely on the Q&A portion of presentations
to take full measure of entrepreneurs. How quick are they on their feet?
Can they dance? Are they engaging, and can they sell? After all, the equity
investor's payday only comes if the company gets sold to another company
or goes public. And the only way either of those events will occur is
if the entrepreneurs have sales skills.
A common mistake during the Q&A period is to act like questions are
stupid. The fact of the matter is, despite what your teacher told you,
many questions are stupid—but it's certainly not in your best interest
to tell an investor so. "Respond to every question as if it's reasonable,"
counsels Pasko. "That way you won't alienate anyone in the room."
Answers full of techno mumbo jumbo also cause problems. "They make you
look like you're trying to hide something," says Pasko.
Raising Money 101 says: When you get a question from the audience, repeat
the question; for example, "The gentleman in the front has asked whether
or not our processes are patentable; is that right?" Also, after answering
the question, focus on the investor again and say, "Does that answer your
Inappropriate audiovisual support.
"Unless you have a tremendous speaking presence, and are able to catch
and hold an audience's attention for better than a quarter of an hour,
it's generally a very bad idea to have no visual support," says Pasko.
With so much information pumped into such a small time slot, investors
who get distracted can lose the context of the speaker's remarks; therefore,
it's important to have a visual outline.
A presentation, accompanied by about 10 to 15 slides, overheads or handouts
that emphasize the speaker's key points and give listeners a constant
frame of reference, tends to be the most effective. Be careful not to
overdo it, and try to tell the story on the slides. Think of the slides
as billboards that carry just the key messages (see "Next Step").
As for video presentations, "Running a corporate video [such as
the kind shown to new employees] for more than five minutes can be
a negative because it gives investors the impression that management is
trying to hide something, or, worse yet, has no clue what to say," according
Inappropriate follow-up. The old
adage is yes comes fast, and no takes forever. While this is typically
true when raising capital, there are those in the investment community
who will test the mettle of business owners by seeing how long it takes
them to follow up. If there is no attempt to make contact after the presentation,
even out of courtesy, many investors get turned off. A common rule of
thumb is to follow up three times, and if there's no response, mentally
write the investor off.
Unless the investor cancels a check on you, never let on that you're frustrated
they didn't bite. The truth is, raising money can take a long, long time,
and problems that turned investors off during the first go-around can
work themselves out during the fund-raising process: products become fully
developed, sales go up, management is more fleshed-out. "Keep in touch
with the contacts you made early on because at some point they may become
fertile ground for raising capital," Pasko counsels. "You may just find
that you have to deliver your 20-minute pitch to them once again."
David R. Evanson's newest book about raising capital is called Where
to Go When the Bank Says No: Alternatives for Financing Your Business
(Bloomberg Press). Call (800) 233-4830 for ordering information. Art
Beroff, a principal of Beroff Associates in Howard Beach, New York, helps
companies raise capital and go public and is a member of the National Advisory
Committee for the SBA.
|| The old saying
about slide presentations is that they're never finished; entrepreneurs
simply run out of time. Nothing could be more true. The amount of
time spent dithering over slide presentations is almost incalculable
and rarely productive. The reality of raising money is that the slides
don't sell the deal. The persuasive and compelling manner in which
the presentation is made sells the deal.
Slide presentations are a necessary evil, but keep
in mind the following pointers the next time you go out to meet
Think billboards, not books.
Slides should be sparse, not crowded. Remember, they're only there
to keep the audience on track.
easy. In most cases, one slide per minute, or 20 slides
for a typical presentation, is about the maximum you should try
to squeeze in. Optimum: 10 to 15.
handouts from your slides. Some public-speaking pros
say never put anything into the hands of the audience that will
distract them from the speaker—a notion not without merit. However,
most hard-core investors will ask for handouts and often use them
to take notes, so it's better to be prepared than to be caught empty-handed.
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