Top Three Mistakes when Presenting to Prospective Investor Partners
Pitching to investors?
What could possibly go wrong?
Mistake #1
Lost rapport with listener due to ignoring their subtle, non-verbal (but usually highly visible) cues
Presenters often pay more attention to what they are saying (and how they are saying it) than to how the listener is receiving their message.
Solutions:
- Before preparing your talk, find out exactly what the audience needs to know. Verify the purpose and length of the presentation with the audience before launching into it. Be prepared to make adjustments. By starting with a clear mutual understanding (basis of an agreement), then expanding on that agreement, you can reach your goals and your audience’s goals simultaneously. Anything else will be a break in rapport and will cost you the credibility and acceptance you deserve.
- Pay attention to verbal and non-verbal cues … they are often vital signs of rapport (or the lack thereof). If their facial expression or voice tone indicates they are confused, puzzled or concerned, discover the cause, and win them back. If they look bored, ask if you should “pick up the pace” or “what do you really want to know?” or if necessary, simply ask “what would help you understand and appreciate the lasting value of this?” If you lose their attention, stop. Do not waste your breath speaking if the listener isn’t listening. Sounds like common sense, but you’d be surprised how often this happens, for whatever reason. Prevent this from occurring by dealing with what’s happening in the moment (it may or may not be something you said).
Key: Match (acknowledge, or speak to) the right things at the right time — sense of purpose (why they invest), their mood or energy, voice tone or tempo (pace and amount of detail), shared values and experience, specific words that reflect deeply held values or beliefs, visions of the future, etc. What do you match? Depends on your goal and the response you get, but start with the “investment thesis” or purpose of the capital and work backwards from there.
Unless the audience is so large that it is impractical, encourage and handle questions as they come up. Be flexible but stay focused on the agreements about topics and priorities (especially if there are established time limits). A quick clarification “in the moment” can prevent needless misunderstandings and miscommunication downstream.
Mistake #2
Presentation materials provide too much and the wrong kind of information
Presenters often attempt to explain their entire business plan (instead of key facts about the business case and value proposition), their product or technology solution (instead of just their unique competitive advantages), and their detailed resume (instead of just their qualifications).
TMI aside, another common mistake is going right to the solution without giving enough context to understand the dynamics that gave rise to the solution in the first place. If not obvious (such as climate change mitigation, etc.) what market pain or crying need does the business resolve? This is often the emotional “hook” that reflects common ground between the company’s purpose (mission or passion) and investor motives.
Investors often think they’re being rational, and calculating, but the deals they prefer are going to be hinged with a subjective, felt sense (emotions) over rational reasons. Don’t tell them this, just make case and let them find their own reasons for making the investment.
And how will the markets react to this new “force to be reckoned with”? What will competitors do as the business gains market share? What will be your company’s response?
Presenters need to show that they are well informed and prepared to help investors understand the risk/reward equation for the proposed investment. Only topic more important to most investors than risk management (eliminating all the risks that can be reasonably mitigated) is the potential upside — the positive “blended value” of financial, social and/or environmental impacts. How will they be realized and measured? These are the key results that must be spelled out, that go well beyond making financial returns for the partners. Add in the team’s credentials explaining why will this team be successful with this venture at this time?
Emphasize the essence of what the investor needs to know, with sharp attention to the investment itself, not the business plan. Why is this a particularly good investment? Provide facts, evidence, persuasive rationale.
We often see presentation materials that rely on lists of complete sentences, sometimes even full paragraphs, to convey the essence of the plan. Use only keywords and frame ideas as mere placeholders for what the presenter will bring to light (often through questions the investor asks — “just-in-time” details that provide satisfying answers to fundamental concerns or at least the need to understand how the business will work in practice). In any case, do not let the presentation materials detract from the power and importance of what you have to say.
Solutions:
- Determine optimal length of presentation based on the listener’s needs and interests, not based on your desire to present a particular set of ideas.
- Use appropriately sized information “chunks” to communicate effectively — “five plus or minus two” per page. Highlight key ideas, not complete sentences or paragraphs. Avoid complicated graphs except to the extent that you explain what it means — draw a conclusion (key points or ideas) supported by the data that brings to light the value of the business.
Summarize key points before moving on to new topics and when wrapping up, right before asking for questions or comments.
Key: don’t even try to explain everything … plan to give just enough information and direct responses to questions to stimulate interest and further curiosity. Fend off miscommunication or misinterpretation by checking for their understanding of important details.
By interacting and asking non-rhetorical questions — “Do you see the connection between that big idea and this next phase of funding?” (then watch for nodding heads) — you can “calibrate” your presentation to the response(s) you are getting. Paying careful attention to their behavior (shifting your attention off yourself, and onto them) enables you to be as responsive to that “reality” in each moment as you need to be, without losing your place in the story, to reach your goal.
Draw out questions, even if they’re likely to be challenging or even slightly hostile, because demonstrating “grace under fire” might be more important than all your slides and plans combined. Shows your character, confidence and resilience. [ Need help with this aspect? Contact us for to arrange coaching. ]
Mistake #3
Presenter relies too heavily on the planned agenda, not enough on the investor’s true interests
Whether it is “death by PowerPoint” (over-reliance on the pre-determined presentation materials) or other pitch points you see as important, if you fail to tune into what investors want or need to know, you will either frustrate them or lose them entirely. Social skills are essential in equity partnerships, just as they are in any effective business relationship. Further, the time you spend on topics you care about, but that they don’t value, effectively wastes both your time and theirs. This is usually a finite amount of time for both of you — the time you have available to secure funding from those who mesh well with your goals and the time they have to evaluate same. Using it wisely is more important than you might realize. Are you gaining or losing rapport, minute by minute?
How will you know if they’re not following you? See Mistake #1.
What do investors really care about? As the saying goes, venture (startup) investors don’t invest in business plans, they invest in teams. They need to gain confidence in your abilities to carry out the plan, ensuring that it is the “right plan at the right time in the right hands,” so that usually begins with succinctly conveying the basics of what, why and how you will succeed at it.
Generally, venture investors aren’t as interested in your presentation materials as they are in you, your message, your story. Project financiers, including In3 by the way, are more interested in the project’s close-to-zero risk, and if equity investors, risk-adjusted returns, mainly in written form, not your verbal storytelling abilities. Be sure to tailor your “story” to fit with their key interests or concerns.
A common mistake is to rush into a pitch session without knowing your audience, their “hot buttons,” values and thus true interests. Focus interviews are essential, combined with doing your homework (if such information is available, which it usually is these days via websites, LinkedIn, or those who know the investor well enough to offer tips).
Even when you are well prepared, what you have to say about your story that’s of direct relevance to the investor’s interests is far more nuanced and important than the information that’s scripted in your head, or visible on PowerPoint slides. For project finance, a tight (1-page) teaser can help make quick yes/no (screening) decisions, starting off with your skillful demonstration of knowing their true criteria and understanding how they will decide whether or not to explore further.
Slides or handouts are merely visual reinforcement of key ideas to accommodate different learning styles and keep the conversation focused. Slides or other visual aids provide structure and this “jumping off point” for the real conversation. Your comments, experience and unique knowledge are what will interest the audience, not your ability to make whiz-bang graphics or use beautiful, “eye candy” stock photography.
This is not to say that the contents of your prepared materials are unimportant. Just don’t let those materials detract from the full impact of the tailored message you will deliver. Will just “showing up and winging it” get you what you want? It might, but unless you have a confirmed gift at speaking off the cuff, and many years of proven success with on-point pitches, why take the risk?
The goal of preparation is to get freed up from your presentation materials, so you can be relaxed, organized and authentically yourself (and still make sense to other people), which means being on their map of reality, not just your own. Can you step into their metaphorical shoes and find that common ground, blending together perspectives, interests and goals?
A simple demonstration of this willingness to “let in” what matters to them, asking enough questions to know for sure what that is, then blending that with what you know must be understood (or at least not misunderstood) before you can talk about your proposed loan and/or equity partnership, how that will be of mutual benefit, now and over the longer term, then and only then getting into the nitty-gritty of terms and conditions.
Note that more experienced investors know their acceptable terms and conditions before talking with you. We know what is and isn’t a reasonable offer, which after a few decades of experience is not hard to detect. If you seem to have enough rapport, it can be a skillful move to ask for terms (informally or in writing) before a more elaborate series of meetings that neither of you would chose if you did not already agree on at least “indicative” (placeholder) terms.
Warning: Be careful to not contort your pitch too much, just to appeal to any given investor. Like putting on an ill-fitted suit of clothes, that can backfire. How? It risks making the presenter unnaturally self-conscious, nervous or incongruent (saying something you know is untrue will likely show in your non-verbal behavior — gestures, mannerisms or tone), or … assuming you fly under their radar, ultimately cause you to end up with the wrong equity partner(s), which is effectively a ticking time-bomb.
Instead, be authentic. Tailor, don’t kowtow. In other words, be willing to show respect (maintain rapport) without bending too low or taking “one down” (being blatantly subservient). Don’t get caught “telling them just what they want to hear.” Being open and candid engenders trust. Explain what you know for sure and be open to saying “I don’t know that … let me look into it,” then do follow up. In other words, don’t stretch the truth too much or you’ll get bent out of shape.
Also, don’t take challenging or borderline hostile questions personally; remember the investor is taking measure of your character.
Solutions:
By making sure you remedy errors 1 & 2 (watch for signals of rapport, or the lack thereof, and offer the right amount and type of information based on your awareness of whether they’re with you, or not), your handling of the presentation materials sets the stage for the two-way dialogue that leads to success. With adequate preparation and practice, no “extra” attention will be needed on how you say it. You may want to memorize certain quotations, key phrases, introductions and concluding remarks — anything where a few words must be strung together precisely to convey the intended message.
Examples of this:
- What is it that your company does better than anyone else?
- Why are you really in business? What’s the underlying mission, vision or values that “get you up in the morning”? What problem or market pain does your business address? What are at least three ways of measuring your success?
- Who is it for? [“it” is your solution, product or service, which may benefit multiple groups, so identify primary and secondary stakeholders, starting with your direct customers.]
- With each new set of ideas in your pitch deck, first “clear” the words (say or paraphrase and thus acknowledge what’s there on the slide) to establish meaning and context as quickly as possible. If necessary, define or explain your terms (“Does everyone know what ‘triple bottom line’ means?” or “Is it clear what I mean by ‘impact-washing’?”) … checking for mutual understanding, with the decision-maker’s head nodding, then, once the dust of stirred-up (spontaneous) questions has settled, and the momentary confusion of new concepts has passed, bring the listener’s attention back to you, and make those vital points: a) What is the ask? b) What does the company need to succeed? c) What’s in it for the investor?
- Keep the pages interesting and visual (PowerPoint, like webpages online, are mostly visual media), but readable, if using text or graphs. Follow the 5+/-2 chunks-per-page guideline, and you will have lots of value to add as you tell your story, provide highlights, or key take-aways (points you wish to emphasize). Use the initial slides to “frame” the purpose, context and “why you are telling” that story, why the market timing is perfect, how this plan in the hands of this team will manifest destiny.
- Be yourself (or a slightly nervous version of yourself, which is completely normal and expected). Maintain eye contact. Make it interactive. Ask questions. Get people involved. Make it as conversational and natural as possible.
Key: Be easy to interrupt but impossible to throw off center. If possible, wear your “bullet-proof ego.” Take all signals of rapport (or the lack thereof, which you will notice as a mismatch of one or more facets of rapport, such as you telling jokes but nobody laughing, their insistence on answers to questions that you defer until later, you launching into new topics without checking to see if they’re done with the last one, or even they moving more quickly or slowly than you are) as feedback to improve your connection with the audience, improve your presentation, and possibly even, if you can detect a pattern in the feedback, to refine or pivot your plans.
Always checking to make sure you understood the intent of any feedback (especially if you see things differently or can’t image why they see something as stated), which helps you not take things personally, but nonetheless take the information seriously. A handy question that gets at their underlying intent, perhaps separate from their presentation to you about it, is “What would that do?”. Practice asking this whenever you hear something you don’t quite understand or that seems off, confusing, or unfair. “What would that do?” will teach you something valuable about how they are wired, true motives and upside for them. Is that shared? Is there common ground?
In the longer-term, as you improve your pitch, you’ll find the sweet spot between taking constructive feedback to heart, while taking none of it personally. It is so easy to “fall in love” with a business idea, venture, or project proposal, which is very dangerous. That alone can keep investors at bay, as they can smell a law suit coming even if there isn’t one. Personalizing is a bad sign. How can you create some space between you and your business? A few suggestions: 1) Recognize that you are autonomous, not depending on anyone or anything, 2) You are not your business, even if you strongly identify with it as a smart and valuable plan, and 3) You will get there from here if you are fortunate enough to learn what’s in the way.
So, in light of these suggestions, if you are love, how is that going to work?
Of course, not all investor feedback is free from bias or agenda on their side (it is surprisingly common for investors to find fault and point to problems in hopes of tearing you or you plan down, discouraging you in hopes that you will offer more generous terms), but the right partner(s) will usually frame problems as opportunities or at least be more gracious about it. Consider the source and reflect on why certain things got said. If, upon reflection, you can’t find common ground (some of venture finance is interpersonal chemistry, less so with project finance), simply thank them for their time and attention and see if there’s any learning you can extract for the next go-round.
We are available for pitch practice (coaching), preparation assistance or business planning services to increase the odds that you’ll succeed sooner, with less effort.
Happy pitching!
Daniel Robin