By Glen Hellman, Dingman Center Board member and Dingman Center Angels investor from his blog “Forward Thinking: Driving Thoughtful Success”
You’re a hot startup. You’ve got it going. You’re a lean, mean, fighting machine team. You’ve got all the mojo, karma, and feng shui of the next Google. You’ve got everything but the cash required to put you over the finish line. So how do you get that cash?
Well you’ll need to get your first date with an investor to get that cash. You’ll need to present a plan that convinces that investor to appreciate your idea, your plan and your ability to execute and you’re going to have to be able to pitch your story in just a few slides.
You have an audience with an investor group to give an 8 minute pitch. Your job is to generate enough interest in that meeting to motivate those investors to look under your company hood. This is your match.com moment and you are pitching for your first date.
You can go up there and present 8 minutes worth of slides or you can tell a story… a five chapter story that moves investors to action.
Here’s the plan and I’m going to use an imaginary company that invented aspirin as an example.
- Chapter 1: Market Pain (Place the audience in the shoes of the buyer and make them feel the pain.)
- Chapter 2: Solution (After you hurt the audience rescue the with a solution.)
- Chapter 3: Market Size (Let them know this problem is worth solving.)
- Chapter 4: Why Invest In Us (Why can you be trusted to make this thing work?)
- Chapter 5: What’s in it For The Investor (What’s the exit?)
So let me tell the story:
Chapter 1: Market Pain
“Imagine that your head hurt so bad that you couldn’t see. You couldn’t drive, go to work, care for your child.” (Asking the audience to put themselves in the shoes of the target customer by using the “imagine that” term, personalizes the problem and is more impactful than simply addressing a large faceless demographic.)
Chapter 2: Solution
“Imagine that by taking just two small pills the pain could be erased in minutes. Imagine the impact on your life”.
Chapter 3: Market Size
“There are 45 billion people in the United States with chronic headaches translating to over 1 billion headaches per year.”
Chapter 4: Why Invest in Us
“This team has done this before. We’ve got the experience, the Rolodex and we’re operating as a high-performance, functioning team.”
“We’ve secured a cost-effective manufacturing capability to keep up with demand. Our Sales team has already developed key distribution agreements and we’re in negotiations to expand sales to overseas markets”
“Today there are a myriad of competitors. From the people who hit themselves in the head with a hammer because it feels so good when they stop. No solution is as consistently effective and works as fast as Aspirin.”
(Alternate Competitive Slide Format) There are times that the “Gartner Magic Quadrant” slide won’t work for your company and in that case go with the checkbox.
Chapter 5: What’s in it for the Investor?
“We’ve built a financial model based on our current distribution, manufacturing agreements and staffing projections. We’d welcome your critical review of our model.”
“We’re raising $5 million and believe that should take us to cash-flow positive so no further funding is anticipated.”
“Based on recent M&A activity we believe that a $100 million dollar return for your investment is reasonable in the next 4 years.”
So that’s the plan and here are some tips on creating the slides.
- Use graphics to express concepts over words when ever you can.
- Try to limit slides to 5 bullets of no more than seven words.
- Use images on word slides that evoke the meaning of your slide.
- Ask yourself, do I need this slide, if I take it out of the presentation does it detract from my story? If the answer is no, get rid of it. Less is more.
- Remember that you’re not trying to close the deal, you’re pitching for the next date. Leave some mystery. Give the audience enough information to want to learn more but leave them curious enough to come back for more.
Glen Hellman helps exceptional entrepreneurs figure out what to do and gets them to do it. He’s an angel investor, serial entrepreneur, and has worked for venture capitalists as a turn-around specialist. He’s a principal at Driven Forward, board member at The University of Maryland’s Dingman Center for Entrepreneurship, a Vistage coach and a mentor at the Founder Institute which is a good excuse but not the reason he is such a horrible hockey player.