SlideMagic Blog

Client: “Hey, investor presentations don’t look like this! I have seen many before. This one has too many slides, too many images, we need to fix this.”

Me: “That’s exactly the point”

A startup pitching to a giant:

• This will save you millions of cost!
• Your users are asking for it!
• We enable you to break into new markets!
• Your competitors already have something like this!

25 minutes later with 5 minutes left: “convinced?”

“Yeah sure, but we have a policy not to work with startups that might go bankrupt tomorrow…”

It is important to find out the major concern of the giant before pitching. When someone mumbles in a phone call that they have a policy not to work with startups, it is most likely not a side comment. Focus your pitch on this issue. Not explicitly, but in between the lines.

• Show your blue chip investor base
• Show the partnerships you have with very established players
• Show your positive cash flow
• Show your customer list
• Show them anything that might support the point

The real battle is here. Maybe it is a hard one to win, but at least you should try.

Some random thoughts about designing good investor presentations. Investor presentation in this context is a presentation by a larger publicly traded company to equity analysts and institutional investors, for example a quarterly results announcement or an investor conference.

My blog contains a lot of ideas that visible for only one day, I plan to start writing some longer articles about certain topics that deserve a more permanent presence, and update them with new ideas or input from my readers.

Begin working on the presentation early The worst presentations are finished at 3AM the night before the investor call. It is possible to create 75% of the content of the investor presentation with preliminary data, or even the data from last quarter. Usually changes in data are not that dramatic that completely new visualization approaches are needed. Use existing data to decide on what type of graphs you need and replace the dummy data with the real thing as the information comes in. And: not all sections in an investor presentation are about data. The section with the update on the company strategy can be completed independently of the availability of the latest financial results.

Get the basic formating right Use the correct corporate template, set the colors and the fonts to the correct values. Avoid clip art. Use professional, high resolution images. Use one template throughout all the presentations at the event. Pay special attention to the way data charts are formated. There is nothing worse than a straight copy-paste from Excel. Look the way newspaper or magazines such as The Economist pay attention to the layout of graphs: clean and focussed on one message. A PowerPoint presentation to investors differs from an annual report: it is OK to round up numbers to make the chart more readable. People who want the full detail can always refer back to the accounts. In a 20 minute call those last 3 digits behind the dot do not matter.

I was discussing a presentation for a public share offering with a client the other day and we kept on coming back to the presentation advice that the investment bankers were providing.

Every investor presentation should have a “business card” slide as page 1. It should contain the history of the company, the main shareholdings, and sales, gross margin, operating profit, earnings per share and top line growth for the last 5 years.

Investment bankers know how to buy and sell companies. They have seen thousands of investor presentations. And yes, most of these investor presentations look a certain way. But that does not mean that this is “the way things are supposed to be done”.

You can stand out and design a first page that gets potential investors sitting on the tip of their chair, getting really excited about a great investment opportunity. When the company was founded, or that 2007 operating profit was $34.2m will get addressed at same stage in the presentation, just not on slide 1.

The investment banker’s advice can actually be understood. Whenever they ask a company for the investor presentation, out comes a very long bullet loaded PowerPoint deck that takes 2 hours to go through. Instead of redesigning this monster they ask: great why don’t you put everything that is important on one page or write a 2 page executive summary? In that way they know they can get through a pitch in 20 minutes.

The secret to a good 20 minute pitch is writing a full slide deck that takes 20 minutes to present.

Overhead: “We completed this extensive business plan for our startup 3 months ago. Check! It is a lot of work, but hey potential investors want it, so we churned it out.”

Here is what investors really want:

1. A good visual presentation that helps them understand your business quickly
2. A company that knows what it is doing, has a clear plan going forward
3. More detailed data/information after 1. has been digested

None of these require a long, text-loaded document. Text is the worst way to deliver 1., the exciting investor presentation. And text is not the best vehicle to deliver 2. and 3.

There is a reason why management consulting reports are written in PowerPoint, in a style that is somewhere in between the Steve-Job-style-keynote and the densely written marketing text book.

• Business issues/strategy can best be communicated/discussed using a visual language: it is about data, relationships, positioning, pros and cons, time lines. Diagrams (even poorly designed ones) do a much better job than a dense paragraph of text
• Things change all the time, and text is hard to change. Swapping the flow of a story, adding a piece of information, updating the market shares. “We did this business plan in September, but it is already out of date (December).” A document in PowerPoint is easy to change and update.
• PowerPoint document can be navigated quickly. It is easy to browse through sections, zoom in, zoom out.
• It is very hard/time-consuming to get the exact wording of something right, especially to agree something among a group of people with different styles. In PowerPoint you cut words, leaving less room for lengthy editorial discussions
• Most business documents are written in English, most people who write them are not native in this language. For a non-native speaker, it is hard to write a good proper long-hand text in 100% good English (native-speakers probably have spotted this in this blog). Most people can reach 80% correct English, and in PowerPoint you get away with it.

This interesting file from 2007 made it to the top of Hacker News at some time during the day: the application of Dropbox for funding by YCombinator. The question/answer exchanges read like a high-paced due diligence interview by a potential investor. The answers are short and to the point, the questions are short and to the point. Learn from it and improve your own investor pitch.

An interesting post on TechCrunch today: Socialcast founder Tim Young explains how he raised $10m for 3 companies using a 5-slide PowerPoint presentation. Some of the points that stood out (please read the full post for the complete picture):

• In 1-on-1 meetings you can try to avoid the confrontational both sides of the table setting by sitting next to each other and sharing a laptop screen
• Remember what the objective of your 1st VC meeting is: get to the 2nd one, it is - not yet - about trying to tell the potential investor everything you know about your business in the hope that he will sign the check after 30 minutes. Getting to the 2nd meeting is all about avoiding “rat holes”.
• Focus your slides (in come the 5 slides he used), but have the 45-slide backup in your back pocket in case you need to lift out a slide.
• Use (real) images of faces wherever you can to introduce people that are involved with the business (instead of names). When he says faces, faces, faces, he obviously is not referring to anonymous models that are too often found in stock images.

I agree with this approach, I just would like to give a word of caution/some comments. Each startup has a different set of 5 slides. Don’t just copy the ones Tim used. Rather look through the slides and see what Tim is doing.

His 5 slides have no story in themselves, they are pact with facts. Tim is telling the story himself, without slides. Only when he needs facts he reverts to slides. “Look at the credible team and investors we have” [Very dense slide packed with names, photos, and logos]. “See that there at the bottom? 75,000 i.s.o. 5,000 users per server, let me explain” “We’re on a roll” [Very dense slide with performance metrics], etc. The exception is slide 3, an abstract graphic that you can almost draw on a napkin to explain the key idea behind the business.

Many of the readers of this blog are - like me - designing investor pitch presentations. This 30 minute talk by Paul Graham of Y Combinator gives some interesting perspectives on how the competition between “super angels” and regular VCs has an impact on startup valuations and the startup fund raising market in general. If you are here just to learn about slide design, skip the video.

Watch live video from c3oorg on Justin.tv

You’re the owner/founder of the company and you are pitching to a potential investor. When introducing the company, you always start with its history:

How you started straight out of university, renamed the company after a waterfall you visited in Africa a year later, developed a 2nd product line, but then dropped that again in year 4, re-branded again, moved to a different city, and hey, that’s how we ended up where we are today.

To you it makes perfect sense. The story is how the company became what it is, how you became what you are. To the outsider, it is not that relevant, and even potentially confusing as the audience tries to figure out what you are about.

Skip the history and start with today. Except - if needed - a short reference to a useful link to the past: “the fact that we started out as a piece of 3D home design software in 1998 comes in handy today as we move forward to build the world’s best 3D gaming engine”.

A chronological story line is not always the best story line.

One of the new slides I included in my presentation lessons for entrepreneurs deck: talk about the elephant in the room. Some issues are just so obvious that you have to address them (Mark Suster gives a few examples here).

OK, you can decide to ignore them. The potential investor will say “thank you very much” and mentally shelf your pitch already while shaking your hand on the way to the door (peaking over your shoulder to that enormous animal standing in the corner).

Image via David Blackwell