Some guidelines on how to present to investors in the startup world.
Through my work with 88mph & 440ng I already run through four accelerator programs. Two in Cape Town/South Africa, one in Nairobi/Kenya and one in Lagos/Nigeria. So all my advice is not made up, it´s the outcome of two years working with startups in accelerator programs.
At the end of every accelerator program comes Investor Day, when the startups we funded present to investors. 88mph/440ng normally funds startups twice a year, in February and September and then they each run through a 3-month accelerator program. Two weeks before the program ends we invite all the investors we know to hear them present what they have built so far. (Here the 440ng YouTube channel with all presentation pitches and decks from Nigeria 2014)
Ten weeks is not much time and normally a startup doesn´t have much to show for itself after that time, but they try to build a prototype in a week or two nonstop work. Under my favourite motto: Move fast and break things. After that they can test and try to sign up customers who would use their product. They try to test business models and try to find routes-to-market.
Two weeks before Investor Day we take a whole weekend off for pitch training and designing the decks. The presentations are often pretty rough at the beginning. But this is to be expected. We try to pick founders who are good at building things, not ones who are great presenters and have spoken to a group of people many times.
Most of the investors will be non-technical, so we need to help the speakers to explain their technical matters to that audience in a simple and interesting way. Worst thing would be if an investors turns them down because they simply didn´t understand the technical part because the founders were presenting bad.
On Investor Day each startup will only get about 3 minutes to present their business in order to a) focus on the important things and b) don´t bore the investors. More over we have designed an eight page presentation deck with the following order:
- Introduction & Problem
- Solution & Product
- Market Opportunity
- Business Model
- Where we now & what have we proven
- What do we want to prove in the next ? months
- Where will this take us
- Team & Ask
1. Introduction & Problem
Shortly introduce yourself with your own name and your startup name. Include your logo, nothing else. Summarize the key, compelling facts of the company in two sentences, similar to an elevator pitch.
Then go straight to the problem. Explain the problem with a story. The biggest fear of investors looking at early stage startups is that you’ve built something based on your own a priori theories of what the world needs, but that no one will actually want. So it’s good if you can talk about problems specific users have and how you solve them and in a way the investor can actually understand the problem. Try to emphasis the pain you have.
2. Solution & Product
After the problem you go straight to your solution. How can the startup you have built fix this problem? What product have you built to make life easier? Also tell this in a story. Stories are powerful and emotional, yet unappreciated in many business presentations. The most memorable presentations don’t start with data. They start with a personal story. It’s not about data, it’s about commitment. Also remember angel investors are different than venture capitalists. They both want to make money, of course, but while VC’s are much more focused on data, angels often take a mentoring role and are making an emotional and financial investment in the idea and the people.
3. Market Opportunity
Quantifying a market opportunity is simply a matter of estimating the number of consumers who have the need that you have and converting that into a currency.
4. Business Model
This is very simple, explain how you will make money.
5. Where we now & what have we proven
So today, at Investor Day, were are you now? What have you done so far, have you launched the product, acquired customers, have leads, etc. Everything what you have done so far should be mentioned here. Can you prove that your business model works and prove that customers would actual pay for this service? Have you made revenue yet?
6. What do we want to prove in the next 6/12 months
So what are your next steps and goals. What will you do in order to grow your business and get more customers. What do you have to organise and manage in order to get your startup of the ground?
7. Where will this take us
If you manage all the in no.6 mentioned task where will that take you. What revenue will you make by then, what are your projections for 6, 12 and 24 months?
8. Team & Ask
The team is one of the most important things when investing into a startup. For any investor it takes a miracle to get investment dollars out of them if they’re not impressed with the team. 88mph/440ng also looks at the team very closely and won’t invest if it isn’t a good fit. Introduce yourself and your team, who are you, what have you built so far and why do you think you will manage to grow your business? Also mention the amount of money required to help your startup of the ground.
How should the deck look like?
If possible don’t put words on slides. When there are a lot of words on a slide, people just skip reading it. So look at your slides and rather find pictures or graphics which help underline what you will be saying. Headlines are ok and you only use words if necessary.
The deck should be designed in a way that it is in the background as you should face the audience and talk to them, not something you face and read to an audience sitting behind you.
Don’t forget the slides should be readable, at the very least, crank up the font size big enough to make all the text legible.
If you have any kind of data, however preliminary, tell the audience. Numbers stick in people’s heads. But don’t give them more than four or five numbers, and only give them numbers specific to you.
One of the biggest mistakes entrepreneurs make when pitching to angel investors is bombarding them with data and boring slides instead of inspiring and engaging them. This is one of the key lessons I learned since working for 88mph/440ng.
Passion is the key. Simply ask yourself this question: “What am I really passionate about?” The answer will be considerably different than the answer to the question, “What is my idea?”.
To put it in a nut shell. Investors need to know that the product addresses a real world pain. To pitch your idea successfully, you must reach their minds and their hearts.