NVBC Seminar 8. Perfecting your Pitch
Tonight, the New Ventures BC seminar series presents Perfecting your Pitch. The seminar is presented by David Shore of Stirling Mercantile and Jonathan Bixby of Strangeloop Networks.
David Shore, Stirling Mercantile
First a Poll of the Audience
By a show of hands a little more than half of the audience appears to be in the competition. One third have given presentations to investors. About the same number give presentations regularly.
They’re here to learn how to give a great presentation, how to be concise, to get some pointers on style for a pitch and learning how to win the competition. $300,000 at stake. The key to doing well in presenting to investors and in order to advance in the competition, you have to do well in the presentation.
Talking about presentations in general. Towards the end, we’ll talk about presentations to an investor.
We’re constantly presenting with a screen behind us. These tips will show you how to do it well.
Jonathan Bixby, CEO and Co-Founder of Strangeloop Networks
If you are to win this competition, you’ll have to go through a jury process with very smart, cynical judge. They’ve seen countless pitches, of which they’ve approved only a small percentage and many of those went south after.
You have to be able to explain it to the judge like this: “Tell me about it like I’m a kid.” If you can’t articulate what you do, if the value statement is not clear, you’re not going to win.
Tell Me What You Do
We boil this down to some simple questions. We’ll also discuss some good and bad examples of companies. In an in-camera session, we may have a workshop after as people give their pitches.
What do you sell? Who do you sell it to? What’s the value proposition?
We sell (hardware/software => that helps (our target market) => to (save money or make money)
Winner
Energy Aware 2006 Winner.
Good Statement
Energy Aware Technology sells home energy displays to electric utilities to help their residential consumers better understand the way they use energy so they can find ways to save money.
Focus on the problem, the solution and the target market that shows your value statement. Don’t focus on the technology.
90 per cent of what we’ve been told about presenting isn’t right.
The winner of the NVBC competition tends to be the one that the judges remember because of the CEO’s presentation. Differentiate yourself. You have to be a great communicator about the excitement level about your business.
Barrack Obama, Bill Clinton, Steve Jobs, all have natural charisma and flair. But all of those people communicate in a certain way with a certain style.
Highly Recommend Book
Hit Me Again! … I Can Still Hear Him! The Secrets of Superb Public Speaking by John Miers
Demo of a superb conversation (canned, but what can you do…) between Jonathan and Dave.
First, I think, then I speak. Then David thinks, then he speaks. There are non-verbal cues, but that dance of communication is the way that humans communicate.
We’re taught in speech-making to talk in an entirely different way. We tend to phase out because people “speak in a weird way” during presentations.
Barack Obama uses the same conversation style in a speech as he does in a one-on-one conversation. That’s a key to his success.
You can’t listen and think at the same time.
It’s not the rate of words that’s important. It’s the rate of ideas.
I Think. I Speak. You think. You speak.
The audience speaks with movement (head nodding, expression).
Terrible tool of Power Point. It’s a weapon of mass distraction. Use it correctly. You cannot be articulating slides which are complicated. People are not going to listen.
Power Point is Abused. Why do we put our speaking notes on slides? You can’t read and think at the same time. Also, the audience can read way faster than the speaker can talk. So don’t use speaking notes on your slides.
Having bullet points, you might remember the points. But you want to be remembered as the speaker (The CEO).
Steve Jobs uses symbols, visuals. Not using bulleted speaking notes.
How do I know if my presentation is graphical enough? Look at overview of slide deck. Nice to have visual representation of what you’re trying to get across.
Is there an order of bringing up a slide? Different schools of thoughts. Black, visual, then black. Some people will speak to it while people are looking at it.
For technical conferences, you may need more technical written content on slides. Those slides aren’t forbidden. But generally, you want to err on the side of simplicity with visuals.
David Shore (continued…)
The Structure of the Presentation
This is tailored towards an investor presentation. Biggest investment firms have presentations all day long. Investor companies must reject upwards of 95 per cent of presentations. Mindset is “as soon as I can find something wrong with this, I can leave this presentation… and go to the next one”.
A dozen slides you must include in your deck, to change an investor from a skeptic to a champion:
You’ll have about 20 minutes to give your presentation, about a minute and a half per slide. Next 20 minutes are people asking questions. If you have 40 minutes of questions, not a good sign.
Title Slide
My Company (Logo)
Presentation to: Smart VCs (include investor’s logo)
Date and Time
A video won’t win the competition.
A blank screen won’t win the competition, either. “I don’t have a presentation. Just give me your questions”. This approach doesn’t work.
First slide should give a snapshot of what business you’re in. Eg. a picture that shows hardware says “We’re in the hardware business”.
Second Slide
The Team. Introduce them by name and title (including board members, and possibly advisors — if they’re engaged). This introduces credibility to everything you do. It helps if there’s an association showing that team members have worked together before.
It’s OK to say in an early stage company, we’re looking to close a gap in the team. Even go to the investors and ask if they might identify someone.
Next Slide
Industry Problem
Often referred to as “the pain”. Many presenters wrongly use this as their first slide. Articulate it in a way that connects to…
Next Slide: An Image Showing Your Solution
You will want to spend a bit more time on this, talk about the IP, talk about the genesis for the project, who you got feedback from when you chose this, what are your features sets, etc.
Show some validation eg. “I think this is the biggest thing I’ve ever seen!” – Mr. Big, Bigcorp.
Next Slide: Addressable Market
Perhaps a pie chart? Focus on how many widgets you’re going to sell. Look at where the IP could be focused to go after a larger market and make more money.
Eg. A product for woodworking shops that would speed up their efficiency and make them horribly profitable. But there weren’t enough woodworking shops! That’s a good company, but it won’t get venture capital. We expanded the market. banking and oil and gas industry could also be customers for the company. Suddenly you go from a company that could get $12 million after five years of hard work to a company that could get $60 million for the same amount of work. Now it’s exciting.
Five years is what we recommend you project for.
Addressable market is the market if you had no competition at the price you would sell it to them for. It should be in the billions.
It’s difficult to get clear, non-conflicting data about the addressable market. You’ll get different numbers.
Next Slide: Competitive Position
You’ll want to spend some time on this, perhaps using a two way graph showing different functions. Place your company on this grid as it relates to value proposition in target market. Show why your value is going to be the better way to go and the strategic direction.
Next Slide: Sales and Marketing
Pricing strategy, target markets, channels, where you are now. Perhaps describe it graphically in a timeline?
Next Slide: Projections
High level spreadsheet, showing projected income statement analysis, looking five years out. Investors generally hold their investment for five years. They will do a calculation based on profits or multiple of revenue. Fifth year is far more exciting. Don’t expect the investor to do the extrapolation. Do the math.
You’ll have a good idea of your expenses and customers in your first year. Investors will focus on how long it takes to become profitable. They want to see that the growth is realistic but exciting. Want to see growth margins that are consistent with industry. If you’re a company showing a profit margin of 50 per cent, that’s an indication that you need a better CFO. If you’re generating a better profit than 99 per cent of the companies doing this, your numbers may not be convincing.
Year 5 numbers are a projection. A bottom-up forecast is something based on the costs for running your business and how quickly you can sell product, hire, train, get out to the marketplace. It’s not easy to do. But financials that talk about how we’re going to get X-amount of a market are top-down forecasts and are less credible.
NOTES: You only have 20 minutes. You’re not trying to answer all questions with tons of detail. But you want the investors to be interested enough to come back to you with questions later, during the due diligence process.
I’d like to see a top-down projection that added credibility to what you’re doing. I can’t do it. I’d like to see someone else do it. Perhaps it would be useful only to add on to a bottom-up analysis.
Question: Why do the financial projection out to five years when those numbers can’t be credible?
Answer: It’s true that anything beyond three year financial projection, it is difficult to show valid numbers. But if you don’t do the five-year projection, you’re leaving it to your investors to do that math. Investors want to get ROI from life of investment. You do the math. Don’t make the investor do the analysis.
Next Slide: Road Map
This is intended to say where you are within the life cycle of your business.
First, the IP Roadmap; Going from Alpha to Beta to doing a full launch. You may show how revenue comes into the picture. Then you can start talking about the funding roadmap. Show the overlay of the different segments. Show milestones that you’ve hit and how they match up.
Re: funding roadmap, every time you’re doing a financing, your value is more, so your dilution is less. Time investments.
Last Slide: Summary
Team, Market Opportunity and Timing.
Many people use the last slide for a thank you or showing contact info. But your last slide might be up for a while. You want to put your best foot forward, keep it up so they’re looking at it. This slide could be up for half the duration of your presentation.
Appendix
Throw some stuff in here that could be enticing. Do a map of your presentation. Number it so you can bounce around your appendix. Be able to jump to the slide while you’re talking about it. Look at your guide, type in the number, go to the slide and start talking to it, using visuals to answer questions after.
These are the slides you may not have time for, but have them with you so that you can relate to them on a question.
AVOID SAYING
“Our projections are conservative.” (Then why are you telling me these numbers? Tell me your real numbers)
“We have no competition.” (Either you haven’t done enough research to find your competitors or there’s no market for this product and that’s why you have no competition)
“We have a first mover advantage (We don’t want to invest in Friendster. We want to invest in the ones who come later and do it right)
“We only need to capture X% of the market to be successful.” (Top-down projection has no credibility)
Five criteria you’ll be judged on. Err on the side of hitting those five elements. Tough to prioritize. That’s what you have to do.
Q & A
Q. What’s your take on animations in Power Point?
A. Use sparingly. It’s rarely needed. It’s distracting. Occasionally, there is a complicated concept and you need to layer topics.
Q. Do You have to use Power Point?
A. Use whatever tool you need to that will convey your information. I saw something done with Excel that was very visual. Stay away from cartoons.
Q. Can you use a physical prototype to pass around?
A. If you can use something physical to pass around, that’s great. If you’ve got a giveaway that can sit on a jury member’s desk, it works.
Q. How much sophistication in terms of jargon should we assume for the judge?
A. Very little. With 15 judges, it’s unlikely that they will all understand technical jargon.
Q. Is it OK to pass around a brochure at the end?
A. Yes, that’s a good idea. It will remind us after the presentation. It can’t hurt.
Q. How engaged can you get with the group of judges? For instance, can you ask for a show of hands?
A. I’ve seen that backfire incredibly. Eg. “How do you think I can win this competition?” Response, complete silence. Judges are catankerous, old-school dudes. They mean business, they’re very successful.
I wouldn’t go there unless you feel the vibe is so awesome in the room. There’s not often an awesome vibe in the room. That minute you spend trying to rile up the crowd is one less minute you have to present.
Tags: Investors Pitch, New Ventures BC Seminar, Perfecting Your Pitch, Stirling Mercantile, Strangeloop Networks