An Always Topical Topic: Presenting to Investors
Any entrepreneur looking to grow their business is always thinking (or should be) about how to improve their investor pitch. Once you have an opportunity to get in front of an investor, you want to do everything you can to make your pitch successful. I offered some tips I’ve learned during my years coaching entrepreneurs in my post, ‘Things NOT to Do When Presenting to Potential Investors‘. Last week, a fellow blogger, Timothy Hay posted ‘Entrepreneurs’ Most Common Mistakes When Pitching VCs‘, offering some great builds on the ideas I’d shared.
Some of the key mistakes he shares, and my thoughts on each:
1. Not at least considering the potential of taking your company public someday. - Although IPOs are about as common as Browns playoff appearances these days, shaping your company so that it could conceivably go public is a great way to ensure that you are touching all the bases and thinking big enough. And… you never know… the Browns might make the playoffs, and you could be a candidate for an IPO.
2. Being overconfident. - If you remember, I said in my post that ‘Not Bragging’ is a mistake. You DO need to be confident, knowledgeable and sell yourself and your team. You shouldn’t be overconfident, and act like you have all the answers, however — the VC knows that you don’t. And besides, VCs have big egos — if anyone has all the answers, it will be them! Be sure to be willing to say that you “don’t know” or that you are “unsure” to certain questions, while accepting suggestions from the investors — they have seen a lot of companies, and have a lot of knowledge to bring to the table. The trick is to be thought of as “confident”, but not “overconfident”.
3. Never being audited. - This is directly related to my mention of having your detailed financials prepared - and going a step further to have them audited. This shows potential investors that someone else has validated your books, and mitigates their risk and questions in this area. Despite that, do NOT put the detailed financials into your investor presentation — they don’t care at that point. When I was raising money for my company, Ion Optics, we handed interested investors a CD that had all of our slides, our more detailed business plan, audited financials, articles on the company and technology, and other tidbits. This showed attention to detail, and made the investor’s life a little easier.
Read Timothy’s full post - and share your questions and additions so we can continue to share the knowledge gained through our collective experiences.
Chris Mather is the President of JumpStart TechLift Advisors. Previously, he managed a number of technology initiatives in Northeast Ohio for NorTech. Before entering the economic development world, Chris ran a number of technology companies in Northeast Ohio and New England, including Ion Optics Inc., where he raised $6.7 million in venture capital, and Apsco Inc. and Gould Instrument Systems. Prior to that, he spent 13 years in sales, marketing and management roles with Hewlett Packard after graduating from Worcester Polytechnic Institute with a BS in Electrical Engineering.
February 16th, 2010 at 9:52 pm
Chris –
I agree on the first 2 points here but am honestly not clear on the third. How does a forecast get “audited”? In my experience I rarely have seen early-stage companies (assuming this is what we’re addressing here) with enough of an operating history that needs to be audited. A competent bookkeeper will have kept things in order in that case.
However, if you’re referring to a detailed financial forecast and model with balance sheet, income statement, and cashflow statement then I agree with that.
February 26th, 2010 at 1:22 pm
Thanks for the comment, Glenn. I’m glad you wanted to clarify this third point – and you are correct in you latter assessment. Since Timothy was referring to a bit later stage companies in his post, I wanted to relate his comment back to some of the earlier stage companies we work with. If your company is far enough along that you have historical financials to be audited, it’s always a good idea to do so before going in front of investors. If not – and your company is preparing a forecast and financial model – you are correct, auditing doesn’t apply in the same way. Regardless of your company’s stage however, it is always smart to have someone else (advisor, peer, etc.) validate your financial models and forecasts as you approach investors.