IR magazine considers what turns investors on – and off – during a pitch
A company wants to put its best foot forward in an investor presentation. Unfortunately, many put their foot in their mouth because they forget that, as with any sales situation, the focus must be on what the customer wants and not just the company’s own goals.
At best, you damage your chances for getting an investment. At worst, you become an apocryphal story – and investors do talk. That’s why IR magazine asked investors and advisers to explain what makes a good presentation, as well as to recall some of the common gaffes they’ve seen.
The key to a good presentation is keeping things simple, says David Calusdian, an executive vice president and partner at Sharon Merrill Associates, a Boston-based IR advisory firm.
‘There shouldn’t be too many extra messages thrown in,’ he explains. ‘The old adage goes: when someone asks you the time, you need to tell him what time it is, not how to make a watch. So you really need to focus on how the company is making money.
‘I would always start with the investment thesis. The presentation needs to convey why an investor should buy the company’s stock. And every slide in the presentation should be a part of the story the company is telling about its investment thesis.’
Time constraints
It’s critical to plan for the realities of the meeting. Even if scheduled for an hour, you won’t have a full 60 minutes. ‘I’ll be five minutes late and leave five minutes early,’ says Mike Scanlin, CEO of BornToSell.com and a former venture capitalist at Sierra Ventures and Battery Ventures. ‘And you’ll want to leave time for interactive Q&A, so you have about 30 minutes to present.’
Be realistic about how much material you can cover. ‘People sometimes come up with slide decks that have 50 slides, with bullet points and charts that are impossible to read,’ observes Joe Stallings, a partner with Balentine, an Atlanta-based investment and risk management service.
Scanlin once saw a company so focused on technology that the CEO took 30 minutes to cover 45 slides, all of which were technical diagrams, not management or business issues. ‘I asked to see his financials slide and then – I’m not making this up – he hit the forward arrow key to advance to the next slide 120 times,’ he recalls.
Know how to use the presentation software so you can immediately jump ahead or back however many slides you need, and have a paper list of the slides and their number to make sudden transitions easy. Also, hand out paper copies of the slide presentation so investors can make notes on them.
A common mistake is to put together a watertight presentation but then not practice it enough, says Calusdian, who has spoken on giving investor presentations at NIRI’s annual conference.
‘You really need to practice it out loud in advance or your presentation may actually take away from the information you’re trying to deliver,’ he advises. ‘It can hurt your credibility. If you seem nervous behind that podium, or you don’t seem like you know the material – even if it’s just that you don’t know the script – you can lose credibility.’
Practice, practice, practice
Calusdian’s advice for practicing a presentation is very similar to the advice a piano teacher would give a student learning a new piece. First, go learn the whole thing off by heart, including mastering the pace and any transitions between sections.
Once that is accomplished, go back and add dynamics to drive home your key points, such as adding inflections, gesticulations and ensuring eye contact remains constant.
‘Once you know the script, and you know what you’re going to say in every slide, you can go back and make it as dynamic and effective as possible,’ Calusdian says.
One area that has grown in importance for presentation trainers is body language. That’s because investors, including hedge funds, are now being trained to interpret the body language of company management. In most cases, the person presenting will have nothing to hide, but it is important to be aware of how your actions could be misconstrued.
Calusdian offers two examples of mannerisms you should try to avoid: don’t hold your hand over your mouth while you speak, and don’t stand with your hands held behind your back. Both mannerisms could be interpreted as a sign of deceit, he warns.
Flipping things round, the meeting is a good time to ask investors some of your own questions. You could ask about how the organization works with companies in which it has invested: how often and in what circumstances does it communicate with the company?
Will you have to plan on board members fielding direct queries, or are there other steps you can take to head off disruptive contacts while managing and satisfying investor expectations?
It’s also a good idea to undertake some due diligence, speaking with contacts you have in other companies in which the organization has invested money. After all, if you plan to give a thorough presentation, you might as well have a full sense of what you’re about to ask for.
Additional reporting by Tim Human.
Slide rules
There’s no point cramming slides with loads of information: once up on the screen, all your carefully crafted prose will be incomprehensible to all but those with the sharpest of eyesight. Putting too much information on your slides can also distract from the message being presented by the speaker.
To help you improve the quality of your slides, David Calusdian, an executive vice president and partner with Sharon Merrill Associates, offers a couple of guidelines:
- No more than six bullet points on each slide
- No more than six words to each bullet point
- Anything that can be presented graphically should be.
