Below I am going to focus on the stuff that I wish I would have know when I started pitching my startup company, Tatango, to angel groups.
In addition to giving a few of my ideas, I also asked Eric Pratum, a past applicant screener and part of the screening committee for the Bellingham Angel Group, to share his thoughts.
So, here we go:
Get Connected: Before you apply to an angel group, make sure someone on the screening committee knows you. These groups get hundreds of investment applications and you need to make sure you have someone on the inside that is batting for you when the members are evaluating those initial applications. I found two ways that work really well to get connected with someone within the group: The first is to simply email the group and see if you can get a sit down with one of the members to see if your investment opportunity meets their criteria. Second, ask for an introduction from another investor or company that has been invested in by that specific group.
Pratum: Derek is absolutely right. I can’t tell you how often screening committees turn down applicants only to have a member come back at the next meeting and argue for reconsideration. I’ve done it. Other screeners did it. A lot of times, it’s a matter of you, as the entrepreneur, getting someone to take an interest in your opportunity and then getting them to better explain it to the decision makers.
Copy Apple: Have you seen a Steve Jobs keynote? Look at the slides? See how much information is on each slide? If you are talking about what each slide says, rather then talking about what each slide means, you are boring people. Remember, people can read. So don’t read them what you already have written on your slides, talk about what isn’t in the slides.
Pratum: Sometimes, it helps to print your presentation and pass it out. I’m still on the fence about that, but try to follow the 8/8 rule (or less). No more than 8 lines with 8 words maximum per line. Really, you need to talk to me. If I’m a responsible investor, I will read up on your company pre- and post-meeting. This is potentially your only chance to actually talk to these investors face-to-face.
K.I.S.: Keep It Simple. Remember, these investors most likely aren’t experts within your industry and if they don’t get what your company does, there is no way they are going to invest in it, no matter how good the deal is.
Investors’ Time Is Valuable: Be grateful for their time both during the application process and after the full membership presentation, as these investors are usually very busy, so make sure they know you appreciate their time.
Pratum: Once you’ve hooked an investor, he’s going to be hard to shake. But if you do something wrong and he loses interest, you will not get him back. Like your presentation, your dealings with investors should deal with the most important points first, and if they have time for anything else after that, great. If not, at least you dealt with the most important issues first.
Practice, Practice, Practice: I’m not joking here. I must have rehearsed my investment presentation at least 200+ times. You should have your investment presentation down to memory, being able to speak to each slide even if they are not there. I’ve had a presentation where my slides were completely messed up, and it didn’t phase me one bit as I had practiced so much that I went through my presentation as if everything was in place, I didn’t need the slides to guide me.
Pratum: Poor presentation prep will lose everyone. Great idea, great management, great traction, poor presentation = no investment. I’ve seen it happen, and it hurts everyone.
Get Comfortable: Getting up in front of a large audience is scary, but if you can pull it off like a pro, this will help build confidence in potential investors. Usually it’s hard to find a big audience to practice an investment presentation, so I usually settle for getting the experience of presenting to large audiences by going to speak at high schools and colleges about my experience as a young entrepreneur.
Pratum: Derek gave the slickest presentation our group had ever seen. He was comfortable and confident, and he definitely knew his stuff. If you’re the CEO, but you’re a poor presenter, ask someone else to do it for you.
Move Around: Nothing is worse then a presenter being forced to stand behind a computer when they are clicking through slides. If you are doing powerpoint presentations you must have your own remote clicker to operate the slide transitions. This will allow you to move about the room while making your presentation, which will cut investor fatigue issues if you are standing in the same place the whole time. Make sure you also practice with the clicker.
Pratum: Definitely, you need to have your hands free enough to move so that you can point, make hand gestures, and demonstrate any body language associated with your product or service. If they hand you a mic, ask if there’s a clip mic or if you can simply go without. Get both hands free.
Mind Your Time: Most angel groups only allow you 10-12 minutes to pitch to their group. I would recommend you build your deck to fit within the shortest time alloted which in my experience is 10 minutes. I’m always amazed that some entrepreneurs get cut off with slides remaining, especially as the last few slides are usually the most important slides as they propose “the deal” to the group. This comes back to practicing, make sure you are practicing with a timer every time. My investment presentation is 9 minutes, 30 seconds. The extra 30 seconds allows me to go off on a tangent if I think it can improve the presentation to that specific group. This extra 30 seconds also allows for any unforeseeable things that may happen during your presentation.
Pratum: There are always questions. If you’re going to burn Q&A time, make it minimal. If you can stop your presentation within a few seconds of the 10 minute buzzer without someone having to signal you, that lets me know you’re a pro.
Graphics & Charts Kick Ass: When giving an investment pitch, you are up their to inform and ENTERTAIN your audience. No investor that falls asleep halfway through your presentation is going to invest, so make you slides interesting. Let me preface this by saying this doesn’t mean use clip art or just insert graphs and images that have no relevance.
Pratum: YES! Find someone great in Excel and have them make you some good, meaningful charts if you can.
Bring Backup: No need for the A-Team, but you do need an extra copy of the powerpoint presentation emailed to a web hosted email (Yahoo Mail, Gmail etc.) on a portable USB drive, a CD and on your laptop, which you have the right adaptors for any visual hookup situation that may arise.
Pratum: If something goes wrong and there’s no backup, you’re screwed. You might not get a chance to come back. Sorry, no investment for you.
Create A Show: I’ve learned this the hard way. Whenever you save a PowerPoint presentation that you will be using on another computer, make sure you save it as a Powerpoint Show, which is abbreviated as .pps This format will save all your images, charts, etc. to match what you see on your own computer.
Pratum: When you’ve spent more time doing presentations, you get used to these things. It’s painful to watch someone try and explain what the slide was really supposed to look like.
Charts & Graphs NOT Numbers: I always laugh when I see a presenter with a full projected P&L statement embedded into their presentation. You have got to be kidding. How the hell is anyone in the back going to see any of those numbers, or grasp the most important aspect of a P&L? When you are trying to show trends in numbers, users, growth, financials etc. make sure you do it with charts and graphs.
Pratum: If you want to give me some numbers, that’s fine. What have you already measured? After that, give me a few anchor numbers, but not too many. Year-over-Year visuals really help.
Prepare For Questions: Once you have done a few angel presentations, you will start to notice a few common questions that are always being asked. First, see if you can pre-answer the question, by addressing it within your presentation. If not, make sure you have a well thought out answer and don’t be afraid to have appendix slides which you can reference.
Pratum: The worst question is: ‘So, what’s the deal?’ Investors want to know: what need you address, why you’re better than other options, what’s the potential, and what you’re offering them. Get to that in the presentation and then have friends, family members, etc. grill you like they’ve never heard of the company.
Derek Johnson is the CEO of Tatango, an SMS marketing platform that has raised $700,000 in angel capital. Eric Pratum is the former applicant screener and former screening committee member for the Bellingham Angel Group. Now he’s the director of marketing for Empower.me.