This is a guest post from Benjamin Ball Associates, a consultancy that teaches clients how to pitch, present and persuade. Benjamin Ball Associates has over ten years’ experience of helping companies such as Permira, Deutsches PE and Frog Capital to stand out with investors.
The investors you meet hear from hundreds of potential investments. Naturally, everyone who presents to them forecasts excellent returns. And every person who pitches to them believes their opportunity is the best.
So how can you stand out? How can you make your investor meetings engaging, memorable and persuasive? How can you increase your chances of being invited back? These are six of the ways to stand out in investor meetings:
1. Simplify your investment narrative
Your investment narrative is how you communicate what makes your fund or proposal a compelling investment opportunity. If investors don’t understand any element of an opportunity then they will not invest.
Can you explain your opportunity in a way that an intelligent 12-year old could grasp? As Albert Einstein said, “If you can’t explain it simply, you don’t understand it well enough.”
Keep it high level, especially in your marketing communications and your first meeting. Teams often go into too much detail too quickly. Remember, if investors haven’t yet bought into the overall idea, then any secondary detail will only confuse them.
2. Start with a question
Great pitches involve identifying mutual interest and personalising your presentation to address the investors’ needs. So find out what aspect of your opportunity each set of investors is interested in. Then make sure you only pull out the cards in your deck that are relevant to those interests.
Answer questions and invite dialogue throughout your pitch. If an investor has a concern or query, they won’t be able to fully focus on what you’re saying until you answer their concern. As one investor told us, “I find it frustrating when I ask a question and the fund manager says, ‘I’m coming to that, it’s on page 20 of the presentation’. Often the question never gets addressed.”
Your pitch is a chance to demonstrate that you understand and can meet their investment mandate. A pitch is not a chance to drag investors through a generic stack of PowerPoint slides as you deliver a one-way monologue.
3. Tell more stories
Stories are your secret weapon. Facts target the left-hand side of the brain, which is logical and judgemental. Stories target our emotional decision-making centre. Humans make decisions quickly and emotionally, then try to back them up rationally.
That’s why luxury goods and anonymous charity donations exist – people buy into the story that the brand is selling, or the story we tell ourselves about the kind of person we are. Stories are also inherently interesting, more memorable and provide valuable context.
You almost certainly have stories that you could tell, but you’re probably telling them as dry facts instead. Examples of stories for investor meetings could include:
- Showing your strategy in action, through stories about the impact you have had.
- Introducing the origins of your fund, idea or proposal with a story.
- Using a story to explain how you realised why your investment strategy is so successful.
Investors will connect more emotionally with you, understand your opportunity better and be more likely to remember you.
4. Rehearse your responses to tough questions
Investor Q&As can be daunting, as you don’t know what they’ll ask. In addition, perhaps you or your team feel defensive when asked about a perceived weakness or a previous failure.
However, preparing for tough investor questions and being honest about past mistakes is a huge opportunity to stand out. As one investor told us, “We are looking for people we can team up with for a decade. The moment we find people who are aggressive and defensive about their history – if we can’t ask questions – then due diligence stops.”
Your pitch is the start of a potential long-term relationship with investors. Mutual trust and transparency is an essential part of this. Acknowledge what hasn’t gone well (and what you’ve learned from it) and you’ll have greater credibility when you talk of your successes.
The best VC funds prepare rigorously for tough questions, following these three steps:
- Write out all the tough questions you could be asked and work out your answers to them. Consider answering some of them upfront in your presentation, rather than waiting for the question.
- Stress-test answering the questions. Decide who in your team will respond to each one. Then spend time firing them at each other, editing and refining your answers as you go.
- Bring in an objective outsider. A neutral third party can challenge your answers, pose additional questions and expose any weaknesses in your arguments. We spend days with some of our clients to make sure they are investor-ready.
5. Have a strong start and finish
When they first sit down, investors will be subconsciously steeling themselves: will this be a pain, or a pleasure? If you start strong, investors will sit up and pay attention. In addition, the start of a pitch benefits from the primacy effect, which means it is usually the most memorable part of the experience.
The second most important part of your pitch is the end. This is due to the ‘recency effect’; a tendency people have to over-emphasise the last piece of performance data presented to them. Control the message that you finish with, especially if questions and next steps have led the discussion off-track. Sum up your investment narrative and leave on a strong, positive note.
If you have any weaker arguments, position them in the middle of your pitch. If your fund has better short-term results, place this information last. If your fund has better long-term results, finish with these. If you know that your investors will be seeing a lot of pitches in a short period of time, try to secure either the first or last slot.
6. Be more likeable
Likeability alone isn’t enough to impress investors. But if investors don’t like you, they won’t invest. This might seem like a superficial criterion. However, you will be working with your investors for several years. When there’s an ocean of opportunities, why would any investor choose to spend time with a shark?
In fact, Harvard Business School’s Amy Cuddy found that warmth is equally important as credibility when it comes to successful pitching. You can project more warmth and likability by doing simple things such as smiling more, using more engaging language and maintaining eye contact for longer.
A stand-out investor meeting involves the head and heart
It’s tempting to focus your pitch preparation on facts, data points and your track record. That’s the mistake many people make. They forget that investors are human. While credibility is essential, investors tend to go for teams they like and can trust. And they are more likely to back an investment they can buy into emotionally. Investment decisions need to feel right, as well as look right.
To read more about Benjamin Ball Associates, click here.