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Viewing Presentations from the Investor’s Perspective

Viewing Presentations from the Investor’s Perspective

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Published by: Dr. Earl R. Smith II on Dec 12, 2009
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Presentations from the Investor’sPerspective
Dr. Earl R. Smith II
DrSmith@Dr-Smith.comwww.Dr-Smith.comAll investors are bombarded with requests for meetings. Entrepreneurs put alot of effort into networking and building relationships that will allow them tomake a presentation to a possible source of funding. They have honed theirelevator speech and given it many times. Mostly the results of thesecontacts are non-committal or an outright expression of no interest. Allinvestors say no or maybe much more frequently than they say yes. But,there are the times when you say yes and a meeting is scheduled. Here area few thoughts on how to handle that meeting.
Request an Advance Package:
It is a very good idea torequire an advance package; something considerably moreextensive than the executive summary. This will allow youto go through the preliminary materials, request anyadditional materials or clarifications and do some diligenceyourself. One of the ways to make this initial meeting moreproductive is to get very familiar with the details of what isgoing to be presented. This will also give you a chance toresearch the competition and prepare a series of questions or talking points.Providing some, or all, of these questions well prior to the meeting can go along way towards making it more productive.
Set Expectations:
Make sure that you let the entrepreneurs know how youwould like the meeting to go. If it is scheduled for an hour, set theexpectations for how that hour should be used. Their initial presentationshould take up no more than half the time. This will give both you and thema change to discuss any issues or questions that come up. Settingexpectations will also help them focus on providing the level of informationthat is appropriate. One of the faults of many presentations is that it is toodetailed for an initial meeting. I have seen stacks of twenty five to thirtyslides. You need to let them know what information you want to seepresented. It is a good idea to contextualize the meeting in a broaderprocess. Let them know what your procedures are following the initialpresentation.
Avoid Redundancies:
You have probably already heard the elevatorspeech and seen an executive summary. If the meeting is going to beproductive, it should focus on new information. Some of these newrequirements may not be covered in the package that they have puttogether. For instance, if you are particularly interested in their successdeveloping paying clients or their advantages over the competition, a priorrequest will help make the meeting more productive. Make sure that youcommunicate your needs early in the planning process. You want to avoidsimply going over materials that have been presented in prior, less formalconversations.
Outline an Extended Process:
Many entrepreneurs get very excited whenan initial meeting is agreed to. They approach it as if one clean swtroke willresult in their getting funded. Most investors I work with take between sixand twelve months to make a final investment decision. The presentersshould know that this is the first step on an extended journey. It is a goodidea that, as a condition of taking the first meeting, your normal schedule isclearly understood. In some ways this will help the presenting team. Manyentrepreneurs get very nervous that they will ‘blow their chance’. You shouldmake it clear that the initial meeting is only a prelude to an extendedprocess. The likely outcome will be a decision to go the next step.
Watch the Team in Action:
The initial meeting will be your first chance tosee their team in action. Are they well prepared? Have they anticipatedimportant questions? How do they deal with hard or unexpected questions?Do they understand your perspective? You can begin to assess the strengthsand weaknesses which will determine the probability of their success orfailure. The first meeting should be a team presentation. It is a very good idea toopen a file on each team member and keep notes on their performance. Youwill also be able to see holes in the team. Many entrepreneurs put togetherteams from the ‘choir’. They avoid bringing skill sets onboard that are notdirectly focused on the technology. Often, when there are ‘outsiders’, theytend to be weak and unlikely able to meet their responsibilities. Three criticalareas are business management, financial management and sales.Remember that you are assessing the team as well as their valueproposition. One result of the meeting may be a set of recommendations forstrengthening the team and an invitation to return once thoserecommendations are implemented.
Put them on the Spot:
You need to know how the team and criticalmembers will respond under pressure. They will certainly experience a lotduring the period following funding. It is a very good idea to put them to thetest very early in the game. Nobody comes to such meetings having all theanswers to every question which will be raised. One of the things you shouldbe looking for is the ability to say ‘I don’t know but will find out’. You need toweed out those who tend to try to bluff their way through such situations.Look for tensions within the team. Do they disagree without an apparentability to resolve the disagreements? Teams that have figured out how towork productively together have a greater chance of succeeding. Remember,it is one thing if the team is well prepared for the presentation; it is another if they are prepared to build a business.
Highlight Your Needs and Expectations:
Many teams will be used topresenting to the ‘choir’. Your needs and perspective may be somewhat newto them. It is normal for entrepreneurs to see their company in terms of itstechnology and advantages over competition. But you will be looking at it asan investment. This need goes well beyond what might be presented inspreadsheets. Every seasoned investor knows that these projections arenever accurate. Key members of their team need to understand that you arein it for the return on your investment. It the team does not understand howyou are approaching investment in their company, problems are certain tooccur with deviations from expectations. It is important to have a very clearunderstanding of those metrics that guide your decision and expectations.
Ask the Hard Questions Early On:
Your decision process is probably goingto center around a relatively short list of key questions. Some of them will beanswered by simply being asked. Others will depend on your impressions.But, if you are going to stay on solid ground, you need to gather reliable andthoroughgoing answers to them all. A very good idea is to share most of them at the beginning of the meeting. “This is what we need to learn as aresult of this meeting?Be particularly sensitive to attempts by thepresenting team to reduce the importance of any of these questions. Takethat as a lack of seriousness and involvement in the process. Remember thismeeting is fundamentally about you and meeting your concerns.
Avoid Answering Questions about Results:
Your normal process willinvolve an extend subsequent discussion of findings, impressions and howwell the investment opportunity fits your objectives. You may want toexpress an interest in continuing the discussion, but any expectation thatyou will be making an investment decision as a result of a first meeting is

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