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Perfect Pitch

Still hitting the wrong note with investor presentations? Try these expert tips.
March 1, 1998
URL: http://www.entrepreneur.com/article/15338

Though they started their company just eight years ago while still enrolled at Temple University in Philadelphia, Future Graph Inc. founders Bob Blitshtein and Steve Boymel are now software industry veterans. The company started life with a single software product, titled f(g) Scholar, to help students with math and science. Today, Southampton, Pennsylvania-based Future Graph is an emerging publisher and developer of math and science educational software aggressively sold in retail stores.

On the path from obscurity in a college dorm to entrepreneurial success, the pair became experts in another discipline, as well: raising money. According to Blitshtein, since the founding of Future Graph, he and partner Boymel have raised approximately $2 million in more than a dozen separate financings, ranging from grants to loans to equity investments by high-net-worth angels and venture capital firms alike. The partners credit much of their money-raising success to their winning presentation. "There's no doubt about it," says Blitshtein. "We've made our presentation to investors hundreds of times over the years."

A leading authority on investor presentations is Jeffery Adduci, president of the Regional Investment Bankers Association (RIBA) in Charleston, South Carolina. RIBA is a trade association that, among other activities, hosts five investment banking presentations each year for companies seeking an investment banker, selling an IPO or developing market support. During his tenure with the group, Adduci has run 50 investing conferences and, as a result, has heard some 1,600 presentations by companies trying to raise money.

"By far, the companies that are the most successful at raising money are those in which management is effective at presenting themselves," says Adduci. Here are his observations on areas where entrepreneurs frequently go wrong in pitching to investors, plus comments from Blitshtein about how that advice helped him succeed at raising capital for Future Graph.

Blitshtein says a company's projected financial performance is perhaps the most challenging aspect of presenting to investors. "With so many exciting opportunities in the marketplace," he says, "you've got to walk a very fine line between numbers that are exciting enough to attract investors and those that will turn them off because they're simply unrealistic."

Early on, when Blitshtein and Boymel presented numbers showing projected revenues of $2.5 million--a fivefold increase at the time--Blitshtein says the response from most investors was something akin to "big whoop." "Investors said it wasn't just that the company had to make a lot of money to be interesting," he recalls. "It was that if the company wasn't positioned for significant market penetration, it would probably fail."

Blitshtein advises presenting a compelling scenario--but only if you can point to concrete events that will get you there.

"Initially, this was a problem," recalls Blitshtein. "People's eyes glazed over; [they even] fell asleep." He says the problem was solved when, painful as it was, the partners de-emphasized the technical aspects of their products and focused on how the investors' capital would make money for them.

Adduci's advice: Spend no more than three to five minutes discussing technology. "Any more time spent on science is less time devoted to selling the deal," he warns.

The most effective presentations are accompanied by 10 to 15 slides, overhead projections or handouts that punctuate your remarks and give the listener a constant source of context. Don't get too obsessed with visual aids, however. Blitshtein says that while slides or handouts provide the basic outline for an investor presentation, entrepreneurs must be prepared to deviate from the script when necessary. "Investors want a chief executive who is fast on his or her feet and not tied to a piece of paper. You've got to show you can dance."

Finally, Aducci warns against long, flowery corporate videos. "It's a mistake to let a corporate video run for more than five minutes," he says. "After that amount of time, it starts to give investors the impression that management is trying to hide something [or has nothing important to say.]"

Adduci says he's seen deals expire on the spot due to live demonstrations that flop. At one conference, an entrepreneur attempted a live Internet demonstration. But when the software his company developed couldn't connect to cyberspace, it no longer looked like such a good investment. The potential drawbacks of corporate videos notwithstanding, Adduci says that for product demonstrations, which can be extremely effective sales tools, use a video for a perfect pitch every time.

Poor listening skills often cause entrepreneurs to blow the Q&A, says Blitshtein. "It's dissatisfying to an investor when he or she asks a question and the answer isn't even relevant," he says. "In fact, it's as close to the kiss of death as there is. By not listening to an investor's question carefully, you reduce your chances of success."

"Again, it comes down to listening," says Blitshtein. He says it takes some experience, but when you follow up, you need to be able to determine when investors are putting you off and when they are simply too busy to talk to you. "When someone tells me they can't talk, I ask when I can call them back. The way they respond tells me almost immediately whether they are interested in our deal."

Adduci recommends following up within a few days of the presentation but no more than three times. Then wait. "If you haven't gotten an answer in two weeks, kiss that investor goodbye. But do it nicely, so you can get the names of at least three more investors before you move on."

"Contacts made early on may at some point become fertile ground for raising capital," says Adduci, "unless, of course, the entrepreneur hasn't kept in touch or, worse yet, was less than gracious when the investor said `no thanks' the first time."


David R. Evanson, a writer and consultant, is a principal of Financial Communications Associates in Ardmore, Pennsylvania. Art Beroff, a principal of Beroff Associates in Howard Beach, New York, helps companies raise capital and go public.

Contact Sources

Future Graph, (215) 396-0720, http://www.futuregraph.com

Regional Investment Bankers Association, 171 Church St., #260, Charleston, SC 29401, (803) 577-2000