The following guest post is by Derek Johnson, CEO & Founder of Tatango, a free, ad-supported, group text messaging startup. We covered their startup here.
What is an Angel Investment Group?
Angel Investment groups usually contain 15-75 members, meet every month or two and consist of “qualified” investors that listen to 3-5 investment pitches every meeting. These groups on occasion also hold events to educate both investors and entrepreneurs on issues relating to investment capital.
How do you get in front of angel investors?
The first step is the application process. Sometimes there is an application fee of $80 - $150, and from my experience, most Angel Groups are using an online website like AngelSoft to accept applications. The site enables entrepreneurs to upload documents such as business plans or pitch decks, create a quick video pitch, and even auto populate other Angel Group applications with the uploaded info.
Pitching to the investment screening committee...
Depending on the group size and the meeting frequency, the group will evaluate the applications and select 5-8 companies to present to the investment screening committee. During the screening process, companies present their powerpoint presentations to a small group of the angels, answer questions, and receive feedback & advice. Usually, the screening committee selects 3-4 companies to present to the entire membership with another Q&A portion. Sometimes, presentations fees can range upwards to $1,500.
So.. how do you pitch them? How can you create a lethal presentation?
I've found that the Seattle Alliance of Angels has the best instructional guide to structuring your powerpoint presentation. You can download the guide they have created here.
However, I'll focus on advice that would have helped me the most when I started pitching to Angel Groups. Many of the following points can make or break an investment pitch. In addition, I've asked Eric Pratum, a past applicant screener and part of the screening committee for the Bellingham Angel Group to give his thoughts, which are below mine in italics.
1. Get Gonnected. Before you apply to an Angel Group, make sure someone on the screening committee knows you. Angel Groups receive hundreds of investment applications - you need someone on the inside who can vouch for you. I've found two ways that work really well to facilitate a connection:
A. Email the group and to see if you can land a meeting with one of their members to see if your investment opportunity meets their criteria.
B. Ask for an introduction from another investor or company that has received investment from the group.
Derek is absolutely right. I can’t tell you how many 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.
2. Help investors relate to your idea. Tatango is focused around a product (text messaging), which appeals mainly to the 18-28 year old crowd. However, I've come across some investors during presentations who've never received a text message. How can you help them relate?
Example: Put your product into perspective. Show the investor how they can use your product in their daily lives. For our group text messaging service, I paint a picture, or scenario: What if your group had to cancel a meeting for snow? Well, the head of the group could send a “message” (see how I didn’t say text message, that would confuse people who don’t know what a text message is) to everyone’s mobile phone within seconds to make sure everyone knew about the canceled meeting.
Tie your product or service to as many applicable things in the investors’ lives that you can. These relations help to build a better understanding of what you are offering. I can guarantee that an investor that does not ‘get’ your company will not invest in it.
3. Mimic Steve Jobs & Apple. Have you seen a Steve Jobs keynote? Look at the slides. Notice how little information is displayed? You should be talking about what each slide means, not boring them with what each slide says. Remember, people can read. Instead of reading to them, talk about what isn’t in the slides.
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.
4. Keep It Simple. Remember, it's likely that the investors are not experts within your industry. If they don’t get what your company does, there is no way they are going to invest, no matter how good the deal is.
Derek does a great job of this. Even though the underlying framework of Tatango is difficult to understand, the premise that they’re trying to connect groups in the best way possible is very easy to understand. Find something like that about your company and start from their when you deal with investors.
5. Investors Time Is Valuable. Be grateful for time taken during the application process and after the full membership presentation. Investors are busy. Make sure they know you appreciate their time.
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.
6. Practice, Practice, Practice. No joke, I've probably rehearsed my investment presentation at least 200+ times. Your pitch should flow naturally from memory. Be able to speak to each slide as if they aren't there.
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.
7. Be Comfortable. Presenting infrong of a large audience can be nerve racking. But, if you can pull it off like a pro, it'll help build confidence with the investors. It's usually hard to find a big audience to practice an investment presentation. However, speaking at high schools and colleges about my experience as a young entrepreneur has given me great practice.
I was once told that Derek gave the slickest presentation our group had ever seen. I agree. 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.
8. Engage your Audience. There's nothing worse than watching a presenter monotonously stand behind the computer to click through slides. Bring your own remote clicker. This will allow you better engage your audience by being able to move around the room.
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.
9. Mind Your Time. Most Angel Groups only allow you a 10-12 minutes pitch. Build your deck to fit within the shortest time alloted. In my experience, thats 10 minutes. I’m always amazed that some entrepreneurs get cut off with remaining slides; especially, when they have the most important slides at the end. This comes back to practicing. Time yourself. 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. The extra time also allows for any unforeseeable things that may happen during your presentation.
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.
10. Make It Pop. I know, I know, content is everything; but, at least make it look good. If you have one, have your graphic designer spiff it up. Just like your pitch, you want your deck to be crisp, too. This takes no less then an hour of their time and is definitely worth it.
Moving graphics can get annoying and/or just take up time, but a pretty presentation will stick in their heads. The same goes for video. It will just eat time, but great pictures can be digested in a split second.
11. Graphics & Charts Kick Ass. Don't just inform your audience, ENTERTAIN them. No investor that falls asleep halfway through your presentation is going to invest. Make your slides interesting, present information in a new way, add your own spin, or throw in some jokes. However, this doesn’t mean using clip art or inserting graphs and images that have no relevance.
YES! Find someone great in Excel and have them make you some good, meaningful charts if you can.
12. 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.
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.
13. Create a Show. I’ve learned this the hard way. whenever you save a powerpoint presentation that you will be using on another persons 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.
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.
14. 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 which is the trends you are trying to express. When you are trying to show trends in numbers, users, growth, financials etc. make sure you do it with charts and graphs.
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.
15. Prepare For Questions Once you have done a few Angel presentations, you'll start to notice a few common questions that are always 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 that you can reference.
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.
16. Gather as much advice and feedback as possible. Always ask others for feedback regarding your presentation and always take a few minutes after a presentation to reflect on what went well and what you can work on in the future.
It’s really tough to get investors to respond to you if they pass on the opportunity to invest, but get any feedback you can. It could be the difference between getting investment after 2 presentations or after 30 presentations.
The following advice has been added by College Mogul:
17. Know your elevator pitch. Everyone should have a 1 sentence pitch. It shows that you know how to succintly communicate your value proposition. If you give some convoluted, run on sentence "pitch", you'll not only confuse your audience, but you'll come across as not truely understanding the mission that your company is setting out to achieve.
Be sure to check College Mogul's other advice: 17 Sales Tips for Startups and It's Better to Sleep with Strangers.
[Please find the original article on Derek Johnson's blog. Minor editing has been applied on this article]
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