I spent the afternoon in Boston coaching entrepreneurs who are preparing investor pitches. I provided some tips to the entrepreneurs and want to share a few of them here:
Quickly describe what your business does and how it will make money: Within the first 30 seconds, it should be clear to your investor audience what your company does to make money. Investors tend to have a short attention span and so you want to get their attention quickly during a pitch. Another good guideline from Jon Karlen at Flybridge was to make sure you can get through your entire pitch, unrushed, in 1 hour.
Don’t spend too much time on the market size of the opportunity if you’re pitching investors who are intimately familiar with your market: If you are pitching a digital media firm who has made investments in the Internet advertising space, you don’t need to spend time telling the firm about the growth potential of online advertising. Use the time you’ll save by cutting out the market size discussion and spend it fleshing out other areas of your business.
Make sure the margins in your financial projections are realistic: Several times I’ve seen business plans that indicate a company will achieve a net margin of 25%+ at scale. There are not many businesses that I can think of that can achieve those margins. The two that come to mind are Google and Microsoft. Therefore, the logical assumption is that the author of the business plan thinks their business will be the next Google or Microsoft, but in actuality I think that people don’t bother comparing their predicted margins with comparables from their industry. It’s never a bad idea to spend time researching public market comparables, so when you do, make sure you check some of the key ratios and margins to make sure you’re relatively in line with the rest of your market.
Mark Davis spends a great deal of time discussing pitch do’s and dont’s on his blog if you’d like some more information on this topic.