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Pitch Perfect: Common Sense Tips for Making a Successful Angel Investment Presentation

Private Equity and Venture Capital Alert | March 18, 2015
By: James F. Coffey

Most start-ups don't need to be told the importance of an effective pitch.  The pitch attracts financing which propels the company into the marketplace.  Because investors in angel groups are usually well-connected, one stellar pitch can trigger interest from others.  Conversely, a flop can really harm your chances elsewhere.

But what comprises a successful presentation? How do you avoid a flop?

I've compiled the following tips from my experience sitting on both sides of the table as a legal advisor to start-up companies and as an investor with the Boston Harbor Angels.

Understand your audience.  Know the demographics of the group, and know what type of answers they want to their questions.  Angel investors are not afraid of taking risks and they want a high return on their investment.  For example, equity is typically more appealing to angels than a convertible note.  Angel investors are not looking to invest in a lifestyle business—they want to know your ability to sell the company for a high return within three to five years.

Take advantage of coaching opportunities.  Use the coaching assistance angel groups offer.  These opportunities are largely under-utilized, but they are chances to get feedback from those who are familiar with the demographics of the angel group.  Coaching offers valuable insight into what the angel group is looking for, and the sessions will expose you to the different types of questions investors will ask.

Be prepared.  Do your homework on the industry and the market competition and be prepared to have support for your financial projections and your pre-money valuation.  Be prepared to demonstrate that your IP is protected or protectable and provides a sufficient picket fence around the technology to protect your idea from competition.

Be flexible.  Be willing to make adjustments to the business plan and deal terms, and be receptive to constructive advice.  A stubborn founder usually leaves the presentation room empty handed.

Make your presentation clear, clean and visually appealing.  Create a presentation that is easy to view and to understand.  Ten minutes is the standard length, and your CEO should be the one presenting.  The slide deck should be uniformly formatted and uncluttered to enhance the presentation rather than distract from it.  The ten essential components of the slide deck are:

  1. Problem.  State the issue you are trying to solve.
  2. Your solution.  Explain how are you going to solve it.  Include an easily digestible description of your technology.
  3. Level of market disruption.  Show how disruptive your technology or product is to the market, and why this disruption makes the company a compelling investment option.  Why can you solve this problem better than IBM or Google?
  4. Development timeline.  Include a visual representation of your company's accomplishments and what lies ahead.
  5. Target market.  Describe the target market for your technology or product.  How big is the pie and how large a slice are you hoping to capture?
  6. Competitive landscape.  Examine the competition in your company's space and demonstrate how you are better able to solve the problem and capture the market.
  7. Financial projections.  Provide a visual representation of your financial projections for the next five years.  Be aware that the investors want to see a high return and a lucrative exit.
  8. Deal.  Detail the terms of the deal including the offering and pre-money valuation.
  9. Exit strategy.  Explain your exit strategy.  The investors will be keyed in on the return they will gain from your exit.
  10. Team.  Describe the credentials of your main officers.  You want to instill confidence in your experience and your ability to run the company.

In sum, clearly state what you do, why you're different, and what the investor's return on investment will be.  Focus on why your company is in a better position than others to disrupt the market and capture a large share of it.

The essential components of a presentation to angel investors are not rocket science, and the perfect pitch is not out of reach.  If you are able to master these basics, you will be better situated to successfully launch your company into the marketplace.

As part of the Corporate Securities and Finance Groups, Jim Coffey provides strategic counsel to companies in all phases of transition, including start-ups and early stage development companies seeking angel funding, as well as fully mature business ventures seeking insight on mergers, acquisitions and other exit strategies. Jim can be reached at 617.748.5206 or coffeyj@whiteandwilliams.com.

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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