You have prepared your business plan, completed your financial forecasts and secured a meeting with a potential investor. The next challenge is deciding how to present the opportunity effectively.
Presenting a business plan to investors does not usually mean working through the document page by page. Your business plan provides the detail and evidence behind your investment proposition, while your pitch deck helps you communicate the most important points clearly and concisely during the meeting.
Your financial forecast then provides the numbers that support your growth plans and investment requirement.
Used together, these documents can help you explain where your business is today, where you want to take it and why an investor might want to be part of that journey.
Understand the purpose of the investor presentation
An investor presentation is an opportunity to generate interest in your business and demonstrate that the investment proposition deserves further consideration.
It is unlikely that you will be able to cover every aspect of your business during a relatively short meeting – nor should you try to.
Instead, concentrate on the information an investor needs to understand the opportunity.
This will normally include:
what the business does;
the problem or market need you are addressing;
your target market;
evidence of demand or traction;
your competitive advantage;
your business model;
your growth strategy;
your management team;
your financial forecasts; and
how much investment you are seeking and what it will be used for.
The detailed business plan can provide additional information where the investor wants to explore a particular area further.
Don't present your business plan page by page
One of the biggest mistakes you can make is treating your investor meeting as a presentation of the written business plan itself.
A detailed business plan might contain 20, 30 or more pages of information. Attempting to work through every section is likely to result in a presentation that is too long and difficult to follow.
Instead, think of your business plan as the evidence base behind your presentation.
It contains the research, analysis, strategy and assumptions that support the investment proposition.
Your pitch deck should extract the most important information from that plan and turn it into a much shorter presentation that allows you to tell the story of the business.
Use your pitch deck to tell the story
Your pitch deck should guide the investor through the opportunity in a logical order.
There is no single format that every business needs to follow, but a typical investor pitch might cover:
The problem
What customer problem, need or opportunity have you identified?
Your solution
What does your business provide and how does it address that problem?
The market
Who are your customers and how large is the realistic market opportunity?
Traction
What evidence do you have that customers want your product or service?
Competition
What alternatives are available and why is your proposition different?
Business model
How does the business generate revenue?
Growth strategy
How will you increase sales and build the business?
The team
Who is responsible for delivering the strategy and what relevant experience do they bring?
Financials
What are your key forecast revenues, costs and profitability?
Investment
How much are you raising, what will you spend it on and what should that investment enable the business to achieve?
The precise order can vary, but there should be a clear progression from identifying the opportunity to explaining how investment will help you exploit it.
Keep your slides simple
Your slides are there to support what you are saying rather than replace you.
Avoid filling them with paragraphs copied directly from the business plan.
Use concise statements, charts, images and key figures where these help communicate the information more effectively.
For example, a chart showing forecast revenue growth over five years may be much easier to understand during a presentation than a table containing 60 months of forecast figures.
Similarly, if you are explaining how investment will be allocated, a simple breakdown of the main uses of funds may be more effective than showing investors a detailed cash flow forecast.
The detailed information can remain in your business plan and financial model for investors who want to examine it.
Know your numbers
Investors are likely to ask questions about your financial forecasts, so you need to understand the numbers behind your presentation.
You do not necessarily need to memorise every figure in a detailed financial model, but you should be comfortable discussing the key numbers.
These could include:
current and forecast turnover;
gross and net margins;
major operating costs;
customer numbers;
average customer value;
cash requirements;
break-even;
the amount of investment required; and
how long the funding is expected to support the business.
The measures that matter most will depend on your business model.
You should also understand the assumptions behind your forecast.
If you are forecasting £3 million of sales in Year 3, for example, be prepared to explain how many customers or transactions are required to generate that revenue and why you believe that level of sales is achievable.
Make the investment requirement clear
An investor should not reach the end of your presentation wondering how much money you actually want.
State your funding requirement clearly.
You should also explain how the investment will be used. For example, funding might be required for recruitment, marketing, product development, equipment, new premises or working capital.
But don't stop at explaining where the money will go.
Try to demonstrate what the investment is expected to achieve.
For example, rather than simply saying that £200,000 will be spent on sales and marketing, explain how that expenditure fits into your growth strategy and what milestones you expect the business to reach as a result.
This helps the investor understand the relationship between the capital being invested and the future development of the business.
Use your financial forecast to support the presentation
Your pitch deck will normally contain only a summary of your financial forecasts.
Your full financial forecast provides the detail behind those headline figures.
The forecast should be consistent with everything you have said during the presentation.
If your pitch describes plans to recruit additional staff, expand into a new market or increase production capacity, the costs associated with those activities should appear in the financial model.
Likewise, your sales forecasts should reflect the growth strategy described in the business plan.
Investors may want to explore the assumptions behind your figures in considerably more detail after the initial presentation, so make sure the numbers can withstand further scrutiny.
Demonstrate traction where you have it
Evidence that customers are already interested in your product or service can be particularly powerful during an investor presentation.
If the business is trading, this might include revenue growth, customer numbers, repeat purchases, subscriptions, contracts or other relevant measures.
An early-stage business may have different evidence, such as successful trials, pre-orders, letters of intent, pilot customers or market testing.
Choose the measures that provide the clearest evidence that the opportunity is real.
Avoid overwhelming investors with every metric you have available. Concentrate on the information that genuinely helps demonstrate progress and demand.
Be realistic about competitors and risks
Investors are unlikely to expect your business to operate without competition or risk.
If you are asked about competitors, avoid dismissing them or claiming that you have none.
Explain who the main competitors or alternatives are, how you differ and why you believe customers will choose your proposition.
You should take a similar approach to risk.
Demonstrating that you understand the challenges facing the business – and have considered how to manage them – can be more credible than presenting an unrealistically positive picture.
Your business plan can contain a more detailed competitor and risk analysis, while your presentation concentrates on the factors most relevant to the investment proposition.
Prepare for questions
The questions investors ask can be just as important as the presentation itself.
Try to anticipate the areas they are likely to explore.
You might be asked:
Why do customers choose you?
How have you validated demand?
What prevents a competitor from copying your idea?
How will you acquire customers?
What assumptions drive your sales forecast?
What happens if sales are lower than expected?
Why are you raising this amount?
How long will the investment last?
What additional funding might be required?
What are the biggest risks facing the business?
Practising your answers can help you respond clearly without sounding as though you have memorised a script.
It can also expose weaknesses in your plan before an investor identifies them.
Make sure your documents agree
Your business plan, pitch deck and financial forecast should tell the same story.
If the pitch deck says you are seeking £750,000 but the business plan says £500,000, an investor is likely to notice.
The same applies to sales forecasts, staffing plans, market information and growth milestones.
Before presenting your business, check the documents together.
Make sure the latest version of the financial forecast has been reflected in the business plan and pitch deck and that key figures are consistent throughout.
This sounds simple, but investment documents often develop over time and inconsistencies can easily appear as assumptions change.
Practise the presentation
Knowing your business well does not automatically mean that presenting it will be easy.
Practise the complete presentation before meeting investors.
Time yourself and identify any sections where you are spending too long on background information or technical detail.
You should be able to explain your business in straightforward language, particularly if investors do not have specialist knowledge of your sector.
It is also useful to practise with someone who is not closely involved in the business. If they struggle to understand part of the proposition, an investor may do the same.
What should you take to an investor presentation?
At a minimum, you should have access to your pitch deck, business plan and financial forecasts.
Depending on the business, you might also have supporting material such as product demonstrations, market research, technical information or customer evidence.
You don't necessarily need to present all of it.
The aim is to have the supporting information available if the discussion moves into greater detail.
Think of the three main documents as having different roles:
The pitch deck communicates the opportunity.
The business plan provides the supporting detail.
The financial forecast demonstrates how the strategy translates into numbers.
Together, they give investors different levels of information depending on how deeply they want to examine the opportunity.
Presenting your business to investors
A successful investor presentation is not about squeezing your entire business plan into a short meeting.
It is about communicating the investment opportunity clearly enough for investors to understand the business, its potential and what their capital could help you achieve.
Use your pitch deck to tell the story. Use your business plan to provide the evidence. Use your financial forecasts to demonstrate that the strategy and investment requirement have been properly thought through.
Most importantly, know the information behind all three.
The more clearly you can explain the opportunity, your assumptions and your plans for growth, the better equipped investors will be to decide whether they want to continue the conversation.
Preparing to approach investors?
Business Plan Writers prepares professional investor business plans, pitch decks and detailed financial forecasts for businesses seeking investment.
We can help you ensure that the strategy, financials and investment proposition are clearly presented and consistent across your investor materials.
Find out more about our Investor Business Plan service and how we can help you prepare for approaching potential investors.