How to prepare for investor presentations

A case study for reveals how companies can increase their chances of funding by getting their investor presentations right.

As a public relations professional and serial entrepreneur, Lee Henshaw might be expected to take investor presentations in his stride. Henshaw has raised finance for three companies, including his latest venture Happy Cuttings, but he still had more to learn.

Henshaw approached gateway2investment (g2i), a programme managed by the London development agency designed to help London-based technology companies succeed when trying to secure investment. He wanted to go through its ‘readiness programme’ to learn how to ’increase my understanding of our product and learn how to present it to investors.’

Already having plenty of experience in both raising money and running a business, Henshaw says he wasn’t expecting to hear much that he didn’t already know. With his new venture rooted in the PR sector, he felt he already had a credible business plan.

Little did he know

By the end of the four-day session, all that had changed. He’d turned a UK project into a global one, refined his business model, rethought his philosophy on investor relations and even dumped his company name. He’d also found out the true meaning of the phrase ‘nerve-wracking’ and recalls how he ‘turned up thinking I knew everything, and they thoroughly slapped that out of me.’

Part of an agency’s job is to try to get editorial coverage for their clients in newspapers and magazines. It’s usual to provide press cuttings after the event to show clients what’s been written about them. In traditional print media, specialist service companies often provide those cuttings – but internet tracking is still in its infancy. It’s a laborious and time-consuming task, particularly as some articles only appear on news sites for a few hours, and it all has to be done manually.

Happy Cuttings is developing search technology to meet this online need, tracking down stories on the web and putting them into a report for agencies with relevant context. Working with a freelance developer and project manager, Henshaw put £25,000 of his own money into the venture. He must then seek to raise around £1 million and aims to offer the service across multiple industries and expand globally.

Challenged by investors

His original plan had been to provide a service purely for the UK entertainment sector, but one of the first things he was asked during his g2i presentations was why he was limiting his options. ‘If an idea works and meets a real need, investors want to scale it as far as it will go,’ says g2i.

The g2i team wanted to know what his sales projections were based on. ‘I had a very vague understanding of the amount of PR companies that exist in this country and how substantial they are,’ he says, ‘now I’ve got a better understanding of the global PR market – for example, what percentage of publicists work in technology or entertainment. So I have a lot more regard for the potential market size of the product. It reminded me how important research is.’

The shareholders in another of his ventures are relatively passive and don’t expect many reports, says Henshaw, but most angel investors and pretty much all VCs are far more demanding.

The sessions taught him about monthly management accounts, 12-monthly projections and other investment reports – in short they ‘made me more serious about how I treat investors’. He picked up information about the Enterprise Investment Scheme, which is designed to help smaller companies raise capital by providing tax relief for investors on certain shares.

Even the name he’d chosen came under fire at the workshop. ‘Five Leaves Left’ was named after the songs of one of Henshaw’s favourite folk artists. But as an investor asked at one of his presentations: ‘Why not just call it what it is?’

Grilled by his peers

The presentations to investors turned out to be the most gruelling part of the process for Henshaw, despite his years of experience. ‘I had to present to an audience of 20 to 25 people. I found it nerve-wracking – they constantly critiqued me. It was one of the most unnatural things I’ve done. I’m used to presenting to clients and I like public speaking, but presenting my idea in one minute was really difficult. At the end of the course, I felt I’d grown enormously in stature.’

Although he’d raised money before attending the workshop, he’d only done so informally. Since his g2i experience, he’s gone on to raise £925,000 for two other companies he’s involved in and he credits part of that success to his investment readiness experience.

‘When you first do it, you think of the investors as “them and us”,’ he says, ‘but with a social networking event, it just gets easier and easier to talk to them. It’s possible that the investment for Happy Cuttings will come from outside my community, and from someone with a history of investing in technology.’

He concludes: ‘The most beneficial thing was meeting other entrepreneurs, watching them pitch and listening to their critiques of our business plan. At times you can feel like giving up – but putting you in the company of other entrepreneurs really dissuades you. You realise some people have got really bad ideas and some are brilliant, and you can see where yours falls.’

Find out how to write a business plan.

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