Bootstrapper.com - Confessions of Serial Entrepreneurs

In this third installment (and also in the fourth) I break down your presentation into sections, each part being equally important to your overall presentation.. I do this to allow you, the entreprenuer aka the solider, an opporunity to begin pacing yourself in preparation for (and also during) the presentation aka the war. Please use Part 2/4 as an outline for moving forward and use a stop watch to time yourself at each of the intervals. It’s a great habit to begin using a stop watch because it’s almost guaranteed you will either lose course during your presentation or be side tracked. As a result, you need benchmarks in your presentation for ease of use in getting back on track- using a stop watch and acclimating yourself to these benchmarks should do just that.

First off, as refereneced in my previous post, there should be a maximum of ten slides total in your presentation- DO NOT waste a slide on the company name, officers, address, etc. Now obviously there’s a method behind this madness….. the reason you shouldn’t waste a slide on this is simple- because you only have ten slides total!!! In addition, you can simply place a cover page on the materials you’ve handed out to the Angels and reference to it before putting up your first slide. This anciallry information on a slide is a waste of precious space. Furthermore, if this information is put up ahead of time (before you begin your presentation) it will distract the Angels- which is obviously counterproductive. That’s why it’s best to have this information as the cover page of your packet so that your first slide dives right into the material and engages the Angels.

In my last post I alluded to the fact that your presentation starts the minute you open your mouth and that it’s a war moving forward once that silence has been broken. That is partially not the case solider as Angels actually begin evaluating you BEFORE your first words. Angels begin their due diligence process by critiquing every detail about your appearance- your dress, posture, grooming, etc. All of these factors contribute to how Angels view your stature, how you view yourself, your company and your investors- ie how much confidence you have- which speaks volumes to the Angels.

Remember, Angels are successful and seasoned professionals, they know what to look for in a great company and a great leader. These seemingly small points are actually quite imperative- so pay attention to them ahead of time. Everyone knows you don’t show up to an interview in a tee shirt and jeans without shaving for 2 weeks- and this is 50x more important then a simple interview- thus, you should be immaculate. When you’re asking an Angel Group for their hard earned cash you must be very conservative in your attire selection, stand as straight as possible throughout the presentation (keep the lower back muscles flexed) and make sure all hair is groomed neatly and properly whether man or woman. Men can have a perfectly groomed beard/goatee and that’s it! These are rules of the road even before the first words out of your mouth are heard.

The First Minute:

During the first minute of the presentation the Angel Group wants you to connect with them. As stated in my first post- it’s critical that you make a connection with the Angels within the first 2 minutes max! If you fail to do so, you’ve lost the group for the rest of your presentation. Within this first minute, give a short “elevator pitch” about where your idea came from, who was involved, why and what you see as the ultimate “best case scenario” for the company in 5 years.

This explanation needs to be short, concise, to the point, engaging and full of energy. Look eye to eye with each Angel at the table, rotating clockwise and then counterclockwise. Keep your head up and always smile. Your mannerisms, posture, tone of voice, energy and enthusiasm are gauged and noted by each Angel. If you cannot do this successfully, you’ve already lost the Angel Group- which is why it’s so important to prepare heavily upfront (see Part 2/4 for further explanation).

 

As a side note, during this first minute (and before the “bulk” of the presentation starts) DO NOT pass out any documentation/handouts/or have the PPT presentation up. These all serve as distractions for the Angels and take focus away from your presentation during a critical time of engagement. 

In this first minute I would estimate only 35% of presenters take full advantage of this “engagement window.” What most entrepreneurs don’t realize is the first minute dictates the tone (and success) of the rest of their presentation because if the Angels aren’t already engaged before the “bulk” begins, they simply won’t pay attention to you. It’s simple why most (the majority of the other 65%) fail to accomplish engaging Angels with their elevator pitch- they lack adequate mannerisms and communication skills (both verbal and non-verbal). This could be anything from having a monotone voice like Ben Stein (boring your audience to death) or crossing your arms in front of you throughout the presentation (implying that you’re defensive).

First Minute – Third Minute:

Now that you were able to connect with and thoroughly engage the group of Angels in front of you it’s time to get to work. In this next interval of time you should give a macro-level overview of your target market- describe the addressable market size, who the target consumer is and how your product/service adds value (essentially how the product/service benefits the consumer both physically and mentally). Your product/service value-add is most important- is it cheaper, easier to use, a more advanced and/or proprietary technology, etc? If you cannot clearly articulate the value-add or USP, better known as the unique selling proposition of the venture (versus other competitors) then the odds of you receiving any Angel funding is minimal at best.

 

 

Any seasoned Angel Group wants a clearly articulated USP and the lead time of that product/service versus competitor entry into the marketplace- ie how long is it before competitors acquire the competencies, assets, strategic partnerships, etc to produce the product themselves and scale it? Once you’ve entered the marketplace and others (normally incumbents) identify it as an attractive opportunity, they will immediately begin R&D to eventually try and unseat you- thus greater competition is created as companies continually vie for the same loyal consumer base. Furthermore, Angels also want to see not only the USP, but what you’re going to do once the USP is lost as the competition’s R&D will eventually catch up with your firm, normally three years down the road (although it’s variable based on the maturity of the industry/segment/niche). Being able to articulate a forward thinking plan and vision goes a long way with Angels because it shows a willingness and flexibility to evolve the business. Some entrepreneurs unfortunately think of the venture they started as “their baby,” which they want to nurse, nurture and not listen to others opinions. This is a fatal mistake as constructive criticism on how the model must evolve to become or stay competitive is invaluable.  I’ve seen it time and time again. Bottom line, as I always say- I need to understand “how and why the grass is greener on the other side…… and beyond then as well.”

Another area most entrepreneurs overlook in this segment is articulating how the venture benefits not only the specific target consumer, but also the greater public in general. For instance, many times I’ve witnessed presentations where a presenter only focuses on how Joe Smith is benefited by taking XYZ drug. Well that’s fine and dandy to the Angels, however, they also want to know about the effects this drug could have (both positive and negative) on the healthcare industry, other pharmaceutical companies, Joe’s family or even our culture in general. A great example is Viagra- this pill changed our culture and the public’s perception of “hush hush” problems/ medicines through mainstream advertising as Pfizer brought the problem to hard print, tv, radio, etc. Yes of course, you should spend 85% of your time in this final minute talking about how your product/service benefits your target market, but don’t forget about the 15% of time that should hypothetically explore the more macro-level implications of your product/service.

 

Below are some well known buzz terms used by Angels (and often sought out in presentations) which always should be thrown sporadically into the mix. This will certainly peak an Angels ear because you’ll be speaking their “lingo.” They include:

• The Current State – What is the problem your target market has? Do they want to solve it, avoid it or is there simply an unserved or underserved niche that you want to fulfill?
• Seriousness of the State – What are the implications for your target market if the product/service isn’t adapted in the marketplace?
• The Desired Future State – If it was up to you, where would the consumer be in 2, 5, 10 years as a result of adaptation of your product/service in the marketplace? Articulate the problem that was corrected, mitigated, avoided or created so that an opportunity to produce follow-on product offerings is developed (as seen with skincare lines).

During this time period, less the 15% of entrepreneurs will articulate this section correctly. This is your opportunity to present the “gist” of your venture to the Angels and why the marketplace cannot live without your product/service. Where individuals fail in this instance is in clearly articulating how their product/service relates to and influences each of the different buzz terms.

Another major mistake by entrepreneurs involves talking to the Angels (at length) about the general benefits of the product and how it’s better then the incumbents current offering. For instance (hypothetically), your new product/service is a build-on technology to a search engine. Instead of stressing the benefits of that build-on technology to the consumer, most entrepreneurs just focus on how their product is better versus the incumbent(s). This is a grave mistake as Angels see your presentation through a dual lens- both as the consumer and also as an investor (ie what’s in it for them). Make sure to appeal to both of those lenses.

Third Minute – Fifth Minute:

In this part of your presentation you get down into the nitty gritty of the product/service and the solution it brings to the table. Here you must detail how the new invention/platform is significantly better then what currently exists on the market- ie key features, benefits, etc. The further you can distinguish yourself from what’s in the market, the better, because your product/ service must blow the competition out of the water or you’ll be presenting to deaf ears. By blown out of the water, I mean that as an Angel myself I want to see a product that’s EXPONENTIALLY 3x – 5x better then what’s on the market. Read that again, that’s not simply a multiple of three to five, that’s an exponential growth figure. Here is where you should also talk about the intellectual property (IP) of your venture- whether it’s in patents, strategic partnerships, unique competencies of the management team or some other hard to replicate/barrier to entry for competitors. Angels care about risk mitigation and unless your product performs exponentially above what’s out on the market now and is solidly protected (as nobody can have a complete picture of what’s about to be released or in early R&D stages) you’re not going to get funded.

Thus, it’s also a good idea to address how to combat products/services which may be in development by other competitors but aren’t out on the market yet. It’s key to address not only what’s out on the market now but also what could be in 6 months, 1 year and 3 years. The S-Curve of innovation in most industries dictates that your product/service offering will change dramatically within three years due to hypercompetitive marketplace conditions- which is something Angels want to hear you speak about. You ask why would they want to hear me beat up myself and my idea? Because it’s essentially a constructive critique of yourself and your venture, which exemplifies your forward thinking outlook, and Angels perceive this as a risk mitigation quality/talent. Even if you just mention this point and you don’t have a set plan in place, it’s a point which 95% of all presenters I’ve seen will overlook.

But if you are ready (and I firmly suggest that you are) to articulate the future you see for your target industry, its players and how your company will evolve- by all means go for it in a short and concise manner- build an easy to ready diagram or highly impactful demonstration. Both will be very much appreciated by the Angels in attendance and can only further your credibility and the vision you’re trying to relay to the Angels- but make sure it’s macro-level and not bogged down with details. Short and concise, short and concise!!

Next you should explain to the Angels how your product/service will be commercialized- ie installed, integrated, merged and how customer service is involved. Customer service in my mind MUST be touched upon. I come from background at Nordstrom, where the customer is always king and in my mind it’s the way to go- put the customer first and foremost with a back-end solution to solve all their needs as seamlessly and non-bureaucratically as possible.  As we know from Dell, this can be a make or break element of your model- especially once it begins to scale. This leads to the next point- circle back to the IP once again now (reinforcer) and detail your plans for the scalability of the venture. Do this only AFTER you’ve talked about the customer service outlay because Angels will be impressed with this approach I can guarantee it. Customer service is an often overlooked art in my mind and a great lead-in into reinforcing your IP and then detailing how to scale the model.

BUT BEWARE………. as stated in Part 2/4… it’s imperative that you remember throughout this section that possibly only two or three members out of the entire Angel Group will have specific and deeply entrenched competencies in your target industry. Therefore, avoid as much of the technical “mumbo jumbo” as possible in this section- if you speak above their heads in any regard, once again you loose and you’ll be talking to deaf ears for the duration of your presentation. Remember it’s all about engaging the Angels- technical wording doesn’t interest an Angel at this point and honestly you don’t have the time to get into an in-depth outlay with all the bells and whistles- do that later during the Q&A session as it’s bound to come up. Use the follow-on Q&A to your advantage and intentionally omit overly technical elements as they will be prodded into further I can guarantee. In addition, the Q&A session is much less time intense (especially if you’ve kept the Angels attention by engaging them) so you’ll be able to loosen up and take a breather when answering questions since you’re not on an exact time schedule.

When ending at five minutes the last point to touch upon is an expounded (both macro and micro) version of the value your product/service brings to the consumer. It’s monumentally important to proceed more in-depth into this here- building upon what you spoke about in your “gist” in the previous minutes. On a macro-scale (it’s up to you to tailor on a micro-scale based on your industry Mr./Ms.Entrepreneur) hammer home the vital importance of getting your product out on the market both in terms of what it will do and what it will solve. If the implications of your product/service are overwhelmingly positive for the consumer and it has a disruptive possibility, ie changing the future of an industry (desired future state) then right now you’re half way home warrior because the first five minutes just few by.

Right now, you the entrepreneur are half way through your presentation. If you’ve battled this far and won- you’ve done a tremendous job, keep it up solider, don’t get cocky and continue to excel through the rest of the presentation. If you’ve gotten this far without blank stares then you’ve done your job and you have the Angels hooked for the rest of the presentation (including Q&A). If you are getting those blank stares and people begin to shuffle around or gaze elsewhere besides directly at you- unfortunately it’s most likely over for you buddy as the investors will now turn to giving words of advice at the end of your presentation instead of wanting to invest.

Less then 15% of you will get to this point successfully- it’s a hard road make no mistake about it- and that’s why preparation is so vitally important- getting Angel funding could literally change your life. Most entrepreneurs will do quite well up until they have to circle back and articulate the customer value proposition in more detail. This is where most entrepreneurs infamously slip up and the reason 85% of presenters loose the war within five minutes.