Bootstrapper.com - Confessions of Serial Entrepreneurs

In this third chapter, 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 entrepreneur aka “the solider,” an opportunity to begin pacing yourself in preparation for, and also during, the presentation aka “the war.” Please use Part 2/4 as an outline for initially moving forward and use a stop watch to time yourself at each of the intervals. It is a great habit to begin using a stop watch because I can almost guarantee 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 will do just that.

First off, as refereneced in the previous section, 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 is a method behind this madness. The reason you should not 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 it before putting up your first slide. This anciallry information on a slide is a waste of precious space, 10% of your slide deck to be exact. Furthermore, if this information is put up ahead of time, such as before you begin your presentation, it will distract the group of angels, which is obviously counterproductive. Thus, it’s best to have this information as the cover page on your packet so your first slide dives right into the substantive material and engages the angel group immediately.

In the last section I alluded to the fact that your presentation starts the minute your mouth opens. This is only partially the case solider as angels actually begin evaluating you BEFORE your first words. Angels start 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 they believe you view yourself, your company and your investors. At the end of the day they’re searching for how much confidence you have, which speaks volumes.

Remember, angels are successful and seasoned professionals. They know do 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 do not show up to an interview in a t-shirt and jeans without shaving for two weeks. This is 50x more important then a simple interview, thus, make sure your appearance is 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 up as possible throughout the presentation (keep the lower back muscles flexed) and make sure all hair is groomed neatly and properly. Men can have a perfectly groomed beard/goatee. 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 your presentation the angel group wants you to connect with them. As stated in the first chapter- it is absolutely critical to make a connection with as many angels as possible within the first two minutes. 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 five 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 will lose the group, which is why it is extremely important to prepare heavily upfront (see Part 2/4 for further explanation).

Note: During this first minute, before the “bulk” of the presentation starts, DO NOT pass out any documentation/handouts or have your slide deck up on a screen. 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.” Most entrepreneurs do not realize the first minute dictates the tone for the rest of the presentation. If the angels are not already engaged before the “bulk” begins, they simply will not pay attention. There is a simple answer to 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 yourself throughout the presentation (implying you’re defensive).

First Minute – Third Minute:

Since you were able to connect with and thoroughly engage the group of angels in front of you, it’s now 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. Value is defined as how the product/service benefits the consumer both physically and mentally. Your product/service value-add is most important to the angels. They want to know if it is cheaper, easier to use, a more advanced and/or proprietary technology, etc. If you cannot clearly articulate the value-add or unique selling proposition (USP) of the venture (versus other competitors) then the odds of receiving angel funding are minimal at best.

Any seasoned angel group seeks to be engaged by a clearly articulated USP. Angels not only want to learn about the USP, but also seek to hear what you’re going to do once the USP is lost as the competition’s R&D will eventually catch up with (and possibly surpass) your firm. As a result, they are very interested in understanding the competitive marketplace lead time your unique product/service has versus the competition. Said another way- how long is it before competitors acquire the competencies, assets, strategic partnerships, etc to produce the product/service themselves and are able to scale? Once you’ve entered the marketplace and incumbents identify your product/service offering as an attractive opportunity, they will immediately begin R&D to eventually try and unseat you. Thus, greater competition is created and margins fall as companies continually vie for the same loyal consumer base through innovation.

An “unseating attempt” normally occurs three years down the road, although it is variable based on the maturity of the industry/segment/niche. Being able to articulate a forward thinking plan and vision gives you clout with angels because it exemplifies a willingness and flexibility to evolve the business model. Some entrepreneurs unfortunately think of the venture they founded as “their baby.” They want to nurse and nurture the venture as well as for all intensive purposes- refuse to 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 have seen this scenario time and time again. Bottom line, angels need to understand how and why the grass is greener on the other side- and beyond as well.

Another area most entrepreneurs overlook during 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 have witnessed presentations where the founder only focuses on how Joe Smith benefits by taking XYZ drug. That is a great start, however, the angels 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, and radio. You should spend 85% of your time in this final minute talking about how your product/service benefits your target market, but do not forget about the 15% of time dedicated to exploring 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 angel’s 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’re seeking to fulfill?
• Seriousness of the State – What are the implications for your target market if the product/service isn’t adopted in the marketplace?
• The Desired Future State – If it was up to you, where would the consumer be in two, five and ten years as a result of adopting your product/service in the marketplace? Articulate the problem that was corrected, mitigated, avoided or even created. In terms of creating a problem, this gives the venture an opportunity to develop follow-on product offerings. This strategy is normally seen with skincare lines.

Less then 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. In this section, early-stage management teams normally fail to clearly articulate how their product/service relates to and influences each of the above different buzz terms.

Another major mistake by entrepreneurs during this section of the presentation involves going on a tangent- talking to the angels at length about the general benefits of their product/service and how it’s better then the incumbents current offering. For instance, your new product/service is a build-on technology to a search engine. Instead of stressing the benefits of the build-on technology to the consumer, most entrepreneurs just focus on how their product is better offering 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 (what’s in it for them on the upside when then invest). 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 your product/service offering and the solution it brings to the marketplace. Here you must detail how the new invention/platform is a significantly better offering then what currently exists in the marketplace, such as key features and benefits. The further you can distinguish your offering from what’s currently in the marketplace, 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 an angel wants to see a product that’s EXPONENTIALLY 3x – 5x better then what’s currently on the market. Read again- not simply a multiple of three to five, that’s actually an exponential growth figure. Here is where you should also briefly detail 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 and/or barrier to entry for competitors. Angels focus on risk mitigation and unless your product/service performs exponentially above what’s out on the market, and is solidly protected (because nobody can have a complete picture of what’s about to be released or in early R&D stages) - your odds of being funded are quite slim.

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 currently released in the marketplace. It’s key to address not only what’s out on the market now, but also what could be in six months, one year and three 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. Angels want to hear you speak about this. You ask, “why would they want to hear me beat up myself and my idea?” They want to because it’s essentially a constructive critique of yourself and your venture, which exemplifies a forward thinking outlook. Angels appreciate this and perceive such a characteristic 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 overlook. Addressing what’s in development by your competitors upfront will invariably make your presentation stand out from the crowd.

If you can articulate the future you see for your target industry, its incumbents and how your company will evolve (and I firmly suggest that you be able to do so), make sure to articulate these details in a short and concise manner. Some suggestions include building 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 convey. However, heed my warning- make sure it’s macro-level and not bogged down with details. Short and concise, short and concise!!

Next, explain to the angels how your product/service will be commercialized- is it installed, integrated, merged and how is customer service involved? Customer service in my mind MUST be touched upon. It’s been my experience that businesses which integrate a core philosophy of the ‘customer is king” have an increased amount of brand equity, which translates into a greater likelihood for long term success. These businesses 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’ve learned from Dell, this can be a make or break element of your model, especially once it begins to scale. Now circle back and reinforce your IP by detailing your plans for its evolution in parallel with the scaling of the venture. Do this only AFTER you’ve talked about the customer service outlay because angels will be impressed with this approach. Customer service is an often overlooked art and a great lead into reinforcing your IP and then detailing how to scale the business model.

BUT BEWARE, as stated in Part 2/4, it’s imperative 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 lose, 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 give an in-depth outlay with all the bells and whistles. Do so later during the Q&A session. Use the follow-on Q&A to your advantage and intentionally omit overly technical elements as they will be prodded into further during this time. The Q&A session is much less formal if you’ve managed to keep the angels attention by engaging them, which should allow you to loosen up since you’re not on an exact time schedule.

When approaching 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 with a more in-depth explanantion into this specfic point- building upon 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) 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, such as 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 it’s a job well done 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 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 is 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 lose the war within five minutes.