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INVESTOR AND DONOR RELATIONS PRESENTATIONS
Article by Herb
Rubenstein,
President and Founder, Herb Rubenstein Consulting and
Adam Levin,
Vice-President, Informaiton Experts, Inc.
Introduction
Obtaining investors
or donors (in the nonprofit world) in this market is not easy. What
used to pass for an adequate presentation to a group of investors
is no longer adequate. A mere PowerPoint presentation with embedded
excel spreadsheets is no longer the standard. Investors want entrepreneurs
to convey accurately the history of their business operations as
well as its predicted future with facts, not assumptions as the
key supporting ingredient.
Investor presentations
in 2003 must convey a new level of thoroughness to convince wary,
and often burned, investors. While many books have been written
on the art of creating effective presentations, this article summarizes
an often neglected area that exists behind the scenes in creating
investor and donor relations presentations. For a more thorough
analysis of all aspects of the art of presentations, see the classic
How to Create High Impact Business Presentations by Professors Joyce
Kupash and Pat Grimes (NTC Business Books, 1993).
Each company,
start up or non-profit must decide if it is worth the $5-10,000
investment to bring in a serious communications firm to help create,
package and help deliver the investor/donor presentation opportunity
to potential investors/donors. Whether or not you are considering
using a communications firm, it is now clear that the investor/donor
presentation must lay out kernels of wisdom and the key business
facts derived from at least twenty separate documents. These documents
are listed at the end of this article and become the source of information
for either your in-house message and presentation developers or
your outsourced communication firm that will undertake to create
the presentation.
What is clear
today is that if you use a communications firm, it must be thoroughly
educated about your organization and your organization’s key
message. It must also understand your audience’s characteristics.
By signing a non-disclosure-agreement, NDA, with a communications
firm, a company or organization can protect its valuable and confidential
information while providing the key information needed by communications
firms to prepare winning communication presentations and strategies.
Organizations can no longer afford keeping this information from
communications firms working for them and organizations should be
wary of communications firms that say they do not need these documents
to prepare state of the art investor and donor relations presentations.
The
Weaving Process
In the year
2000 story telling became the rage. Leaders took courses in how
to develop a theme, stimulate excitement, build anticipation and
conferences like those of the International Leadership Association
in Seattle in November 2002, even had a person with a job title
called “Conference Weaver.”
Investor or
donor presentations, which usually last only 10 to 20 minutes in
their “lecture” format, must do the following:
- Define the
problem in the marketplace (or society)
- Show the
company’s or non-profit’s capability to solve the
problem and stay ahead of the competition
- Show that
the organization fully understands the entire set of economic
challenges the company or non-profit will face
- Lay out
all of the finances of the organization’s past and future
- Present
the management team accurately
- Show the
uses of the money being sought
- Explain
the return on investment (ROI) projections for each investor or
the social returns that will result from the donations
These facts
and projected facts are essential when seeking funds from donors
and investors. While facts tell most of the story, the impact of
the quality of the presentation can not be underestimated. As John
May and Cal Simons clearly state in their book, Every Business Needs
An Angel: Getting The Money You Need To Make Your Business Grow
(Crown Business, Random House, 2001), “But he also invested
because of the strength of Bob’s presentation (italics in
the original), presentations that are world class make a huge difference
in the results they produce.”
May’s
book presents a thorough explanation of all aspects of the money
solicitation process, including a thorough explanation of key elements
of the investor relations presentation. (Much of the book is also
relevant to the non-profit organizations seeking large donations
from individuals, groups and foundations, although it was not written
with this audience in mind).
Ultimately,
with regard to a company seeking investors, the presentation needs
to be able to answer this simple question from potential investors.
“If I
invest x dollars how much am I projected to get back and when?”
(The ROI, return on investment, question).
And from the
non-profit perspective, the Executive Director or whomever is soliciting
the funds must be able to answer the question,
“What
will my money be able to provide through your organization?”
Entrepreneurs
and non-profit leaders must have presentation materials that can
articulate the vision to be made possible by the investment or donation
in a way that appeals to investors’ and donors’ emotional
side as well as their rational side. Thus, the presentation needs
to weave in the big picture with detailed market research, financial
analysis and keen insight into the best organizational structure
to implement your vision and the small picture, the child helped,
the product’s usefulness or the challenge successfully addressed
by the organization described at a personal scale.
As John May
stated earlier, investors and donors will also decide whether or
not to invest in your company or donate to your organization based,
in part, on the quality of the presentation. This includes the look
and feel and how the content is arranged and presented. The investor/donor
relations presentation should have a consistent look and feel with
all of your organization’s other communication materials.
In order to accomplish this, the presentation design should encompass
the following:
- Highly refined,
no nonsense look
- Efficient,
but no key fact left out
- Balanced,
thoughtful presentation
- Direct and
honest, without pretense
- Clear reflection
of organization’s brand
In order to
raise capital from investors or funds from donors, the organization’s
presentation must be an integrated communication piece that encompasses
all of these elements.
With these principles in mind, the following documents are to be
used from the company or non-profit’s files to create effective
investor and donor presentations. If a communications firm is used,
these files are shared after the signing of a non-disclosure or
confidentiality agreement. If many of these documents do not exist,
Step 1 will be to create them to provide a solid base for the actual
presentation. Without all or most of these documents, the presentation
may amount to little more than winging it, a sure recipe for failure
in today’s market. The background documents are:
The
Background Documents
- Current
and all previous copies of business plans of the company or non-profit.
- Outline
of the latest research on the competitive landscape for the industry/sector
involved.
- Summary
of the recent investments or large scale donations made in this
industry by venture or seed stage investors or donors. With regard
to a company seeking investors, it would be useful to provide
an explanation of the valuations used to form the term sheets
of the other investments.
- History
of all prior investments and donations in the organization.
- Current
operating budget (annual) for the company or non-profit for the
past year and all previous annual reports.
- Resumes
of all key personnel on board and expected to come on board over
the next year.
- All graphics,
logos, key words and phrases used to describe the company or non-profit.
- A graphic
presentation of the business model employed by the company or
non-profit.
- A graphic
that compares the company's or non-profit’s current or proposed
products against all competitors
- Time line
documents showing all milestones that will need to be accomplished
to become profitable or in the case of a non-profit to achieve
key goals.
- A memo on
all key risk factors dealing with the company or non-profit and
the marketplace.
- A memo on
the company's or non-profit’s risk management strategy and
all legal protections for the company's or non-profit’s
branding, logos, technology and intellectual property.
- All previously
used marketing materials of the company or non-profit.
- A copy of
all white papers, research papers, and books prepared by the company
or non-profit.
- A copy of
all acknowledgements, press releases, press coverage and articles
about the company or non-profit and its principals.
- Complete
financial history of the company or non-profit.
- Copy of
all private placement memoranda used by the company in the past
to raise money, including current PPM. In the case of the non-profit
all previous donation solicitation materials.
- Firm or
organization resumes of all outsourced partners (legal, accounting,
etc.).
- A thorough
list of frequently asked or anticipated questions with detailed
answers to each.
Conclusion
This article
shows that it is no longer business as usual in creating investor
or donor presentations. Backs of napkins and business plans without
a strong analysis of the present and future competition in the marketplace
will not get funded. Investor and donor presentations are not a
science. However, they are no longer just an art form and the creation
and use of each of these background documents become essential steps
in the “homework” necessary to secure the investment
or donation from a solid base of investors and donors that your
organization needs to propel its growth.
Biographical
Information
Herb Rubenstein
is an attorney and the CEO of Herb Rubenstein Consulting, a leadership
and management consulting firm. He is co-author of Breakthrough,
Inc. – High Growth Strategies for Entrepreneurial Organizations
(Prentice Hall/Financial Times, 1999). His email address is herb@herbrubenstein.com
and he can be reached at (301) 718-4200 in Bethesda, Maryland or
(202) 236-7626 in Washington, D.C.
Adam Levin is
Vice-President of Information Experts, Inc., an award winning communications
firm in Herndon, Virginia. He can be reached at 703 787-9100 and
his email address is alevin@informationexperts.com.
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