When deciding what to cover in an investment pitch, being clear about the benefits you will offer investors is vital, says Director Michael Farrell.
In our work with entrepreneurial businesses across the island of Ireland, the question of what to cover in an investment pitch often crops up. To target the right investors, you need to know what type of funding is right for your business. However, the funding landscape can be confusing—particularly if you are navigating it for the first time—so the first step is understanding the main types of private equity. These are:
• Seed capital: Start-up or early stage finance that is typically used prior to bringing a product to market (e.g. for research or to develop a business plan). In 2017, Northern Ireland had a higher proposition of seed capital deals (64 percent) than any other region in the UK.
• Angel investors: Wealthy individuals who invest personal capital in high potential start-ups/early stage businesses. High-potential businesses are businesses that aim significantly grow their turnover within 3–5 years, usually by expanding into markets beyond the island of Ireland.
• Venture capital funds: Corporate financiers that invest in early-stage companies with strong growth potential. For a list of venture capital funds who provide equity funding for growing unquoted companies, see the Irish Venture Capital Association website, (www.IVCA.ie).
• Growth capital: Finance for the development/expansion of a company that is trading profitably.
Deciding who to target
Depending on what stage your business is at, there may be several potential private equity options to consider. PKF-FPM can help you identify the best targets. Our corporate finance team has a wealth of experience supporting entrepreneurial businesses and we have an extensive network of contacts across the island of Ireland and further afield. An important consideration when deciding who to target is the benefits that you will offer in return for private equity. Remember to highlight any relevant tax reliefs as these can be very valuable for investors. Keep in mind that private equity funders usually want to realise a return within 3–5 years so it is also important to think about the exit strategies that you will offer. Again, our corporate finance team can provide advice in this regard.
Preparing your investment pitch
Your investment pitch needs to explain what your product is, the market need that it fulfils, who your competitors are, your revenue model and your route to market.
You need to have a strong business plan, robust financials, and a credible management team capable of delivering your vision. Often, early stage businesses have a skills gap on their leadership team. This can be compensated for by bringing in external expertise at board level.
Investors will want to see that you understand your sector and have a vision for its future. They also know that things don’t always go as planned, so they will expect you to have a robust contingency plan in case things go wrong for your business.
Using Powerpoint in your investment pitch
Most investment pitch presentations use Powerpoint slides. A good rule of thumb is to have a maximum 5–10 slides with no more than 3 bullet points per slide. Do not read the slides aloud during the presentation. Instead, use them to support what you are saying or to answer a question raised by a potential investor. Rehearse your presentation and seek feedback from colleagues, friends and your accountant before you make your investment pitch. This will both improve your delivery and highlight questions a potential investor may ask. Keep in mind that not every investment pitch is successful but each is a learning opportunity. Use the experience and feedback to revise and strengthen your presentation for the next time.
This short article covers just some of the points to consider when deciding what to cover in your investment pitch. For more information and advice on raising private finance and/or identifying investment opportunities, please contact a member of our corporate finance team.
(1. British Business Bank/Beauhurst. Small Business Equity Tracker, 2018.)
Michael Farrell l Director