Pitch perfect

NEW BUSINESS:Keep it simple, clear and short. and don't assume investors know a thing about your business when making a pitch.

NICE IDEA, SHAME about the pitch. It's surprising how many good ideas don't see the light of day because the promoters fall at the vital hurdle of persuading investors to back their business with hard cash.

Many company managers making a pitch for angel investment assume a level of knowledge and understanding among investors about the product or service that is not there, says Lar Burke, the head of the Business Angel Partnership in Dublin. Company managers often give a high-level or quick summary of the product that is not clear, whereas they should focus on between three and five key points that they want to get across.

"What is needed is clarity around a number of issues," says Burke. "Clarity about what the opportunity is, clarity around what they want from the investor, clarity around what the investor can give them. Clearly describe the opportunity. Explain how the product will be sold or brought to the market. Give full details on the shareholders, the management, the key people working for the business - their backgrounds, their roles and why they are the right people."

Providing information on the company's product or service is just one part of the battle. Assuming a level of knowledge and understanding among investors about the environment and market in which it is designed to operate is another common mistake. "They don't take time to paint the 'big picture', to explain the trends or shifts that are taking place which are driving the opportunity," Burke says. "Where necessary, it is important to educate the investors about what is happening globally, in the macro environment, and what is happening locally, in the micro environment."

Burke advises promoters to prepare and practise the presentation thoroughly in advance, in order to get their key points across in the very short 10-minute pitching slot available to them. "We see it again and again where promoters keep the good information about their companies until the very end. When the warning is sounded that they have just three minutes left of their presentation, they then start galloping through the good material. The key is to get the good stuff out at the beginning."

Over-use of technical jargon is another stumbling block, particularly among promoters of high-tech and software companies. Angel investors can range in age from 30 to over 60 and many may not fully comprehend the computer-speak of twentysomething entrepreneurs. "Speak in plain English. It is not the job of the investor to understand jargon. Simplify the whole thing down," says Burke.

Angel investing may be a bit of of a gamble, but investors are not in the habit of wasting money. They like to know about a company's financial history or projections. "Include previous trading history if there is one," says Burke. "If not, that's fine. Instead give details of expected trading performance, sales revenues that are expected and where they will come from, how much is needed from the investors, what it will be used for, what kind of return the investor should expect, and when and how they will get this, whether it is through a trade sale or a listing."

For many promoters, it is often the first time to make a presentation of any sort, and if the pitch lasts less than their allotted 10-minute slot, some may feel the urge to keep talking. "They should stop when they've reached the objective," warns Burke. "Don't just keep rambling on. It becomes clear that you are rambling."

And the final piece of advice? Anticipate: have answers ready for any obvious or nasty questions that might arise.

The Irish Times' business angel: case study

This month we look at how the three companies have been working on pitching their business in presentations to potential investors and clients

CLEVAMAMA

Making presentations is becoming second nature for the directors of baby-products company Clevamama, Martina Delaney and Suzanne Browne.

"We continuously have to pitch to buyers. It's part and parcel of what we do," explains Delaney.

So nerves may not have been an issue, but, nevertheless, she says that preparing for their business angels pitch is no walk in the park and involves a lot of work, including researching every aspect of the market, right down to tweaking the business plan.

"The business plan from my point of view is an operations manual," she says. "But you have to step out of your business plan and look at the business from an investor's point of view."

As well as having an investor-ready business plan, Delaney says that they are aware that every fact and figure for the business has to be at hand, not only for the presentation but also for any questions that may arise from investors.

And it not only involves knowing your own company and its products inside out, Delaney explains.

"You've got to know your competition," she says. "It's easy to think that yours is the only product in the market, but it is very rare to have a clear run. Everyone has competitors. You have to know your market place, the size of the market and how much of that market you want to capture."

Preparing a 10-minute presentation is also a challenge.

"You're the owner-manager, you could talk about your company for forever and a day," says Delaney.

TECHNOLOGY FROM IDEAS

Raising cash is nothing new for Dan Richardson, managing director of Technology from Ideas. The commercialisation company, which specialises in conducting proof of concept development on early stage ideas submitted by academic researchers, has already raised €500,000 from Enterprise Ireland and venture-capital firm 4th Level Ventures.

"I wouldn't say it's old hat either," says Richardson of the preparations. "Every situation is different. You always have to bear in mind that you're pitching to different investors."

But the fact that the company has already received investment and is up and running allows Richardson to approach the pitch with confidence.

"Because the company is up and running and has got employees, it's less of a concept and more of a reality. That makes things easier," he says.

Nevertheless, he knows that the high-risk nature of the business means that it is necessary that all details are in place to convince investors of the merits of parting with their cash.

"There are always risks attached to our business. It is a risky investment. That's the reason we offer them a reward."

DIGITALJET.IE

"The stakes are very high and you only get one chance to make an impact," says Niall O'Neill of Digitaljet.ie, the start-up that aims to become a digital retailer selling music, videos, games and ringtones to mobile devices through kiosks on the high street.

A key issue for O'Neill is not just gathering as much information as possible, but simplifying all of the elements in an attempt to explain the technology and commercial potential, and also ensuring everybody will understand it in the short time allowed.

"So it is a bit of a challenge. Usually when I meet somebody I can sit and talk for hours and answer any questions that pop up," he says.

O'Neill is preparing slides, detailing the products, services, revenues and an overview of where he sees the company in three years.

"The more information you have at hand, the stronger the case," he says.

O'Neill is also seeking professional advice, particularly from the advisors from the Business Angels Partnership which are helping in the preparation for the presentation. Enterprise Ireland is also giving him an opportunity to do a dry run and have some professionals and consultants review his proposal prior to the meeting.

"I also spoke with a financial consultant regarding the preparation of a complete financial overview, which is usually where the focus begins," says O'Neill.

This month we look at how the three companies have been working on pitching their businesses in presentations to potential investors and clients