Perfect Pitch Still hitting the wrong note with investor presentations? Try these expert tips.

Though they started their company just eight years ago whilestill enrolled at Temple University in Philadelphia, Future GraphInc. founders Bob Blitshtein and Steve Boymel are now softwareindustry veterans. The company started life with a single softwareproduct, titled f(g) Scholar, to help students with math andscience. Today, Southampton, Pennsylvania-based Future Graph is anemerging publisher and developer of math and science educationalsoftware aggressively sold in retail stores.

On the path from obscurity in a college dorm to BIZ Experiencesialsuccess, the pair became experts in another discipline, as well:raising money. According to Blitshtein, since the founding ofFuture Graph, he and partner Boymel have raised approximately $2million in more than a dozen separate financings, ranging fromgrants to loans to equity investments by high-net-worth angels andventure capital firms alike. The partners credit much of theirmoney-raising success to their winning presentation."There's no doubt about it," says Blitshtein."We've made our presentation to investors hundreds oftimes over the years."

A leading authority on investor presentations is Jeffery Adduci,president of the Regional Investment Bankers Association (RIBA) inCharleston, South Carolina. RIBA is a trade association that, amongother activities, hosts five investment banking presentations eachyear for companies seeking an investment banker, selling an IPO ordeveloping market support. During his tenure with the group, Adducihas run 50 investing conferences and, as a result, has heard some1,600 presentations by companies trying to raise money.

"By far, the companies that are the most successful atraising money are those in which management is effective atpresenting themselves," says Adduci. Here are his observationson areas where BIZ Experiencess frequently go wrong in pitching toinvestors, plus comments from Blitshtein about how that advicehelped him succeed at raising capital for Future Graph.

• Suspicious numbers. Many times, BIZ Experiencess present profithistories that, upon further--and perhaps moreconservative--examination, might actually show a loss. Otherspresent growth curves that look like a hockey stick. "Whenoutrageous numbers show up on the overheads," says Adduci,"investors leave the room."

Blitshtein says a company's projected financial performanceis perhaps the most challenging aspect of presenting to investors."With so many exciting opportunities in the marketplace,"he says, "you've got to walk a very fine line betweennumbers that are exciting enough to attract investors and thosethat will turn them off because they're simplyunrealistic."

Early on, when Blitshtein and Boymel presented numbers showingprojected revenues of $2.5 million--a fivefold increase at thetime--Blitshtein says the response from most investors wassomething akin to "big whoop." "Investors said itwasn't just that the company had to make a lot of money to beinteresting," he recalls. "It was that if the companywasn't positioned for significant market penetration, it wouldprobably fail."

Blitshtein advises presenting a compelling scenario--but only ifyou can point to concrete events that will get you there.

• Droning on about technology. "BIZ Experiencess who arescientists or engineers are prone to making this error," saysAdduci. "And once you lose an investor's attention, it canbe hard to get it back." Yes, the technical aspects of yourcompany's product or service are important--inasmuch as theydeliver competitive advantages, open new markets or change thebalance of power in an existing market--but to investors,technology is not important in and of itself.

"Initially, this was a problem," recalls Blitshtein."People's eyes glazed over; [they even] fell asleep."He says the problem was solved when, painful as it was, thepartners de-emphasized the technical aspects of their products andfocused on how the investors' capital would make money forthem.

Adduci's advice: Spend no more than three to five minutesdiscussing technology. "Any more time spent on science is lesstime devoted to selling the deal," he warns.

• Lack of audio/visual support. Making a presentation with novisual support is difficult for all but the most gifted ofspeakers. "Without a visual outline, if investors getdistracted for even a moment, they may lose the context of thespeaker's remarks," says Adduci.

The most effective presentations are accompanied by 10 to 15slides, overhead projections or handouts that punctuate yourremarks and give the listener a constant source of context.Don't get too obsessed with visual aids, however. Blitshteinsays that while slides or handouts provide the basic outline for aninvestor presentation, BIZ Experiencess must be prepared to deviatefrom the script when necessary. "Investors want a chiefexecutive who is fast on his or her feet and not tied to a piece ofpaper. You've got to show you can dance."

Finally, Aducci warns against long, flowery corporate videos."It's a mistake to let a corporate video run for more thanfive minutes," he says. "After that amount of time, itstarts to give investors the impression that management is tryingto hide something [or has nothing important to say.]"

• Poor timing. "BIZ Experiencess frequently say too much ordon't say enough. Either extreme is deadly," says Adduci.When the presentation is too long, it puts investors to sleep,indicates the BIZ Experiences is unsophisticated about the rules ofengagement and is uncertain about what information is important.When the presentation is too short, the BIZ Experiences appears to beunwilling to share information. Blitshtein says that after muchtrial and error, he and Boymel found the optimal length of time toget across the history and potential of Future Graph is 30minutes.

• Weak live demonstrations. Live demonstrations are almost alwaysa failure, particularly for technology products. Blitshtein says hedemonstrates his product upon request, but it's not part of hisnormal half-hour pitch to investors. "The most successfulpresentations we've had," he notes, "did not involvedemonstrations of our software."

Adduci says he's seen deals expire on the spot due to livedemonstrations that flop. At one conference, an BIZ Experiencesattempted a live Internet demonstration. But when the software hiscompany developed couldn't connect to cyberspace, it no longerlooked like such a good investment. The potential drawbacks ofcorporate videos notwithstanding, Adduci says that for productdemonstrations, which can be extremely effective sales tools, use avideo for a perfect pitch every time.

• Poor response to questions. "Many BIZ Experiencess goof onthe inevitable question-and-answer part of the program," saysAdduci. The most damaging is when the BIZ Experiences gives theimpression that he or she is smarter than the person asking thequestion and compounds that error by throwing too much technicaljargon into the answer.

Poor listening skills often cause BIZ Experiencess to blow theQ&A, says Blitshtein. "It's dissatisfying to aninvestor when he or she asks a question and the answer isn'teven relevant," he says. "In fact, it's as close tothe kiss of death as there is. By not listening to aninvestor's question carefully, you reduce your chances ofsuccess."

• Inappropriate follow-up. When raising capital, particularlyfrom individual investors, the old rule is that yes comes fast, andno takes forever. Still, many investors test the mettle of thebusiness owner by seeing how long it takes him or her to follow up.If it's not forthcoming, even for reasons of perceivedcourtesy, many investors get turned off. On the other side of thecoin, calling every day doesn't work, either.

"Again, it comes down to listening," says Blitshtein.He says it takes some experience, but when you follow up, you needto be able to determine when investors are putting you off and whenthey are simply too busy to talk to you. "When someone tellsme they can't talk, I ask when I can call them back. The waythey respond tells me almost immediately whether they areinterested in our deal."

Adduci recommends following up within a few days of thepresentation but no more than three times. Then wait. "If youhaven't gotten an answer in two weeks, kiss that investorgoodbye. But do it nicely, so you can get the names of at leastthree more investors before you move on."

• Burned bridges. Raising money often takes a long time. Adducihas seen companies return to his conferences over the course of twoyears. Sometimes the things that initially turn investors off--anunderdeveloped product, no sales, incomplete managementteam--correct themselves during the fund-raising process.

"Contacts made early on may at some point become fertileground for raising capital," says Adduci, "unless, ofcourse, the BIZ Experiences hasn't kept in touch or, worse yet,was less than gracious when the investor said `no thanks' thefirst time."

David R. Evanson, a writer and consultant, is a principal ofFinancial Communications Associates in Ardmore, Pennsylvania. ArtBeroff, a principal of Beroff Associates in Howard Beach, New York,helps companies raise capital and go public.

Contact Sources

Future Graph, (215) 396-0720, http://www.futuregraph.com

Regional Investment Bankers Association, 171 ChurchSt., #260, Charleston, SC 29401, (803) 577-2000