PS#006: The 90-second Investment Pitch

Recently, in one of my classes, I was asked about how to present an investment opportunity to the partners or senior investment professionals at a fund.

It’s a great question. An important question.

It’s important for two reasons:

1. This isn’t something that you’ll just do once. You’ll end up presenting an opportunity multiple times throughout the investment process.

2. This is your time to shine. You’ll have a chance to show the broader firm how you think and operate as an investor.

In the next few issues, I’m going to talk about how to do this at each point in the process. I’ll provide some examples for each and offer some guiding principles from my own experience.

Stay tuned.

Let’s break this down...

An investor will present an investment opportunity to the broader partnership at 3 different points in the evaluation and diligence process.

As I mentioned, you’ll present an opportunity multiple times throughout the investment process.

You can think of them as different checkpoints. The firm wants to make sure that they are allocating their resources (including you!) to the best opportunities for the fund. It’s all about balancing the opportunity cost.

Those 3 different checkpoints include…

1. After the first call or meeting with a startup

2. Before entering the full diligence process

3. When making a final recommendation for an investment

Each of these checkpoints uses a different form for communicating the information.

Today, we’ll focus on the first checkpoint…

Presenting an investment opportunity after the first call or meeting with a startup.

If you have a first call/meeting with a startup and come away excited about the opportunity, awesome!

First step complete. Next, you’ll highlight the opportunity to the broader team.

This will typically happen at the firm’s weekly deal review meeting, known at many firms as the “Monday Morning Partnership Meeting.”

For this meeting, you’ll want to be prepared with the following...

• the company’s pitch deck, and

• your 90-second investment pitch

The first one is a bit more self-explanatory, so let’s focus on the second bullet – your 90-second investment pitch.

The 90-second Investment Pitch

These partnership meetings are used to hear about opportunities being surfaced from investors across the firm. That means you’ll need to be concise while clearly communicating the potential of the opportunity.

To do this, I recommend answering each of the following questions…

1. What does the company do?

2. What market are they attacking and why is it big?

3. What is their competitive advantage?

4. How have they performed to date?

5. What’s the Investment opportunity?

6. What are the proposed next steps?

One sentence each.

Be short, concise, and to the point.

Use details and numbers wherever possible.

OK, let’s run through an example…

1. The company is an AI-based contract analytics platform that extracts key terms from a company’s entire contract set and displays them in an easy-to-use dashboard.

2. They are focused on mid-market companies of 200-3,000 employees, which represents a $3B+ total addressable market at current prices.

3. The team has a strong cybersecurity background (critical for handling sensitive contracts) and has built out-of-the-box AI that requires very little setup, providing immediate time to value.

4. They’ve grown from $200k to $700k YoY across 45 customers.

5. They are raising $3M to build out the sales team and reach $3M in ARR.

6. We recommend moving the company into preliminary diligence, focusing on the ideal customer profile, business model, and go-to-market strategy.

Be prepared to answer any of their follow up questions. If you’re not sure, let them know you’ll add it to your proposed next steps.

This will quickly give the team a clear view of the opportunity and it’s potential.

Even more importantly, by outlining the next steps, you’ll show senior investors that “ownership mentality” that will build trust and lead to more responsibility in the investment process.

This approach is also great for sharing opportunities with investors (for those of you still trying to break into the industry). You can take the same approach/format, turn into an email, and share it with different investors or funds.