Preparing for Investors in Digital Health: Part 2/3 – 'The Pitch'
In the second of our three-part series on 'Preparing for Investors in Digital Health', Joey Mason, Partner at Delta Partners, gives advice on how to give a successful pitch to VCs in the fast-developing Digital Health scene:
So, you got the interview, what do you do next? Investing is much more subjective than we like to admit. You are selling, and investors are buying, so relationships are really important. Chemistry is critical, which is one reason why you need to see as many potential investors as possible. They should be taking the same approach to investments; we call it ‘Kissing Frogs’. Think of it as trying to find a partner in a series of dates.
There are two key components to a successful pitch:
“By failing to prepare, you are preparing to fail”, Benjamin Franklin, and Roy Keane...
Getting ready for a presentation is like getting ready for an interview. You need to know your customer (the potential investor), and you need to craft your story to meet their needs.
Knowing your customer is much easier in the digital age, as we all leave footprints. Learn about the investor – ask who will be attending the presentation. Find out what their fund strategy is, what investments they have made, what boards they sit on, and what their background is. Make sure you don’t get too smart however. Investors noses are sensitive to sycophancy. If they are seeing you, they are interested in your company, or they want to learn about the market or your business for other reasons. Learn to distinguish which.
Your presentation should be crafted and led from the above insights. Your slide deck should be sufficient to cover all aspects of your proposition and should flow with your plan. Assume 30 minutes of pitch, and lots of questions. 20 slides are already too many, so less is more. You must cover all aspects, and be fluent in any details that you might be asked about. Be practiced enough to be able to skip to relevant sections quickly. Make your deck professional, but not glitzy, as you are dealing with Digital Health, which most people think is a serious business. In fact, many practitioners wear white coats just to prove how serious it is!
Finally, practice your presentation. Like an interview, it is more important to you than to the investor.
“You never get a second chance to make a first impression”, many, including Prince Charming in Shrek 2.
The job of investors is to make a positive return on investment. Your team – it’s vital to have a team - must tell the investors how much you want, and show them that this can turn into a positive return.
The basic equation is that greed must overcome fear. Your team’s job in the presentation – which is really an interview – is to convince them that you can make money for them with their money, in spite of all the difficulties that they know lie ahead of you. This is especially hard in Digital Health, as the roadmap is really not there yet – no Googles, Amazons, Amgens, etc.
As in an interview, you need to be professional, composed, attentive, knowledgeable, open and transparent. Introduce yourselves and gauge the atmosphere. Trustworthiness is critical – on both sides of the table. Build it on your side and test it on the other. Give your presentation in the manner that is most comfortable for the investors. Ask first, as they may listen and then ask questions, or pepper you with questions as you go along. One of the team should note the questions and responses to your replies. This can be very revealing. Do not get into arguments. VCs are a breed that are often wrong, but never in doubt. In the presentation, they are the customer.
Your trick, however, is to convince them that you have an opportunity not to be missed and that you will consider taking them as investors. This is a fine balance to maintain: ask them about their investment process, what size they like to invest in, how active they are, and who they like to invest with. It is a two-way process, after all, even if unbalanced.
Unless you know the group very well, do not go for a close. No one should get married on the first date, if they want the relationship to last. VCs will be investors for longer than most marriages. It takes time to get to an answer, so be prepared to give time to the investors. Truly, marrying in haste allows you all to repent at leisure.
As with any potential relationship, you need to go back and review the date. Do you like them, were they engaged? What questions did they ask, which ones did you fluff? What information do they need and what is their investment process? Be responsive to any information requests.
Finally, even if you do not like the group you meet, do not cut off the option of them investing. Sometimes, you may have to rely on the only willing investor around the table, so keep them interested if you can. After all, in any given working environment, you would rather have a job with a boss that you don’t like than no job at all!