What is the most important thing to keep in mind when presenting your investment thesis to an investor?

When presenting your investment thesis to an investor, the most crucial thing to remember is to know your audience. Make sure your presentation is suited to the investor's tastes, interests, and level of risk tolerance. Recognize their investment criteria and concentrate on elements that align with their objectives. Explain in detail how your investment addresses any potential issues and fits into their portfolio strategy. You can make your investment thesis more impactful and relevant by showcasing a thorough comprehension of your audience's viewpoint. This will also increase the probability that you will win their support.

When you are presenting your investment thesis to an investor, it's important to seek to understand first the objectives-and financial goals to the investors. It's also important to find a way to match the benefits that the investment product offers with the investor's financial goals!

As an individual who has worked on the buy side and sell side, the audience is key in addition to understanding the CEO's wishes. You have more than just the purchasing side of the audience and you'll have to understand the long term effects of your decision. Payback periods for investments on equipment to increase output to appease a purchaser might work but if it's a one time deal, then your output is going to ruin the bottom line in the long run.

For those working within an institutional private equity firm in a VP- or midlevel-type role, knowing your audience is essential. A more junior decision-maker like a younger principal is going to want to tick-and-tie all the details. Your story needs to be grounded in specific, measurable data you can point to at all times. The devil is in the details, and generally, more details are better. For a senior partner, however, it's a different story. They're probably looking for a simple 1-2 sentence narrative they can share with LPs, i.e., investment professionals at some of the largest endowments / pension funds in the world. They don't want to the number of customers in 2021. They want something easily pitchable.

While presenting investment thesis to the investors, the most important part is to understand the taste, preference and risk taking ability of investors. What are their objectives and future goals, align them with your thesis and present them keeping in mind about investor's goals and objectives. It will lead to investors trust in you.

In my investment journey, I learned the importance of creating a clear and compelling story for potential investments. I remember evaluating a company and realizing that structuring my thoughts was key. To make a good investment story, I used a simple four-part framework. I started with a quick introduction about the company and why I was considering it. Then, I highlighted the company's strengths and advantages, showing how it could grow. After that, I outlined the specific things I would do to make the investment successful, like making more money or cutting costs. Finally, I talked about the challenges and how I planned to deal with them.

In presenting a Private Equity (PE) investment thesis, I underscore the vital aspect of structuring the story. Unveiling an enticing opportunity, I conduct thorough due diligence, analyzing market trends and proposing value-enhancing strategies. The significance of a well-crafted exit strategy is highlighted, encompassing potential avenues like sales or mergers. Financial projections, supported by sensitivity analyses, underscore anticipated returns. Transparently addressing risks, I assure our adept PE team's readiness to mitigate challenges. In conclusion, a concise call to action underscores the structured narrative, guiding potential investors on engagement and outlining the expected commitment and strategic support.

Creating a story about your investment including why you think this is a good buy for your portfolio. Explaining investors about the future trajectory of that company, management capabilities, industry overview, risk factors and mitigation of risks. Storytelling is an art and while you're selling something you should be really good at it. So here also the story and your way of presenting it is most important.

People will more often than not buy a story rather than a product regardless of marketing budget. Take for instance the interest in shampoo options that aren't owned by P&G. Those products are flying off the shelves for that simple reason, they're an independent company dedicated to clients. That's something you can't come by easily these days.

Pair the right story with the right deal. For a given deal, certain investment criteria will be more important than others (read: have a bigger impact on returns). Crafting a narrative that highlights the most important investment criteria is critical. Suppose you want to buy a landscaping business that is demand-constrained: we don't have enough customers to accommodate all the landscapers we've hired. "Our company has a repeatable, best-in-class sourcing engine for talent" is a great story! But it's not the right story for this deal. A better story might be "We have another landscaping company under contract that has a two-year customer backlog, so there are Day 1 revenue synergies." Now that's compelling!

People will often be difficult to convince of anything without the math and stats behind it. From convincing a family member to switch investment platforms to persuading a client that the new option will save them money in the long run, you better have the numbers to back those statements up. Fraud isn't a joke.

"The timid salesman goes hungry" is something I've contended with my whole life. Focusing on confidence, rather than a delusional face you wear, is key. Genuine confidence comes from the belief you have the capability to achieve something. This is doubled when you realize your history of success, or damaged by the times you avoided doing what was asked. Focus more on the greater picture.

This is a common failure mode of VP- and mid-level- type roles that rarely gets discussed. You can be the best financial modeler in the world, but if you can't succinctly explain why this deal is THE deal, then all your hard work is for nothing. Contrary to popular opinion, confidence and conciseness in public speaking CAN be learned. There are investing masterminds you can join where you pitch deals to each other, and I also hear good things about public speaking groups like Toastmasters. One former colleague takes beta blockers before major presentations, but that's not an approach I would personally recommend.

You should be able to deliver your investment thesis, and story, in 30s, 5min or 2 hours (and everything in between). The pitch is not just delivered in formal meetings nowadays. Get inspiration from some of the best in the business like a16z who share their thesis, constantly online and physically in many different ways.

I have received some of the best feedback from the times I've been rejected. Rejection is a time to learn and a time to grow as a person/professionally. It takes a strong will to receive ways to improve and then implement them without getting defensive. I've worked blue collar and white collar, the critiques you get in both can cut you to the core but they're honest and necessary at times. It's a great day to improve when the criticism has merit.

Coachability is an important skill because it allows us to get better. Very few of the folks who pitch me on deals ask for feedback on why I turned them down. I would be happy to give that feedback! But for whatever reason, that's not a norm in the private investing space. Don't make the same mistake.

Rejection is not a negative thing, rejections and feedback from them will lead to some of the best results in the future. Listen to the feedback very carefully as it will tell you about the mistakes you made and it will help you to coordinate with investors to achieve what they want.

A few essential elements are: - a clear addressable market opportunity size, - market share, key players in the market (direct & indirect competition), - unique value prop of the solution being considered for investment vs incumbents - defensibility of that solution, - hurdles to overcome to propel for growth & strategic advantage that fund has to overcome them, - clearly articulated exit plan, timeline and value. Bonus points if the thesis can be explained clearly in both 5 mins (elevator pitch style) as well as an in-depth discussion.

(a) Providing a clear and plausible exit strategy is important for investors. In my pitches, I've detailed potential exit scenarios, such as an acquisition or public offering, which helps in aligning with the investor’s long-term goals (b) Being specific about how the investment will be used is essential. I've always included a detailed breakdown of the funding allocation, showing investors exactly how their money will drive growth and generate returns (c) Finally, the manner in which the thesis is presented matters. I've used interactive presentations with visual aids to make complex information more accessible, engaging the investors and making the session more memorable.

(a) Practice your presentation extensively and seek feedback from peers, mentors, or advisors. Refining your pitch through multiple iterations is essential for delivering a polished and persuasive presentation. I once rehearsed a pitch with a mentor who provided valuable feedback on my delivery style and helped me refine my key messages. (b) Highlight the qualifications and expertise of your team. Investors often invest in people as much as they invest in ideas. Showcase the skills and experiences that make your team uniquely suited for success. In a biotech startup pitch, we emphasized our team's background in pharmaceutical research, which reassured investors about our ability to navigate the industry

(a) Present different scenarios and outcomes, including worst-case scenarios. This demonstrates your preparedness for various situations. Our scenario planning reassured investors that we had considered potential challenges and had contingency plans in place (b) Pay attention to your communication skills during the presentation. Effective delivery and responsiveness to questions are crucial. I've seen investors swayed by presenters who were not only knowledgeable but also excellent communicators (c) Discuss how your thesis fits into a diversified investment portfolio. Investors often seek a balance of risk and return across their investments.

I'll give the same advice I give to people when they prepare for private equity interviews. 1) Even bad deals can become good deals at the right price. Price should ALWAYS be a MAJOR consideration when evaluating the attractiveness of a deal. 2) "Buy with the exit in mind." If you can't quickly identify who the next logical buyer will be, it's hard to justify an investment, no matter how great the returns look in your LBO model.