Are you using all the tools at your disposal to create and deliver persuasive investor presentations?
Psychology researchers continually prove how incredibly susceptible humans are to unconscious influences. We can use subtle cues, signals and personal biases to nudge even the most experienced investor’s decision-making.
The impact of these nudges is so strong that they influence behaviour even when people are warned about them beforehand.
Here’s how you can positively influence investors so that they are more receptive to your pitch.
Research reveals that our expectations about a person or event shape our actions, thoughts and behaviours. This leads to those expectations being met: a self-fulfilling prophecy. That’s why placebos can be so effective in treating illnesses. Because we expect to feel better after taking medicine, we do feel better.
If our expectations are proved wrong, they still provide a mental ‘line in the sand’. This anchors our perceptions more positively than they would otherwise be.
From your first contact with the investor, start setting high expectations. If you send an introductory email make it concise, focused and well-written. If you are using a placement advisor, influence the words they plan to use to describe you. If you have media coverage of your fund highlighting a key strength, send it in advance.
When researchers presented test subjects with a particular concept, they found that connected associations were activated in the subjects’ brains. This affects their actions, thoughts and behaviours.In one task, people were subliminally exposed to a logo for just thirteen milliseconds. They were then asked to list unusual uses for a brick. Those who were shown a logo associated with creativity (Apple) generated a higher number of uses for the brick. They also had more creative ideas than those exposed to a logo without creative associations (IBM).
Trigger positive associations for your fund by using well-chosen small talk. For example, use www.onthisday.com. See if the date of your pitch coincides with the anniversary of a legendary explorer or historical event. Mention this fact while building rapport at the beginning of your pitch. You’ll activate the investors’ mental associations of successful risk-taking, adventure and legacy.
A research study showed that using an additional colour in an annual report improved an experienced investor’s ranking of that company. The effect was as strong as when the researchers added a 20% increase to the company’s previous year’s revenue.
Get professional help with the look and feel of documents you present, including your Private Equity Pitch Book. A strong first impression will contribute to the setting of high expectations of your pitch as well as increasing the perceived value of your fund and investors’ attention levels.
Find areas of common ground, either in your pre-pitch research or in the opening small talk. The persuasive power of similarity also extends to body language (Jacob et al, 2011). If you (subtly) lean forward when the investor does, position your hands in the same way and match their tone of voice, you are more likely to build rapport with them.
The order in which you present your information can influence investors’ perceptions. Researchers found that the first piece of information provided was most important in investors’ assessments of both the past performance and future potential of a company. This is the ‘primacy effect’.
In another study researchers showed investors different presentations of the past performance of two funds and asked them to choose one. One fund had better short-term results while the other had better long-term results.
In the presentation with the short-term results presented last, the investors chose the fund with superior short-term results and vice versa. The researchers attributed these choices to the ‘recency effect’. This is a tendency people have to over-emphasise the last piece of performance data presented to them.
Position any weak arguments in the middle of your pitch. Ensure your start and finish are particularly strong. If your fund has better short-term results, place this information last. If your fund has better long-term results, finish with these. If you know that your investors will be seeing a lot of pitches in a short period of time, try to secure either the first or last slots.
These techniques may seem minor or subtle by themselves. However, their cumulative impact can make all the difference when you want to secure that crucial second meeting with an investor.
Benjamin Ball Associates are the experts in advising and coaching fund managers. We help you create and deliver more persuasive investor presentations.
We advise and coach private equity firms and polish portfolio companies. Our clients include Permira, ECI, Sovereign Capital, Deutsches PE and Frog Capital.
If you want to polish your performance in investor meetings or re-work your pitch documents, get in touch. We can transform the impact you make with investors. We deliver fast, effective results.
Call Louise on 020 7193 0130 or email firstname.lastname@example.org to find out more.
Paul Farrow is a Partner at Benjamin Ball Associates. In this video from SuperReturn US East, Paul discusses the common mistakes made by Private Equity funds when communicating with potential investors. He reveals the unexpected personality trait that investors look for in fund managers, and why LPs don’t want to ‘be taken through your pitch presentation’. He shares essential advice that will improve your fund’s messaging, help you stand out and impress prospective investors. Click the play button below to watch:
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“The new presentation properly represents the institutional quality of our fund. It has been a step change of us.”
Erwin de Kleijn Head of IR, Saemor Capital
“This training has contributed directly to new business – including a new FTSE100 client.”
Michelle Elstein Head of Business Development, Olswang LLP
“BBA transformed our pitch into a compelling investment narrative. They undoubtedly helped us secure Sky TV as an investor.”
Gerry Bastable Director, Blast Films