The Fund Raising Road Show (#102)
/In this podcast episode, we discuss the mechanics of a fund raising road show. Key points made are noted below.
Overview of the Fund Raising Road Show
The overview is that you line up an investment banker who sets up a bunch of meetings with potential investors, who are usually fund managers. Then you prepare a presentation, go on the road, and present it to each investor, one by one.
This is already a big difference from the non-deal road show, where you’re going for volume of contacts. Instead, if you’re raising money, you allow about an hour and a half for each investor meeting. The investment banker is in charge of lining up the meetings. The usual drill is to block out several days in one city, so you make the rounds to every interested party, and then switch to a different city and do it again.
Who Goes on the Trip
The usual traveling group is just the CEO, the CFO, and the investment banker. Most investors will have just one or two people in the room, so the groups are very small. This means you don’t need a projector. Normally, you travel with a few copies of a printed PowerPoint presentation, and send a batch ahead to your hotel. Don’t fly with 50 pounds of presentations. I’ve done that. You have better things to deal with than hoisting all of that paper into an overhead bin in the plane.
Presentation Essentials
The key presenter is the CEO. If an investor is ready to drop a few million into your company, then he want to be eyeball to eyeball with the CEO. The CFO is certainly there to cover some parts of the presentation, but expect the CEO to cover about 2/3 of the material.
Like any presentation, you practice in advance multiple times, and the investment banker should be there to make suggestions. I also like to track the amount of time spent on each page of the presentation, to see if we’re lingering too much on some topics. Figure on no more than ½ hour for the presentation, so there’ll be lots of time for questions.
Clothing Choices
Clothing is big factor on a road show. No one will notice if you show up wearing a nice suit, but they absolutely will notice if you don’t – or if your clothes are wrinkled or smell bad. Also, some investor conference rooms are small and stuffy, so you’re going to overheat. That means bringing super lightweight, very high quality suits, and also bring way too many shirts. If you can get back to the hotel for breaks or meals, then swap out shirts, so you’ll look more presentable later in the day. I pack two shirts per day.
Travel Arrangements
The next issue is flying. If at all possible, fly in the night before, so there’s one less way to not miss your first meeting. There are other ways to screw up a road show, but this is one of the main causes, so get there early.
Next, do not rent a car. Rent a limo. This is an absolute, especially if you’re presenting in New York City, where driving is a zoo. There is no way on earth you can expect to be on time for investor presentations if you’re also trying to find their address. Let a professional driver figure that out for you. Otherwise, you’ll show up for meetings looking frazzled – assuming you show up at all.
This also means that the driver needs a copy of your itinerary every day. That way, you get out of one meeting, collapse into the car, and let the driver take it from there. The stress reduction is monumental.
If you insist on renting your own car, then at least bring along a third person who is only responsible for driving, and who has a GPS and a complete list of all the addresses that you’ll be going to.
Building Access
Next problem: Getting access to buildings. This is simple enough in most cities, since you just walk in the door and go up the elevator. Not so in New York. Because of 9/11, you have to show your driver’s license at the security counter and get a badge. It doesn’t take that long, but if you’re rushing to make a meeting time, it’s just one more thing that gets in the way.
Meeting Essentials
Now, as for the meetings themselves. Cell phones must be off or on vibrate. It’s rude to have your phone ring during a presentation. Since everyone checks messages between meetings, that means there’s a high risk you’ll forget to shut it off again. Bottom line, your best bet is to just leave it on vibrate all day.
Next, if there’s a lot of sunshine coming into the room, then you should face the window. That means the investor can look into the room, and doesn’t have to squint when he looks at you. This meeting is for the benefit of the investor, not you, so you’re the one doing the squinting.
In regard to the investment banker: The banker does introductions, and then retires to the end of the table and does e-mail on his blackberry. He essentially does not participate again until the end of the meeting, when he asks if the investor is interested. That means you’re on your own for the entire middle part of the meeting.
This is not necessarily a bad thing. Most of the time, you’re probably talking to a fund manager who is simply trying to get a general feel for your company, and for you. If he’s not interested, then he’ll simply decline any further contacts, and he goes away. And that means he’s almost never going to be abrasive. Instead, expect a fair number of interruptions of your presentation for questions – which will likely be polite.
Whenever an investor asks a question, write it down. More than likely, you’ll hear about it again from some other investor, so it’s best to be prepared the next time. When the meeting is over, you get back in the limo and go over the questions that were asked. Also, you can spot check each other with suggestions for tightening up the presentation.
The Daily Schedule
As the day goes by, it’s likely that you’ll fall behind on your schedule. If so, the investment banker should call ahead to warn whoever’s next in line that you’ll be late. The best way to avoid this is to block out lots of time in between scheduled meetings, but even so, it is difficult to stay on schedule.
Eating Arrangements
You may be invited to a meal with an investor. If so, obviously, do it. However, keep in mind that you may be doing a half-dozen presentations per day, so you will be wiped out by dinner time. If you can, leave dinners open, so you can relax.
Parting Thoughts
And that’s the mechanics of a fund raising road show.
One more point, which you may consider just a cute observation, but its true every time – if you walk into the office of a fund, and there’s no receptionist, that’s a good sign. That means they’re paying attention to their expenses, and they’re probably not overbearing, so they might be good to deal with. At the other extreme, if you see multiple well-dressed and expensive-looking receptionists, you are so doomed. That’s the sign of a pretentious investor who’s going to offer you really bad terms. In those cases, we just go through the motions and move on to the next meeting.