Investor Relations

How to Prepare for a Capital-Raising Roadshow

Careful attention to creating a presentation and practicing it with your team are vital for a successful roadshow.
Henri SteenkampJune 27, 2016
How to Prepare for a Capital-Raising Roadshow

If your company wants to raise a round of capital, either now or in the future, you’ll want to consider putting together a powerful presentation and embarking on roadshows and other face-to-face meetings. It’s an effective way to share your company’s story ahead of any capital raising, or simply to grease the skids for potential future requests for capital, with a large group of new and existing investors.

Henri Steenkamp

Henri Steenkamp

You will need to be well-prepared to present your business, strategy, historic results, and goals to investors who may know nothing about you, your company, or your story. Compared with preparing for an earnings call, you need to take a few extra steps to strengthen your message and make sure you’re covering all bases from legal, financial, and business perspectives.

For those who haven’t been through this process multiple times, following are some important points for successfully executing a roadshow.

Slide-Deck Preparation

During an earnings call, you share a slide deck in which you highlight how your company is doing compared to the market, outline exactly what your market positioning is now, and what changes to that positioning will occur in the near future.

That sounds like a public earnings call, but the difference is that roadshow conversations are private. You have to be very careful to only discuss information and facts that are already public to avoid giving a subset of people new information.

Another important step when it comes to pulling together your roadshow slides is getting lawyers involved. You must use the correct legal terminology and make certain you’re not providing misinformation or non-public information. Working closely with a securities lawyer who has experience putting together investor presentations for your industry can help you avoid costly legal mistakes and errors.

Key Presentation Elements

Since you will be presenting your goals to people you don’t know and possibly have no connections with, it’s a good idea to step back and make sure you’re addressing key points about your market and the state of your industry before delving into business operations and capital requirements. Avoid terminology or abbreviations that might not be commonly understood.

In addition, many investors may not have a clear idea about some critical market drivers, industry trends, or consumer behaviors that are linked to your business’s value proposition. You need to make sure you highlight exactly what your business does, who you are, and what you are doing. This is also your opportunity to show investors how you’ve done what you’re doing — how you have generated investments or sales so far, addressed the needs of the market, and reached certain milestones — so that investors can feel confident investing in your business over another option.

Also, while you also be sharing standard financial information as you would in an earnings call, roadshow presentations require drilling down deeper into your company’s portfolio of investments in the business. You may need to discuss not only the types of investments made but also your overall investment philosophy and strategy. And you may want to discuss how you expect to provide a strong return on investment and the types of investors you’re looking to work with and

Remember, when used correctly, stories are much more memorable than facts and figures alone.

Presentation Preparation

In most cases roadshow presentations are a team effort, because many investors want to see the faces behind a company and make a personal connection. Organize a practice session so that team members are comfortable interacting with one another, leading the discussion, and answering questions. This is a great opportunity to illustrate how seamlessly you all work together as a team.

For example, the CEO might start with a high-level overview of the company, and then the CFO can step in to provide financial details and commentary that support the CEO’s statements. Then the CIO can talk about what he or she thinks of the company’s investment strategy. The goal here is to tell a story that gets the attention of and captivates the audience. Practice as a team to ensure that your presentation will be one to remember.

Capital-Raising Intermediary

Finally, no matter how powerful your presentation is, you will need to work closely with an intermediary, usually an investment bank or other financial entity, that will connect you to potential investors. The intermediary will introduce you to investment decision-makers and set up face-to-face meetings so you can conduct your presentation in person.

Conducting roadshow presentations can be intimidating at first, and things may not always run smoothly. Preparation is the key to crafting the right approach. Make sure to consult with a lawyer, prepare data-rich, graphical slides to strengthen your message, take the time to practice, and seek an intermediary to connect you with the right people. The rest is up to you.

Henri Steenkamp is CFO of Saratoga Investment Corp., a provider of financial solutions to middle-market companies. Follow him on Twitter and read his thoughts on his finance blog and South Africa blog.