5 Key Elements of a CFO’s Successful Investor Pitch

Answer the one question on investors’ minds: “Why should I believe that this company will make me money?”
Frank WilliamsonMay 24, 2021

Creating a message that resonates with private equity investors or other suppliers of private capital requires more than a nice-looking PowerPoint. It means understanding the investor’s mindset. Investores are primarily focused on getting their original investment back (plus a return, naturally) after it’s been used to make improvements in the business. But there’s an all-too-common disconnect between CEOs absorbed by their big ideas and investors who find it frustrating that they’re expected to bet blindly on the future.

The CFO can play a vital role in crafting an investor pitch, presenting crisp, precise details that flesh out the broad vision. The big-picture job of the CFO might be best described as “chief measuring officer.” That’s the actual value that they bring to the conversation by demonstrating to investors how, specifically, they will make their money back.

Crafting a solid pitch involves answering the overarching question on investors’ minds: “Why should I believe that this company will make me money?” Here are five elements of a pitch that can build trust with investors and convince them to provide capital.

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1. Start with the basics.

Investors will first want to understand the company’s fundamentals: How it makes money, what makes it unique to its industry, and what problems it solves and for whom. After giving a general overview, you’ll want to describe the innovations and developments planned and what they mean for the company’s future. A CFO must keep this part of the presentation grounded in reality, providing concise facts to demonstrate the ideas are achievable.

2. Back up the vision with specifics.

Put together a detailed set of financial projections that show where investors’ money will go, how it will be spent, and how the company’s vision will result in a profit. The CFO should set investors’ expectations by presenting conservative numbers. Yes, you want to excite investors with the possibility of success, but not at the risk of breaking their trust by promising something unattainable. Many companies choose to collaborate with outside consultants who can provide third-party objectivity, presenting financials honestly yet favorably.

3. Don’t sugarcoat the possibility of failure.

Developing a business relationship based on trust means discussing its risks as well as its benefits. Any investor understands that providing capital to a company involves an element of risk. However, it’s important to define what failure looks like initially so there’s no misunderstanding down the line. Identify the potential shortcomings of the plan and how the organization is addressing them. Then, take it one step further. Explain what will happen if the business’s goals aren’t met and what that means for investors. Should they expect part of their investment back no matter what happens?

4. Give a realistic timeline.

Investors understand that a business plan’s timeframe can be fluid. Nevertheless, it’s essential to communicate in much detail the business plan’s steps, plus expected milestone dates (perhaps including a planned event like an IPO or a product launch) and aspects of the process that might take longer than expected. Faster is not necessarily better. Any experienced investor will understand that lasting success is sometimes a slow build. But a process that takes too long is bound to turn off some investors who want to move on to the next opportunity.

5. Answer the big question.

Remember that you’re not asking for charity — you’re presenting a business proposition. Investors might like you and be enthused by your ideas, but a pitch needs to establish credibility. A company can answer the big question — “Why should I believe that this company will make me money?” — in several ways.

Unlike the process of applying for a bank loan, the finance chief can’t point to a pattern of repaying previous loans or offer up collateral to guarantee future profit. However, a CFO can present historical financial results that show a pattern of profitability over time. Company leaders’ previous successful ventures can also go a long way toward gaining investors’ trust.

Investors are like anybody else — they just want to know they’re being heard and their concerns are being addressed. By providing reliable data, answering questions, and being a primary point of contact, the CFO can help demonstrate a company’s commitment to its investors and generate a positive, mutually beneficial relationship.

Frank Williamson is the CEO of Oaklyn Consulting, a consulting firm that helps closely held businesses and nonprofits with mergers, acquisitions, capital-raising, investor relations, succession, and other strategic corporate finance decisions.