Investor presentation- sharing the problem

Continuing our series by Tim Taylor on how to present to investors, here Tim tells us how you talk about the problem you solve…

Now that you’ve hooked the audience with your story of why you started your company it’s time to tell the audience the fundamental problem that you solve.  This is where entrepreneurs most frequently lose the audience, believe it or not.  And it commonly speeds downhill from there.

The key to describing your problem effectively is in the simplicity of the words you choose.  Rarely is the problem effectively articulated in the context of technological or scientific jargon.  Ideally, you would like to build off the title slide of your presentation when you described the reason you started your company.

It’s helpful, for example, to transition from the title slide by saying “…and it’s because of this experience that I started this company to solve the following problem”.  Remember, in a typical angel investing audience you are going to have 6-9 different industry backgrounds so it’s important to begin by keeping as many of the audience members engaged as possible.

A few critical things to consider:

1. Consider life before your solution:  I LOVE the idea of describing life before your solution.  Often times it includes an ineffective and costly solution that is the market standard that you are challenging.  Life before often includes creating a time line showing the 4 to 5 steps typically involved in the process and pointing out where the process is broken.  This will make it much easier if your solution slide (the next one) is life after your solution.

2. Leave the jargon at the door:  Doctors have this interesting habit of referring to heart attacks as myocardial infarctions.  I know that myocardial infarction is the proper way to refer to it, but can’t you just say heart attack?  Technology start-ups must avoid the trap of describing where in the “stack” the problem is, it’s the first step to losing the audience.

3. Pictures over words:  If you can, use images in describing your problem.  For example, when I worked with an EMR company I suggested that they use a picture of a doctor’s office overflowing with manual folders.  Visually describing your problem is more engaging and stops you from reading the text.  And when you have text, the audience members aren’t sure if they should read the text or listen to you.

4. Size matters:  Your problem slide is a great place to introduce market size into your presentation.  Often if an entrepreneur describes a problem without market size they lose the hook of the scale of the problem.  Remember, market size does not need to be bullet proof, analytical research.  A reasonably defensible approach works just fine.

It’s not unusual for there not to be a specific “problem” that’s being solved but rather a convergence of a set of market factors.  For example, the proliferation of smart devices combined with the meteoric growth of applications to use on them creates opportunities for technology to improve battery life on the handsets.  Or the explosion of social networking combined with the power of trusted advice sources creates an opportunity for one-to-one marketing technology harnessing the power of the social networks.

In any case, I can’t stress enough that, regardless of whether you are in front of angels or VCs, they want to be engaged.  They want a simple and compelling story that they can relate to and then ask more detailed, even technical, questions if they so desire.

The three most important slides of your presentation are your problem, solution and competition slides.  In my next article I will present ideas on how to articulate effectively how you solve this problem that you’ve identified on the problem slide.  So you want to make sure that you start out on fire!

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Tim Taylor is the founder of My Pitch Coach (www.mypitchcoach.com)