Finance chiefs play a key role in raising money for their organisations. CFO competence is now the second-most important consideration in investment decisions, behind market-expansion opportunities, according to a survey by OneStream, a finance platform.
Winning over investors means crafting a compelling story backed by crisp, precise details that flesh out the firm’s broad vision. In high-pressure investment pitches, with only a few slides to make a strong impression, finance leaders may be tempted to resort to boring cliches, or fit their vision to what they assume investors want to hear. Doing so could be disastrous.
For finance chiefs looking to perfect their pitch deck, here are eight phrases that will have investors rolling their eyes.
1
Table of Contents
Toggle‘Our financial projections are conservative’
Investors want clarity, not optimism. Claiming that projections are conservative implies that expectations should exceed the projections, stresses Ivan Nikkhoo, founder and managing partner of Navigate Ventures, a venture capital firm.
“This is bad news for all parties,” he explains. “A CFO’s job is to convince investors and establish credibility and confidence, not get them overexcited. Even if you succeed in the latter, you’ll miss expectations further down the line and damage trust.”
Instead, present a realistic base case, a stretch goal and a downside scenario, with a clear explanation of each, including how those scenarios were determined. Be specific about why the forecasts hold up, how growth will be generated and what could go wrong.
2
‘We are pre-revenue now but will reach £300m in two years’
“Lofty revenue projections aren’t just the preserve of pre-revenue businesses,” says Nikkhoo. “I’ve met with business leaders who’ve toiled away for more than a decade and still insist their modest revenues will skyrocket in the next 12 to 18 months.”
“Unsurprisingly, I don’t believe them. This type of approach loses credibility with experienced investors very quickly.”
3
‘In three years, we’ll be selling to big tech’
“Good companies are never sold; they’re bought. This wisdom holds even when talking about the most cash-rich acquirers on the planet,” says Nikkhoo. “Once a company is successful, people always want to buy it. Whereas if you build to sell and acquirers don’t show up, you’re dead in the water.”
4
‘We’re a great business’
Investors aren’t looking for just any great business; they want to know why now is the time to invest, says Jess Jackson, investment manager at Praetura Ventures, a venture capital firm.
“Key metrics, IP and traction all contribute to our decision-making – but they only get you so far,” she says. “Most pitch decks fail to create urgency around the opportunity they’re presenting. When we look at pitch decks, we want to see the momentum behind the company.”
CFOs can demonstrate momentum by, for instance, highlighting recent acquisitions in the market, or explaining why future regulatory changes will favour the business. “Good pitch decks encourage you to find out more. Great pitch decks pull you on board a train that’s just about to leave the station. Show us that the window of opportunity is closing,” Jackson says.
5
‘We have no competitors’
According to Mike Greene, CEO of Global Research Business, a business advisory firm, if a market has no competition, there’s often a reason for that. Perhaps there’s no demand, or previous attempts at similar businesses have failed or the price point is unviable, explains Greene, who has invested in approximately 30 businesses, including Shazam and Chargemaster.
“Every business has alternatives and investors are wary of founders who don’t acknowledge their competitive landscape,” he says. Business leaders who deny any competition exists risk undermining their credibility with investors, who will inevitably question the firm’s go-to-market strategy.
6
‘The product is everything’
Success isn’t determined by products or services alone. To achieve success in any industry, organisations must make savvy hires, devise a compelling marketing plan and execute the business strategy effectively. “Too often, great products are backed by weak teams made up of mates, family members or cheap hires,” Greene says.
Investors want to see scalable processes, strong teams and clear go-to-market strategies – not just interesting products, he adds. “Ultimately, CFOs and investors need to see financial readiness, strategic execution and the right people to ensure sustainable growth.”
7
‘We’re using AI to automate workflows’
AI is a buzzword that investors are already tired of hearing. Every business leader claims to be using AI, but few can explain how it enhances their products or drives revenue. If AI is truly a differentiator, investors want to know what proprietary data it’s being trained on and how it will benefit the bottom line in the long term. CFOs therefore should avoid ambiguous phrases such as ‘AI-powered financial insights’. So says Tom Henriksson, general partner at OpenOcean, a venture capital firm.
“Everyone touches on AI. They speak about using AI to automate workflows, improve software development and enhance day-to-day operations. But we’re looking for exceptional teams that are genuinely making breakthroughs in this domain. Wrapper products developed around pre-existing foundation models will not move the needle.”
8
‘Hockey-stick growth’
So-called hockey-stick growth refers to a sudden sharp increase in growth after a short period of stability. “The phrase was thrown around a lot in higher-growth markets,” says Alysha Randall, founder and CEO of Fast Growth Consulting, a firm that offers training courses to new and aspiring CFOs.
Unfortunately, these growth curves are far more common in forecasting charts than in performance charts. Relying on such optimistic growth forecasts is “naïve and potentially meaningless” in today’s tough economic environment, Randall says. These days, investors tend to prefer profitability to “growth at all costs” – that is, they prefer cash-resource efficiency to high growth fuelled by aggressive spending. Plus, she adds: “Sometimes these growth projections lack the strategic thinking or data to back them up – they’re mostly wishful thinking.”
Finance chiefs play a key role in raising money for their organisations. CFO competence is now the second-most important consideration in investment decisions, behind market-expansion opportunities, according to a survey by OneStream, a finance platform.
Winning over investors means crafting a compelling story backed by crisp, precise details that flesh out the firm’s broad vision. In high-pressure investment pitches, with only a few slides to make a strong impression, finance leaders may be tempted to resort to boring cliches, or fit their vision to what they assume investors want to hear. Doing so could be disastrous.
For finance chiefs looking to perfect their pitch deck, here are eight phrases that will have investors rolling their eyes.
link
