To kickstart the launch of Rencell’s private equity Fund II, they went straight to one of the most contentious and challenging steps in the journey – the elusive pitch deck, and brought in a panel of experts to weigh in; including the likes of Rory Ord, Head of Unlisted Investments 27four Investment Managers; Langa Madonko, Investment Principal: Capital Raising and Investor Relations, Summit Africa; George Lyons, Director, Asante Capital; and Kevin Dike, Head of the ML Academy, Missing Link.
There were a number of winning tips to take notes of (hint: save this article).
LPs (limited partners) are inundated with pitch decks from fund managers looking to raise capital, of which they will only make a few select investments. Ord is on the receiving end of these decks and recommends that differentiation is key in making sure their pitch deck stands out among the rest.
The deck is a living document that evolves over time, and established fund managers easily run the risk of selling a ‘one size fits all’ pitch. Madonko added that taking on a generic approach should be avoided at all costs. Fund managers need to ensure that they understand their audience & customise accordingly for their next potential investor.
Preparation is key.
The long-term nature of the relationship, as well as the investment horizon, necessitates the careful selection process for both the fund manager and the LP.
Lyons suggests that fund managers need to establish the right fit, by ensuring that their investment strategy is aligned with that of the LP, all while staying true to oneself and mandate.
One of the biggest challenges experienced by first-time and emerging fund managers is their track record – a key investment consideration for the LP and one of the most important slides of the presentation that they will focus on. To try to overcome this barrier, these fund managers should focus on investors that have a mandate to invest in first-time funds, as well as emphasise their team to add depth and demonstrate credibility.
Pitch decks differ from one fund to the next. However, a primary structure should be followed, particularly with regards to content and length.
Standard requirements include the problem, solution, vision, business model, competition, team, track record, and achievements. However, fund managers should ensure that there is a consistent thread throughout.
Generally, the ‘less is more’ approach is relevant for a pitch deck, which should comprise about 20 slides, keeping in mind, one idea per slide. This will assist the fund manager in avoiding repetition.
Although a fund manager may land the perfect presentation, they still need to present it to their audience.
As a result of the Covid-19 Pandemic, there’s been a significant shift to the virtual office, and fund managers have had to adapt to presenting online.
Dike suggests that fund managers should stand while they are presenting, as this will demonstrate confidence and assist in speaking clearer. They should also interact with the audience as much as possible, by asking questions and getting them involved. Whether fund managers are presenting physically or online, their audience’s needs don’t change – the fundamentals still apply.
It’s important to note that although a stellar pitch deck does not guarantee a term sheet or a signature on the dotted line, it is a critical step to the next phase and ultimately achieving success.
These insights were compiled to create “A Fund Managers Guide to a Successful Pitch Deck”, to assist first-time and emerging fund managers. For the full white paper, kindly contact Jenna McErlaine at jenna@grovest.co.za
Click here to watch the webinar recording.
Rencell will be hosting regular webinars covering relevant topics across the small cap private equity space, with diverse panels and conversations.
Rencell is administered by Grovest, the largest small cap fund administrator in South Africa, with assets under administration in excess of R3.5 billion.