The road show

A road show is a series of meetings with investors, with the intention of raising funds from them. During a road show, the presentation team will likely be accompanied by an investment banker, who has arranged all of the meetings with potential investors. These investors are likely to be fund managers, who are responsible for investing the funds with which they have been entrusted by clients. Because any one fund manager could potentially invest a very large amount in a company, each one deserves a private presentation.

When a company plans to raise money through an investment banker, the banker typically issues a notification to his or her contacts throughout the country. If any investors are interested, the banker schedules them so that the presentation team can visit several investors in a row in one city, and then move on to the next city and present to the next cluster of interested parties. In some cities where there are large numbers of prospective investors, such as New York and Chicago, the presentation team will probably schedule an entire trip to just that one city, and then continue with their road show to other cities in the following week.

The CEO should conduct the majority of the formal presentation, and respond to most of the questions from investors. This is because an investor who may be considering placing multiple millions of dollars with a business wants (and deserves to have) face time with the person responsible for that business. The chief financial officer will handle the more technical financial aspects of a presentation, but there should be no question that the CEO is delivering the bulk of the material. In those cases where a company competes based on its technology, it may be necessary to also include the company’s chief technology officer in the presentation.

The typical road show presentation is for about 90 minutes. A prospective investor may bring several associates or aides, but expect the total group size to be quite small. The investment banker attends all meetings, but mostly confines his or her comments to introductions at the beginning of a meeting, and inquiries about the investor’s interest in the company at the end of a meeting. The typical meeting format is for the presentation team to walk through a handout that describes the company, its need for cash, and how it plans to use the cash. The investor’s team then peppers the presenters with questions. There is usually no need for a projector, since the group size is so small.

Before each meeting, the investment banker should brief the CEO and CFO about the types of investments that each investor prefers, so that they can tailor their presentations to address the issues that the investors want to learn about. Also, it is useful to determine at the start of each meeting how much an investor knows about the company’s industry; it may be necessary to adapt the presentation to add or subtract information to make it match the knowledge of the investor.

Always assume that this meeting belongs to the investor, not the company. Therefore, if the investor wants to immediately ask questions, or set aside the formal presentation entirely, then go ahead and do whatever the investor wants. After all, the entire point of the meeting is for the investor to learn about the company and the safety of any investment made in it – so let the investor determine how to acquire that information.

In short, the fundraising road show is critical for obtaining debt and equity funding. Given its importance, the presentation team should be willing to customize its presentation for each investor meeting, as well as to meet wherever and whenever investors want.

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