What can you learn from reviewing over a thousand private equity fund presentations (also known as “pitch decks”)? Among other things, you learn what works in a fund presentation and what doesn’t. This post contains my thoughts on what an emerging manager should include in a fund presentation.
First, some insights from our files. I pulled 30 emerging manager fund presentations from our files and went through them to identify the slides that emerging managers are including in their pitch decks. Here are the very unscientific findings from that small sample set:
My Thoughts on Emerging Manager Fund Presentations
When reading my thoughts below, keep in mind that every investor is different, and so my thoughts need to be taken in that context. Also, your deck should reflect your unique strengths and advantages, so if you need more slides in an area, do what’s right for you.
Number of Slides. I think the deck should generally be around 20 slides. Up to 25 is okay, if you have appendices. Maybe even thirty in a rare case. But a presentation with 50 slides is way too much in my opinion. You should be able to provide a convincing, concise presentation in 20 slides.
I generally take the first meeting with a manager as a call, and I allot 50 minutes for each call. On the call, the first few minutes is spent on introductions. Let’s say that leaves about 45 minutes to go through the slides and field questions. I tend to ask questions as we go through the presentation. Assuming the questions take up about 15 minutes, this means you will have about 30 minutes to go through your slides. Getting through 20 slides in 30 minutes can be tough to do.
Clean, Uncluttered Slides. This is a presentation, not a book. Too much information makes a slide noisy and hard to understand. I like presentations that are crisp and uncluttered. Graphics are great if they aren’t too noisy, and can help break up the bullet points.
Cover Slide. I think the cover should be clean and simple. Have the name of the fund, something to the effect of “Investor Presentation” or “Overview”, and the date (month, year). The date is important as you will update the deck so a date on the cover will let your potential LPs know if they are looking at the latest version. Also, I recommend adding the date to the PowerPoint or .pdf file for the presentation, such as "XYZ Fund I, LP Overview August 2020."
Disclosures/Disclaimer. Your attorney will provide you with a disclosure/disclaimer slide. Keep it to one slide. Sometimes lawyers go overboard on this and want 2 to three slides – just say no. This disclosure slide usually appears right after the cover. Some decks have the Disclosure slide at the end, but the lawyer in me says to put it at the front.
Overview/Executive Summary. I like to see a single slide with an overview – an investment highlights slide if you will. Short, concise bullet points are good here. For example, this slide could have one bullet on the fundraise status, one for the strategy, one for the opportunity, one for team, and one for track record – not necessarily in this order. The key here is to convincingly state why an investor should invest in your fund in one concise slide.
Firm/Team. These slides are the opportunity to highlight the team’s investing and operating experience and how it’s relevant to the fund’s strategy. Focus on firm and team history, investing partners (and how long they’ve invested together), then operating/venture partners, and then advisors and the extended network. I’d only have 2-4 slides here. If you want to include additional slides for the extended team, put them in the appendix.
Opportunity. If the fund is focusing on a specific industry, geography or strategy, it can be helpful to have a slide or two to explain the opportunity – for example, the size and growth rate of the industry, the advantages of focusing on a specific geography (such as the Mid-West, Utah, or Southern California), or the opportunity presented by the investment strategy (for example, the opportunities in pre-seed venture investing or lower middle market buyouts).
Strategy. These slides will be different for each fund, and you need to include as many slides as necessary to convey why your strategy will be successful, repeatable, differentiated and unique. Slides I often see in the strategy include investment themes, target sectors, portfolio construction, deal sourcing, proprietary networks, investment/underwriting criteria, deal profile, deal due diligence, investment process, value creation, differentiation from other firms (or a competitive landscape chart), achieving liquidity (exits), and more. If the firm has an exclusive relationship with a university, a major corporation in the industry, an incubator, consulting firm, or other entity that provides the firm with exclusive and proprietary deal flow or other value-add, this is where to highlight it.
Case Studies. I like case studies as they provide insights to the overall investment process. I think 2-3 case studies are sufficient for a deck. If you want to include more case studies, put another 2-3 in the appendix. The case studies can be a part of the strategy section or can be a separate section. The case studies should include a description of the company, investment thesis, how the deal was sourced, entry valuation (including EBITDA multiple for buyout decks), leverage multiples for buyout deals, value creation, exit valuation and return metrics (gross IRR and multiple).
Track Record. For fund 1 managers, include your track record from your prior firm. If the track record from your prior firm is verifiable, that’s great, and you should state that in the slide. If you don’t have a track record from a prior firm, but have made some on-strategy investments as a way to establish a track record, whether via special purpose vehicles, off of your own balance sheet, or via a warehousing facility, highlight those investments. If your prior investments aren’t on-strategy, then their value is very limited. For fund 2 and 3 managers, include gross and net IRRs and multiples. If you are using industry performance benchmarks (such as from Cambridge Associates or PitchBook), make sure that your returns match the strategy and the date of the benchmark return. So, for example, if the benchmark return is through December 31, 2020, then your returns should also be of that date. Mixing and matching dates is a red flag. Finally, I have seen some managers “mark up” the current net asset value of their portfolio investments to reflect their estimate of their exit value and use that marked-up value to report performance. Don’t do this – it’s total fantasy and a huge red flag.
Fund Terms. There should be a single slide with fund terms. This should include target fund size (and hard cap), investment period, fund term (including extensions), management fee, preferred return, carried interest (including whether it is whole fund (European), deal-by-deal (American) or a hybrid), GP commit, and fee offsets.
Summary. Some funds include a summary slide as the penultimate slide. The summary slide is a “now that we’ve gone over it, here are the main reasons why you should invest” slide. If you include this slide, keep it crisp and concise. I’m mixed on the value of this slide as we rarely get to it during the presentation.
Contacts. The last slide in the presentation should be a contact slide, which contains the name(s( of the primary contact(s) for the fund and contact information. To me, this is a very helpful slide. Often as I look at the deck, I will want to ask a question, so having the contact information at the end of the deck makes it easy on me. You want to make it easy on potential LPs. Also, if you have appendices, the contact slide should still be at the end of the deck. Some decks have the contact slide before the appendices, but I think it should still be the very last slide of the deck.
Appendices. I don’t mind appendices, so long as they are relevant and add value. I think good slides for appendices are additional case studies, more detailed track record slides and additional slides for opportunity and strategy. For example, one presentation I liked had a couple of slides in the appendix that went into great detail about the manager’s underwriting process. I rarely look at detailed biography slides in an appendix and I don’t think I’ve ever had a manager refer to detailed biography slides in a meeting. So if your deck is too long, I would skip putting detailed biographies in an appendix.
I hope you find the above useful. But the bottom line is you should create a deck with as many slides as are needed to showcase your unique, successful and repeatable strategy, how your team has been successful in the past, and why your team can successfully execute the strategy in the future.
Other Posts for Emerging Managers. Here are some links to other posts that emerging managers might find of interest:
Fundraising Tips for Emerging Managers
http://www.allenlatta.com/allens-blog/fundraising-tips-for-emerging-managers
Compelling PE Roadshows: The Investor Perspective
http://www.allenlatta.com/allens-blog/compelling-pe-roadshows-the-investor-perspective
An LP's Advice to GPs on Annual Investor Meetings
http://www.allenlatta.com/allens-blog/an-lps-advice-to-gps-on-annual-investor-meetings
There are also many posts on fund terms which can be found on the “Blog Post Categories” section of the website. Scroll down on the page to find the posts.
© 2020 Allen J. Latta. All rights reserved.
- Of the 30 presentations, 12 were for buyout funds, 5 were growth equity, 12 were venture and there was one private credit fund. 22 were fund 1s, 4 were fund 2s and 4 were fund 3s.
- The fund presentations ranged from 10 slides to 50 slides (NOTE: do NOT have 50 slides in a presentation). The average presentation was 27 slides (including appendices) and the median was 24 slides (including appendices). For the presentations that did not include appendices, the average number of slides was 23 and the median was 22.
- Half (15) of the presentations contained an appendix. The appendices ranged from 3 to 23 slides, with an average of 11 slides and a median of 9 slides.
- Here’s a breakdown of the categories of the slides:
- Cover. Every deck had a cover!
- Disclosure. Almost every deck had a slide for legal disclosures/disclaimers that was right after the cover slide. A few had this at the end of the presentation.
- Overview/Executive Summary. All decks but one had an overview/executive summary slide. A couple of decks had 2 slides on the overview.
- Firm/Team. Every deck had a slide or slides on the firm and team. On average, there were 3 slides on the firm and team, and the median number of slides was 2. The range was from 1 slide to 7 slides.
- Opportunity. A little over half of the decks had slides on the opportunity (industry, strategy, geography, etc.). On average, there were 3 slides on this, and the median was 2. For the decks that had slides on opportunity, the range was 1 slide to 8 slides.
- Strategy. Every deck had slides on the strategy. The number of slides on strategy ranged from 2 to 16, with an average of 7 and a median of 7.
- Case Studies. 25 decks had case studies (the ones that didn’t were fund 1s). 19 decks had case studies in the main section of the deck and another 6 had the case studies in the appendix. Case studies ranged from 1 slide to 10 slides, with 4 slides being both the median and average. Some decks had one or two case studies in main deck with additional case studies in the appendix.
- Track Record. 20 of the decks (67%) had at least one slide on track record. The 10 decks that didn’t have a track record slide were all fund 1s. The number of track record slides ranged from 1 to 4, with 2 being both the average and median. Some decks also had additional track record slides in the appendix
- Fund Terms. Most decks had a slide on fund terms (size, management fee, carry, etc.).
- Ending Summary. A little over half of the decks had an ending summary (a recap of why you should invest).
- Contact. About 2/3 of the decks had an ending Contact slide. (Note: I was surprised by this, as I feel that every deck should have an ending Contact slide. The Contact slide contains the name of the principal contact for the fund and their email and phone information.)
- Appendices. As stated above, half of the decks had an appendix or appendices. The appendices mainly included additional case studies, detailed team biographies, additional slides on the opportunity, strategy, and/or track record.
My Thoughts on Emerging Manager Fund Presentations
When reading my thoughts below, keep in mind that every investor is different, and so my thoughts need to be taken in that context. Also, your deck should reflect your unique strengths and advantages, so if you need more slides in an area, do what’s right for you.
Number of Slides. I think the deck should generally be around 20 slides. Up to 25 is okay, if you have appendices. Maybe even thirty in a rare case. But a presentation with 50 slides is way too much in my opinion. You should be able to provide a convincing, concise presentation in 20 slides.
I generally take the first meeting with a manager as a call, and I allot 50 minutes for each call. On the call, the first few minutes is spent on introductions. Let’s say that leaves about 45 minutes to go through the slides and field questions. I tend to ask questions as we go through the presentation. Assuming the questions take up about 15 minutes, this means you will have about 30 minutes to go through your slides. Getting through 20 slides in 30 minutes can be tough to do.
Clean, Uncluttered Slides. This is a presentation, not a book. Too much information makes a slide noisy and hard to understand. I like presentations that are crisp and uncluttered. Graphics are great if they aren’t too noisy, and can help break up the bullet points.
Cover Slide. I think the cover should be clean and simple. Have the name of the fund, something to the effect of “Investor Presentation” or “Overview”, and the date (month, year). The date is important as you will update the deck so a date on the cover will let your potential LPs know if they are looking at the latest version. Also, I recommend adding the date to the PowerPoint or .pdf file for the presentation, such as "XYZ Fund I, LP Overview August 2020."
Disclosures/Disclaimer. Your attorney will provide you with a disclosure/disclaimer slide. Keep it to one slide. Sometimes lawyers go overboard on this and want 2 to three slides – just say no. This disclosure slide usually appears right after the cover. Some decks have the Disclosure slide at the end, but the lawyer in me says to put it at the front.
Overview/Executive Summary. I like to see a single slide with an overview – an investment highlights slide if you will. Short, concise bullet points are good here. For example, this slide could have one bullet on the fundraise status, one for the strategy, one for the opportunity, one for team, and one for track record – not necessarily in this order. The key here is to convincingly state why an investor should invest in your fund in one concise slide.
Firm/Team. These slides are the opportunity to highlight the team’s investing and operating experience and how it’s relevant to the fund’s strategy. Focus on firm and team history, investing partners (and how long they’ve invested together), then operating/venture partners, and then advisors and the extended network. I’d only have 2-4 slides here. If you want to include additional slides for the extended team, put them in the appendix.
Opportunity. If the fund is focusing on a specific industry, geography or strategy, it can be helpful to have a slide or two to explain the opportunity – for example, the size and growth rate of the industry, the advantages of focusing on a specific geography (such as the Mid-West, Utah, or Southern California), or the opportunity presented by the investment strategy (for example, the opportunities in pre-seed venture investing or lower middle market buyouts).
Strategy. These slides will be different for each fund, and you need to include as many slides as necessary to convey why your strategy will be successful, repeatable, differentiated and unique. Slides I often see in the strategy include investment themes, target sectors, portfolio construction, deal sourcing, proprietary networks, investment/underwriting criteria, deal profile, deal due diligence, investment process, value creation, differentiation from other firms (or a competitive landscape chart), achieving liquidity (exits), and more. If the firm has an exclusive relationship with a university, a major corporation in the industry, an incubator, consulting firm, or other entity that provides the firm with exclusive and proprietary deal flow or other value-add, this is where to highlight it.
Case Studies. I like case studies as they provide insights to the overall investment process. I think 2-3 case studies are sufficient for a deck. If you want to include more case studies, put another 2-3 in the appendix. The case studies can be a part of the strategy section or can be a separate section. The case studies should include a description of the company, investment thesis, how the deal was sourced, entry valuation (including EBITDA multiple for buyout decks), leverage multiples for buyout deals, value creation, exit valuation and return metrics (gross IRR and multiple).
Track Record. For fund 1 managers, include your track record from your prior firm. If the track record from your prior firm is verifiable, that’s great, and you should state that in the slide. If you don’t have a track record from a prior firm, but have made some on-strategy investments as a way to establish a track record, whether via special purpose vehicles, off of your own balance sheet, or via a warehousing facility, highlight those investments. If your prior investments aren’t on-strategy, then their value is very limited. For fund 2 and 3 managers, include gross and net IRRs and multiples. If you are using industry performance benchmarks (such as from Cambridge Associates or PitchBook), make sure that your returns match the strategy and the date of the benchmark return. So, for example, if the benchmark return is through December 31, 2020, then your returns should also be of that date. Mixing and matching dates is a red flag. Finally, I have seen some managers “mark up” the current net asset value of their portfolio investments to reflect their estimate of their exit value and use that marked-up value to report performance. Don’t do this – it’s total fantasy and a huge red flag.
Fund Terms. There should be a single slide with fund terms. This should include target fund size (and hard cap), investment period, fund term (including extensions), management fee, preferred return, carried interest (including whether it is whole fund (European), deal-by-deal (American) or a hybrid), GP commit, and fee offsets.
Summary. Some funds include a summary slide as the penultimate slide. The summary slide is a “now that we’ve gone over it, here are the main reasons why you should invest” slide. If you include this slide, keep it crisp and concise. I’m mixed on the value of this slide as we rarely get to it during the presentation.
Contacts. The last slide in the presentation should be a contact slide, which contains the name(s( of the primary contact(s) for the fund and contact information. To me, this is a very helpful slide. Often as I look at the deck, I will want to ask a question, so having the contact information at the end of the deck makes it easy on me. You want to make it easy on potential LPs. Also, if you have appendices, the contact slide should still be at the end of the deck. Some decks have the contact slide before the appendices, but I think it should still be the very last slide of the deck.
Appendices. I don’t mind appendices, so long as they are relevant and add value. I think good slides for appendices are additional case studies, more detailed track record slides and additional slides for opportunity and strategy. For example, one presentation I liked had a couple of slides in the appendix that went into great detail about the manager’s underwriting process. I rarely look at detailed biography slides in an appendix and I don’t think I’ve ever had a manager refer to detailed biography slides in a meeting. So if your deck is too long, I would skip putting detailed biographies in an appendix.
I hope you find the above useful. But the bottom line is you should create a deck with as many slides as are needed to showcase your unique, successful and repeatable strategy, how your team has been successful in the past, and why your team can successfully execute the strategy in the future.
Other Posts for Emerging Managers. Here are some links to other posts that emerging managers might find of interest:
Fundraising Tips for Emerging Managers
http://www.allenlatta.com/allens-blog/fundraising-tips-for-emerging-managers
Compelling PE Roadshows: The Investor Perspective
http://www.allenlatta.com/allens-blog/compelling-pe-roadshows-the-investor-perspective
An LP's Advice to GPs on Annual Investor Meetings
http://www.allenlatta.com/allens-blog/an-lps-advice-to-gps-on-annual-investor-meetings
There are also many posts on fund terms which can be found on the “Blog Post Categories” section of the website. Scroll down on the page to find the posts.
© 2020 Allen J. Latta. All rights reserved.
