An investor will not even get to the numbers before he or she has determined whether or not to trust a deal. In the first 10 seconds, they make a decision as to how the deck appears, how the information is arranged and if it was the work of an individual who has already worked with them. This is not vanity. An untidy presentation means an untidy operator and capital does not gravitate towards chaos. There's really two sales simultaneously going on when it comes to raising money to close a real estate transaction; one is the financial pitch using cap rates, IRR and exit strategy, and the other is the visual pitch, using the layout, hierarchy, and pacing. Arrivals at the numbers right, design wrong will result in most investors not reading far enough to locate the numbers. Get both right, and the deck does more valuable than informing people, it gains the confidence of people even before they ask any question.
Once you have resolved the questions of “how” and “where,” you need to determine “how much.” How much does the investor want to invest, and how much does he want to earn?
All experienced investors read a deal in a similar fashion and your deck should read in that order – rather than against it. Their number one request is the cap rate because this provides them one number to understand how the property is currently priced, relative to its income. After that they wish to see cash-on-cash return as that's the number that matters most to them - how much of their own money do they receive for their investment as cash, after their debt has been paid off. After that, they desire to review the underlying assumptions – purchase price, envisioned NOI, debt terms, and exit cap rate, etc. – and be sure they are clearly stated so that they can go through your math and come up with the same numbers, if they wish. If you can't show an investor how you came up with the numbers, he or she will not believe the numbers, despite a great IRR on the cover slide.
Most sponsors' errors are in using the presentation as a back-up to the underwriting model. They copy and paste a screen shot of a spreadsheet and they name it transparency. It isn't. It's noise. A spreadsheet demonstrates that you've done the work; it is not a means of communication.
There are two solutions:
1) you divide the 2 documents completely. Don't include all of the numbers in the model in the presentation, but rather use the presentation to highlight only the handful of numbers that matter when making the decision: amount of equity required, projected “cap rate” at acquisition, average annual cash-on-cash return, projected “equity multiple” and target “hold period.” Five or six distinct numbers, with varied graphical emphasis will take one investor a long way beyond a crowd of forty numbers on one slide.
2) The same applies to the data in the market and the valuation of properties. Sure, comparable sales, rent growth trends and submarket absorption numbers make an attractive argument, but only if they are broken down to 2 or 3 data points that are relevant to your argument. Be clear about the data that backs up an underwriting rent growth of 3% a year, and not some regional report that shows twenty years of historical data with “noise.” Let them know if you are hoping to sell your property on a cap rate compression basis, even if the cap rate is only reduced by a quarter of a percentage point, and explain why. Investors don't like to see a lot of data. They feel confident with accuracy – you selected the three numbers that are significant and constructed the rest of the page to support them.
Exit strategy should be addressed in its own separate, well labeled section and not be a single line in a financial summary. Investors want to understand the rationale behind how they will be able to access their capital and the circumstances they may have to wait until the capital can be accessed, whether that's at the end of the refinance-and-hold process, at the time of stabilization when they can sell for a gain, or 1031 exchange into another larger asset. One that brings the downside information, changes in exit caps the equivalent of 50 basis points higher than you expected or lease-up that takes two quarters longer, approaches that are going to make reading it (the deck) more believable. The fact that there is a base case and stress case in every transaction is nothing new to sophisticated investors. You'll be more believable by pointing out that you've already taken the stress test, than by any adjective on your cover page.
The most important visual principles to maximize conversions.
Whitespace is a credibility signal, it is NOT empty space. If your slide is edge-to-edge with content, text and tables, this is a sign that the sponsor has not determined what should be the focal point; if there is the space and margin around your key cap rate or IRR, it means that you have determined the focal point and this confidence will be reflected in how the numbers are perceived.
Because, Investor should be able to read the information of typography difference. Same with the headline and subhead as in higher performing SEO blogger designs like Piki Templates' Grid Mag — use one large and prominent number for the headline metric (a 7.2% cap rate or an 18% projected IRR for example) and smaller numbers for context, while using body text only for supplemental detail — the eye naturally falls on size first, then position.
Keeping the pitch going and not stalling by having one idea per slide. Just like fast-loading, Adsense-friendly templates, such as Quick Spot, divide a homepage into bite-sized chunks of content and prevent the investor from having to split her attention between too much text, each slide in your presentation should contain only one financial concept — purchase price and basis on one, debt structure on another and exit assumptions on another, for instance.
The use of colour should be in order to signify meaning - NOT to decorate the page! Make one accent color your strongest values (cash-on-cash return, equity multiple, etc.) so that the color becomes a subconscious visual cue your audience learns (when visiting the first three slides you've created), akin to how one accent color is used in magazine-style layouts to tip-off your reader when they've reached a featured metric.
In addition, a chart should be used to replace a table for conveying a trend if they are of fundamental importance instead of a precise value. The investor can see the trajectory of a deal from a simple line graph of five years of projected NOI growth in half a second, but will have to do some mental math to see the story from a table – save tables for the rent roll or unit mix where exact figures are important.
- - Rapidly load the content (visually) and comprehension follows. The same rules that apply to having a lightweight, fast-loading blogger template, which ranks better in search engines, and has visitors stay longer, apply to a slide deck: the fewer seconds an investor needs to take to absorb each slide, the more momentum he or she will have—even a slide that takes five seconds is too heavy, and the longer a slide takes to process, the more the investor might doubt the presentation.
- - When the grid is lined up consistently it creates unconscious understanding. The precision and discipline of a well-built magazine template, in the way the post cards, and featured sections, all snap to the same invisible grid, every time, is the same with numbers, labels and even charts: they should all be aligned, even by a few pixels, or it's subconsciously perceived as carelessness.
- - There should be a measure of a clear call-to-action not just at the end but on each of the closing slides as well. There should be no confusion at any of the natural stopping points: the CTA of each is to repeat one and only one call to action—whether that's "Reserve your allocation", "Schedule a call", or "Review the full model"—defined just as close to the "stopping point" as a high-converting landing page drives an unambiguous call-to-action at every available stopping point a user can take, not just at the end of the page.
- - The use of negative space around hero metrics will add value to the metrics. Investors equate a single projection like your equity multiple with a promise - it's a nice big figure when you have other space to play with it, but a poor figure when you don't.
How to get from Slide Decks to Live Investor Hubs.
A static PDF isn't gaining traction as the ultimate format of a real estate pitch and the answer isn't as dependent on design trends as it is on what sponsors' needs are during the raise process. When a PDF is out of your inbox, you can't get any more information. There's no way to tell whether the investor opened it, how long he or she spent perusing the financial summary or whether he or she got caught at the debt structure slide. An investor hub which is accessible through the web addresses that problem. Sponsors can gather information about which parts of the pitch are holding visitors' attention, which links are being clicked and which ones are coming back for second time viewing before making a call, by presenting the same pitch content, on a dedicated landing page, rather than on a static file.
You don't need a six-figure Web budget or to develop a custom team to build that hub. A light and quick loading time layout – same kind of design that free and paid templates from blogger template websites such as pikitemplates.com have like the Wind Spot template – can easily deal with a sophisticated investor site. The architecture of Wind Spot, which focused on a clean and responsive design with a smooth slider and SEO-friendly architecture was developed for content sites which have to load super quick, and appear credible on a phone display — which is what a deal page should do as well. At the time of meeting, most investors will click your link from their phones while they're reading an e-mail, and if your link loads in 2 seconds as opposed to 10 seconds, they're going to feel better about what you're offering them, no matter what it is.
The set up is easy to do. These pages are typically setup by the sponsor as a single page landing page (no full blog), with the homepage being the "pitch" itself: the first section is the "pitch" (deal name and the metrics that are discussed later in this article), the next section goes through similar steps, and a full version of the pitch deck or financial model is embedded on the same page and can be downloaded. Old 'Reply to this email' close button is replaced with a simple contact form or scheduling link. The templates already have these attributes built in – fast page load speeds and clean section breaks – both of which make them ideal for content publishing and can be easily adopted when creating pages for investors. That leaves the sponsor with one single link, each investment vehicle can be tracked, they can determine exactly how much time each prospect was spending with a link, and follow up with actual real numbers – or maybe not – investors rather than making a blind guess on who actually did or didn't spend time with a link.
The Capital's mascot, Clarity, wins the game.
The fastest fundraisers are often not the ones with the greatest money potential; at least, not in terms of their issue's reported expected net long-term returns. They're the ones who enable an investor to easily grasp the deal, confirm the assumptions and confidently make a decision. It's almost like every decision that an entrepreneur makes in crafting a pitch deck is a trust decision in disguise, such as the amount of whitespace around a cap rate, the hierarchy of what information is above the fold, and how quickly a hosted investor page loads on a cell phone. The distinction between a great raise and a great webpage will continue to blur as more and more of the raise process goes digital – after all, they're both attempting to eliminate every friction point between a good deal and the individual that would like to fund it. It's clear the overwhelmingly successful companies that are using it as a business strategy as opposed to business preference, are the ones that continue to close above average rounds.
