Writing a winninginvestment story          by Vladimir Nesterenko  Presented at the Kyiv School of Economics              ...
Starting point• Investment story – an investment rationale, a part of proposal  made by an entrepreneur or its designee (e...
The fund’s funnel       You are here           Leads                Proposal         Prospects        Formal criteria met ...
Chance of success                           Probability of getting      You are here          to each category*          L...
Who decides?
They do?
Not (yet)
Help him
a) Match formal criteria
Investment criteria          if you match these, make it clear          from the very startFormal                         ...
b) Stand out
( he wants to stand out too )
FAIL
10 shortcuts towriting a story that     stands out
1. Brevity, the    soul of wit
Magic tool: DELETE                The ad captured a week                ago from the Google                search screen
2. Cut to the chase
Magic tool: “So what?”• “The Company is launching two-three new products  a year.” – So what?• -> “Launching two-three new...
3. Be specific
Magic tool: W-Questions• “By increasing the share of exports to 40%, we’ll double our  gross margin.”• W-Questions: When? ...
[3,4]                                    EGGHEADS   Vagueness 3D                                                          ...
Associations: Pain & GainPain                      Gain• Hard to construct• May be not understood   • Convincing• May be i...
[5]“Children’s boots are on sale.         Unworn.”
[6]  “The last man on Earth sat alone in aroom. There was a knock on the door…”
Associations: How they work• Psychologists call it “transderivational search”• Wiki: “… Unlike usual searches, which look ...
3. Advocacy, notdescription
Magic tool: Backward induction• “By entering India market, we’ll increase the share of  exports from the current 10% to 40...
4. Keep it     real
5. Address obviousweaknesses
6. Don’t preach to    the converted
7. Takeresponsibility
Magic tool: No passive voice• “The share of exports will be increased from the  current 10% to 40% in 2017.”• Problem: Sou...
8. Avoidbuzzwords
An advise from Dave“Clear your vocabularies of any superlatives, clichés, orany over-used expressions that can’t be backed...
9. Test it
Tests• Summarize the story in 2-3 sentences and see  whether the summary reflects the logic of the entire  story. (Normall...
10. Design matters
Formatting tips•   Bullet points•   Key numbers•   Rule of thirds [9]•   Respect white space•   No double accent•   Three ...
RoundupRules:                             Magic tools:1. Brevity                         •   DELETE2. Cut to the chase    ...
ExerciseHere is one of the bullet points from an InvestmentSummary – use ‘magic tools’ to make it more specificand respons...
Cheat sheetRules:                             Magic tools:1. Brevity                         •   DELETE2. Cut to the chase...
Exercise (solution)• DELETE: “The Company strategy assumes expanding its operations to  Kazakhstan, to tap its growing ret...
References1.   http://www.investopedia.com/terms/p/privateequity.asp#axzz2K8rrYzic2.   http://en.wikipedia.org/wiki/List_o...
About myself•   The founder of Symmetric – the firm that will make strategy consulting available    for mid-sized companie...
The presentation   will be available onslideshare.net/nesterenkov            and     finmodels.com.ua
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Writing a winning investment story

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Presenting a convincing investment story is absolutely crucial for getting funds for your business or a project. Take advantage of a set of proven shortcuts that would improve your writing skills dramatically. Most of the hints and tools can be equally applied to writing any text that should 'sell' -- from a cover letter to a potential employer, to charity sponsorship proposals.

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Writing a winning investment story

  1. 1. Writing a winninginvestment story by Vladimir Nesterenko Presented at the Kyiv School of Economics February 7, 2013
  2. 2. Starting point• Investment story – an investment rationale, a part of proposal made by an entrepreneur or its designee (e.g., investment bank) to potential investors. The ‘investment story’ is supposed (and expected) to answer the question ‘WHY TO INVEST’.• For this presentation, we’ll assume the investment story is prepared for Private Equity investors.• Private Equity investors – funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. [1,2]
  3. 3. The fund’s funnel You are here Leads Proposal Prospects Formal criteria met Opportunities Business criteria met Deals Deal You want to be here
  4. 4. Chance of success Probability of getting You are here to each category* Leads 99% Prospects 50% Opportunities 10% Deals 1% * Numbers are indicative, for You want to be here illustration only
  5. 5. Who decides?
  6. 6. They do?
  7. 7. Not (yet)
  8. 8. Help him
  9. 9. a) Match formal criteria
  10. 10. Investment criteria if you match these, make it clear from the very startFormal Business• Company size• KYC (oligarchs, …)• Industry • Solid business opportunity• Ticket size (e.g. >$10mn) • Leading player in its market• Geography • High quality management• Investment pattern (e.g., • Manageable risks growth, value) • Clear exit strategy• Maturity• Years profitable (e.g. >3)
  11. 11. b) Stand out
  12. 12. ( he wants to stand out too )
  13. 13. FAIL
  14. 14. 10 shortcuts towriting a story that stands out
  15. 15. 1. Brevity, the soul of wit
  16. 16. Magic tool: DELETE The ad captured a week ago from the Google search screen
  17. 17. 2. Cut to the chase
  18. 18. Magic tool: “So what?”• “The Company is launching two-three new products a year.” – So what?• -> “Launching two-three new products a year, unlike its peers, the Company secures its market share.”• “We’ll push the share of export sales to 40% over the next five years.” – So what?• -> “By increasing the share of exports to 40% in five years, we’ll double our gross margin.”
  19. 19. 3. Be specific
  20. 20. Magic tool: W-Questions• “By increasing the share of exports to 40%, we’ll double our gross margin.”• W-Questions: When? What [is the current share]? How? Where [exports will go]? Why [that will prop up margins]? Who? (addressed)• -> “By entering India market, we’ll increase the share of exports from the last years’ 10% to 40% in 2017 and double our gross margin.” (yet the “Why” question remains…)
  21. 21. [3,4] EGGHEADS Vagueness 3D ONLY READING OMITTED Reference index “EDUCATION” BEING SPECIFIC: “Kyiv School of Economics’ MA program in “MA IN KYIV” Business Economics will hold an admission“MA PROGRAM” test in Kyiv on July 4-6, 2013.” BEING NOT SPECIFIC: “MA PROGRAM Dimension: Reference index IN ECONOMICS “KSE will hold an admission test in Kyiv on July IN KYIV” 4-6, 2013.” Dimension: Modality “Kyiv School of Economics may hold an admission test in Kyiv on July 4-6, 2013.” Dimension: Quantor “Kyiv School of Economics usually holds an admission test in Kyiv in July.”
  22. 22. Associations: Pain & GainPain Gain• Hard to construct• May be not understood • Convincing• May be incorrectly understood, even to • Short the opposite For advanced writers only.
  23. 23. [5]“Children’s boots are on sale. Unworn.”
  24. 24. [6] “The last man on Earth sat alone in aroom. There was a knock on the door…”
  25. 25. Associations: How they work• Psychologists call it “transderivational search”• Wiki: “… Unlike usual searches, which look for literal (i.e. exact, logical, or regular expression) matches, a transderivational search is a search for a possible meaning or possible match as part of communication, and without which an incoming communication cannot be made any sense of whatsoever. It is thus an integral part of processing language, and of attaching meaning to communication. [7]• Our brains do it all the time• Problem: you can’t get into a reader’s mind EGGHEADS ONLY• It’s an ART to make reader attach correct meaning READING
  26. 26. 3. Advocacy, notdescription
  27. 27. Magic tool: Backward induction• “By entering India market, we’ll increase the share of exports from the current 10% to 40% in 2017 and double our gross margin.”• Problem: your reader seeks effects first, then causes• Solution: start from effects• “We’ll double our gross margin by 2017 by entering the Indian market and increasing the share of exports from the current 10% to 40%.”
  28. 28. 4. Keep it real
  29. 29. 5. Address obviousweaknesses
  30. 30. 6. Don’t preach to the converted
  31. 31. 7. Takeresponsibility
  32. 32. Magic tool: No passive voice• “The share of exports will be increased from the current 10% to 40% in 2017.”• Problem: Sounds like one avoids responsibility• Solution: Show it’s not the case -- say this is YOU who will make it happen.• -> “The management is implementing its action plan to increase the share of exports from the current 10% to 40% in 2017.”
  33. 33. 8. Avoidbuzzwords
  34. 34. An advise from Dave“Clear your vocabularies of any superlatives, clichés, orany over-used expressions that can’t be backed up, headds. Avoid using terms like ‘the best’,‘groundbreaking,’ ‘cutting-edge’, and ‘world class.’Investors see those words day in and day out andeventually they lose meaning.”Dave Lavinsky, president of Growthink, a Los Angeles-based company that helps entrepreneurs developbusiness plans and raise capital. [8]
  35. 35. 9. Test it
  36. 36. Tests• Summarize the story in 2-3 sentences and see whether the summary reflects the logic of the entire story. (Normally it’s not the case)• Ask your colleague (better a junior one) to read the summary and see how long does it takes to read it. If more than 2 min – there is something wrong• Get feedback: show your story to colleagues, room mates, taxi driver, etc. If your grandma gets it – be sure your story falls into the winning 1%
  37. 37. 10. Design matters
  38. 38. Formatting tips• Bullet points• Key numbers• Rule of thirds [9]• Respect white space• No double accent• Three colors max• BE CONSISTENT
  39. 39. RoundupRules: Magic tools:1. Brevity • DELETE2. Cut to the chase • “So what?”3. Advocacy, not description • W-Questions4. Be specific • Backward induction5. Keep it real • No passive voice6. Address obvious weaknesses7. Don’t preach to the converted8. Take responsibility9. Avoid buzzwords10. Design matters
  40. 40. ExerciseHere is one of the bullet points from an InvestmentSummary – use ‘magic tools’ to make it more specificand responsible:• The Company strategy assumes expanding its operations to Kazakhstan, to tap its growing retail market.
  41. 41. Cheat sheetRules: Magic tools:1. Brevity • DELETE2. Cut to the chase • ‘So what?’3. Advocacy, not description • W-Questions4. Be specific • Backward induction5. Keep it real • No passive voice6. Address obvious weaknesses7. Don’t preach to the converted8. Take responsibility9. Avoid buzzwords10. Design matters
  42. 42. Exercise (solution)• DELETE: “The Company strategy assumes expanding its operations to Kazakhstan, to tap its growing retail market.” -> “The Company will tap the Kazakhstan’s growing retail market.”• ‘So what’: -> “The Company will tap the Kazakhstan’s growing retail market to increase it’s sales in CIS.”• W-Qns: -> “In 2014, the Company will tap the Kazakhstan’s $20bn retail market to increase it’s sales in CIS by 10% by 2017.”• Backward induction: “The Company targets increasing its sales in CIS by 10% by 2017 on entering Kazakhstan’s $20bn retail market.”• No passive voice: OK
  43. 43. References1. http://www.investopedia.com/terms/p/privateequity.asp#axzz2K8rrYzic2. http://en.wikipedia.org/wiki/List_of_private_equity_firms3. http://www.center-nlp.ru/library/s55/nlp/meta_model.html4. http://en.wikipedia.org/wiki/Methods_of_neuro-linguistic_programming5. http://en.wikipedia.org/wiki/Ernest_Hemingway6. http://en.wikipedia.org/wiki/Knock_(short_story)7. http://en.wikipedia.org/wiki/Transderivational_search8. http://www.inc.com/guides/2010/09/how-to-write-an-executive- summary.html9. http://en.wikipedia.org/wiki/Rule_of_thirds
  44. 44. About myself• The founder of Symmetric – the firm that will make strategy consulting available for mid-sized companies• 10 years in Finance (corporate and investment banking) x industry experience – Local banks, Citibank – Concorde Capital – BG Capital – Geo Alliance Group (EastOne /Arawak Energy) – Tech startups• Two MS’s, in Economics and Finance, from EERC (currently Kyiv School of Economics) and Kyiv National University of Economics. Stanford’s Tech Entrepreneurship course (via Coursera)• Get connected: ua.linkedin.com/in/vladimirnesterenko
  45. 45. The presentation will be available onslideshare.net/nesterenkov and finmodels.com.ua

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