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.

1. Writing a winning
investment story
by Vladimir Nesterenko
Presented at the Kyiv School of Economics
February 7, 2013

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. 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. 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. Who decides?

6. They do?

7. Not (yet)

8. Help him

9. a) Match formal criteria

10. Investment criteria
if you match these, make it clear
from the very start
Formal 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. b) Stand out

12. ( he wants to stand out too )

13. FAIL

14. 10 shortcuts to
writing a story that
stands out

15. 1. Brevity, the
soul of wit

16. Magic tool: DELETE
The ad captured a week
ago from the Google
search screen

17. 2. Cut to the chase

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. 3. Be specific

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. [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. Associations: Pain & Gain
Pain Gain
• Hard to construct
• May be not understood • Convincing
• May be incorrectly
understood, even to • Short
the opposite
For advanced writers only.

23. [5]
“Children’s boots are on sale.
Unworn.”

24. [6]
“The last man on Earth sat alone in a
room. There was a knock on the door…”

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. 3. Advocacy, not
description

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. 4. Keep it
real

29. 5. Address obvious
weaknesses

30. 6. Don’t preach to
the converted

31. 7. Take
responsibility

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. 8. Avoid
buzzwords

34. An advise from Dave
“Clear your vocabularies of any superlatives, clichés, or
any over-used expressions that can’t be backed up, he
adds. Avoid using terms like ‘the best’,
‘groundbreaking,’ ‘cutting-edge’, and ‘world class.’
Investors see those words day in and day out and
eventually they lose meaning.”
Dave Lavinsky, president of Growthink, a Los Angeles-
based company that helps entrepreneurs develop
business plans and raise capital. [8]

35. 9. Test it

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. 10. Design matters

38. Formatting tips
• Bullet points
• Key numbers
• Rule of thirds [9]
• Respect white space
• No double accent
• Three colors max
• BE CONSISTENT

39. Roundup
Rules: Magic tools:
1. Brevity • DELETE
2. Cut to the chase • “So what?”
3. Advocacy, not description • W-Questions
4. Be specific • Backward induction
5. Keep it real • No passive voice
6. Address obvious weaknesses
7. Don’t preach to the converted
8. Take responsibility
9. Avoid buzzwords
10. Design matters

40. Exercise
Here is one of the bullet points from an Investment
Summary – use ‘magic tools’ to make it more specific
and responsible:
• The Company strategy assumes expanding its
operations to Kazakhstan, to tap its growing retail
market.

41. Cheat sheet
Rules: Magic tools:
1. Brevity • DELETE
2. Cut to the chase • ‘So what?’
3. Advocacy, not description • W-Questions
4. Be specific • Backward induction
5. Keep it real • No passive voice
6. Address obvious weaknesses
7. Don’t preach to the converted
8. Take responsibility
9. Avoid buzzwords
10. Design matters

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. References
1. http://www.investopedia.com/terms/p/privateequity.asp#axzz2K8rrYzic
2. http://en.wikipedia.org/wiki/List_of_private_equity_firms
3. http://www.center-nlp.ru/library/s55/nlp/meta_model.html
4. http://en.wikipedia.org/wiki/Methods_of_neuro-linguistic_programming
5. http://en.wikipedia.org/wiki/Ernest_Hemingway
6. http://en.wikipedia.org/wiki/Knock_(short_story)
7. http://en.wikipedia.org/wiki/Transderivational_search
8. http://www.inc.com/guides/2010/09/how-to-write-an-executive-
summary.html
9. http://en.wikipedia.org/wiki/Rule_of_thirds

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. The presentation
will be available on
slideshare.net/nesterenkov
and
finmodels.com.ua