The Antidote to Crappy Investment Banking Advice


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With all deference to even the most talented among them, investment bankers are often… bad storytellers.

No need to take my word for it. Just look at their pitch decks: those laborious, data-laden exercises in branding futility.

Here’s the (sometimes very costly) irony.

Growth companies of all shapes and sizes often abdicate responsibility to investment banks for spinning corporate yarns, despite being conspicuously unable to tell their own stories.

It’s a bit like hiring a roofer who’s not great on a ladder.

Now, are there investment bankers who are terrific at helping companies tell their stories? Of course. But after two dozen years in small-cap land, I can confirm that there are… not many. And that applies to global banking titans as well, BTW.

A bulge-bracket bank once told a CEO I know, for example, that an IPO for their company was “impossible” after a failed series of investor meetings. Three months later – with a complete storytelling makeover – the company undertook a 6x oversubscribed Nasdaq IPO. It turns out it was only “impossible” due to the incomprehensible way the bankers encouraged the company to describe itself.

When you’re in doubt about advice from your investment bankers, channel George Costanza and do the opposite.

The audience. Most investment bankers wildly overestimate the technology and science IQs of investors. As a former fund manager, I’m not speculating in this regard. Switch your target audience to the person in front of you at Starbucks, and your company’s storytelling effectiveness will soar.

Graphs, charts, and tables… Oh My! Part of what makes most investment bank marketing decks useless is the over-reliance upon graphics. And they routinely encourage their clients to make the exact same mistake. So, if a smart high school student can’t figure out what’s going on in a chart you’re contemplating using in 10 seconds or less… use words instead. When in doubt, think “Ted Talk,” not “Eye Chart.”

One version. Really? When bankers descend en masse on your conference room to huck their wares, they routinely make a critical mistake. Like any sales initiative, their goal is to “connect” with you. Well, how on earth are you going to “connect” with them if that requires you to simultaneously read the bound, logo-clad, 4-color Iliad sitting in front of you… and also listen to them speak? The answer is that you can’t and often won’t. And it gets worse because they think you should do the same thing.

Here’s the moral (in addition to never going to meetings wearing matching Patagonia vests): You need two investor presentations. One that is a standalone and one designed to simply support/enhance an interactive discussion. Remember, when it comes to growth company investing, investors bet on jockeys, not horses. When you sit across from an investor to sell them stock, every second they spend reading is one less second they spend learning about the person they’re betting on.

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A globally recognized small-cap expert, Mr. Epstein has advised, governed, and invested in hundreds of small-cap companies. His capital markets and corporate governance acumen are products of a singular perspective – a former corporate attorney, operating executive, institutional investor, and, now, board advisor. As Bloomberg Businessweek commented regarding Mr. Epstein’s category-defining corporate governance book, “attention, directors of small-cap companies. Help is on the way.” 

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