We asked some of our partners from the regional startup investment community to discuss the five biggest mistakes that startup founders make when pitching to investors. Zach Malone is with Draper Triange Ventures, where he reviews approximately 400 investment opportunites a year and serves on the board of two Draper investment companies, Thread and ContainerShip.io. Matthew Lancaster is Pittsburgh Chapter President of Keiretsu Forum Mid-Atlantic and an investor with Ferrum Capital Partners.
Zach Malone
- 1. Do your homework on the venture capital firms you plan to pitch. Understanding the investment focus (e.g., check size, investment stage, industry focus) of a firm is important and can help save time (yours and ours) when deciding whom to pitch for capital.
2. There is only one absolute certainty with financial projections…they will be wrong. That doesn’t mean I don't expect founders to understand every detail of the assumptions in their model and how changes to inputs will affect their growth and overall strategy.
3. Founders will often request an extremely high valuation that isn’t rooted in reality. As investors we don’t want to own too much of a company. That being said, we do have to create returns for our investors and need to make sure the time we spend with a portfolio company, post-investment, will create a meaningful return. Let the market decide valuation.
4. Blogging, tweeting, speaking at industry conferences, etc. are all valuable marketing tools but alone they are not a true “Go-To-Market Strategy”. If you are a seed stage company looking to raise capital for pre-market development make sure you communicate that you understand you’ll need to build a G2M plan in the future. If you are entering market have a detailed sales roadmap, and don’t get bogged down in technical details of your product.
5. Investors want to know they can develop a healthy working relationship with founders. Avoid coming across as an individual who believes they have all the answers. Be confident, but convey an ability to learn from others.
- Matthew Lancaster
As an angel investor there are a number of mistakes that entrepreneurs make during their pitch that can immediately sour any potential investment. My top five are:
1. They are not confident in what they are presenting.
2. They focus too much on how great their idea is and forget to present the business end of the presentation.
3. They forget that the investors are primarily interested in the return.
4. Their slide deck is either too busy or too sparse. It is a presentation, make it balanced and aesthetically pleasing.
5. They do not clearly and concisely explain their idea, which makes it hard to understand what it is they actually do. Angel Investors see a lot of companies. They need something that makes them “get it” quickly.
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