Many startups seeking investment capital make common mistakes when pitching their business to potential investors. These easily avoidable errors can be statements made in their elevator pitch, in an email introduction, or even in the formal pitch deck they use to present.
Information overload goes hand in hand with life as an entrepreneur, especially when seeking advice for investment. Knowing what to say, and more importantly what not to say, is often the difference between receiving the coveted funding to take your business to the next level and going home empty-handed. You can know your pitch and data set like the back of your hand but this all goes out of the window if you say the wrong thing in your investment pitch.
Instead, here’s a list of things entrepreneurs say while fundraising that you need to remove from your pitch immediately.
1.We have no competition
Of course your startup has competition, and to think otherwise shows an investor that you are naive. A simple Google search will often surface any number of potential competitors. Your job is to identify your top potential competitors and explain why your company is better.
Inside your pitch deck you should absolutely include a slide with all your competitors or investors will think you are either trying to hide something or not grounded enough about your own market.
2. You Need to Sign This NDA
You might think you have the most unique idea in the world, and that letting it out is the biggest risk to your future. It’s not. At least, it is highly unlikely.
Somewhere, someone else is thinking of pretty much the same thing right now.
So, investors can’t sign an NDA because they can’t guarantee they won’t fund a similar idea from someone else. There is also too much legal risk they can’t control. It also shows that you don’t trust them. Typically they would sign an NDA when you go into due diligence with them.
What should be more important is getting your idea out there and funding it before and better than your competition.
3.Our USP is that we’re better than x…
After acknowledging you have competition, you must outline what makes you stand out from the crowd and decide what your Unique Selling Proposition is. Throwaway comments that you are simply “better and faster” than your competition will not cut it unfortunately and investors will see through generic assertions that are not substantiated with hard facts.
A USP is synonymous with investment because it is essentially what differentiates you from everyone else in the market.
4.We Have No Weaknesses
You’ve named your strengths and unique advantages. You also have weaknesses. You do. If you don’t know them, you are are really not aware. That alone is a big weakness, and probably the most dangerous.
It can take a mentally strong entrepreneur to recognize and admit weaknesses and gaps. Yet, this is a strength in itself. It means you can fix it, find the right help, and overcome them.
5.My idea is too good to fail
Did you know that over 90% of startup fails?
Whatever you do, do not sell a pipe dream and try to pull the wool over the investor’s eyes. They will see right through this and most likely not invest.
Failure is not necessarily detrimental and it can be an important learning curve in building a more successful business in your next attempt. Paint a realistic picture of what you expect, the best and worst potential outcomes from the business venture and how you are best mitigating risks.
6.Our product will sell itself
No, it won’t. You have to show that you have an understanding of how to get customers. You can’t just assume that if you build it, customers will come. You need to present a well-thought-out customer acquisition strategy, a coherent marketing strategy, and evidence that you understand customer acquisition costs and that you have a good sense of the lifetime value of customers.
7.I Don’t Have an Exit Strategy Yet
Most investors are purely investing on the basis of achieving a highly profitable exit. Normally sooner rather than later. That’s how they make their money. No investor can go in, without an exit strategy in place.
So, not having an exit strategy or saying you’ll never sell or go public means you don’t have anything to offer them. If that’s really how you feel, equity fundraising probably isn’t for you.
Also never talk about an exit strategy right away as investors may think you are in it for a quick win which shows lack of commitment. Only talk about a potential exit scenario if investors are actually the ones that ask you.
