6 major mistakes new startups make when pitching to investors that can cost them in funding
Pitching your startup to investors can seem like a daunting task. After all, you are asking them to inject significant capital into your innovation “baby”. As such, it’s crucial that you avoid the common mistakes that young entrepreneurs make when attempting to woo potential investors to learn more about their developments.
Here are six of the greatest offenders.
#1 – Presenting without a standard deck
Investors are used to being presented with a deck that covers standard topics, in a pretty standard format and structure. Doing so promotes clarity within your presentation, and helps them understand exactly what your offering is, and what market void it seeks to fill.
Indeed, investors have come to expect that pitches start with a company overview, mission statement, and rundown of the team. They then want to see your standard deck include slides on the problem or void, the solution you provide, and the product it encapsulates. They also want you to shed light on other important information, such as the market opportunity, your target audience, traction, relevant competitors, entry barriers, your business model & marketing plan, and financials. Finally, they want you to close with an ask. Summarize why their investment would be a great deal, then enlighten them as to what their investment would ideally look like.
Failing to comply with their expectations will likely leave your potential investors dazed and confused, instead of focusing on why your startup is their next best investment.
#2 – Being too scripted
That being said, even though investors want and expect you to pitch to them in a structured order, they want to see the genuine, human side behind your business. While reading off a script verbatim will tell them all the technicalities they need to know to inform their decision-making, it will not give them the impression that you know your startup inside and out.
Go off script and speak from the heart to show investors just how passionate and invested YOU are in your startup and spark a fire for your offering in their hearts. Doing so will help instill trust in your business, an attribute any successful startup-investor collaboration must possess.
#3 – Bingeing on the buzzwords
Disruptive. Innovative. Revolutionary.
What do all these words have in common? They’re highly trendy buzzwords.
What else? They’re extremely overused and are going to lose you your could-have-been investors.
While buzzwords may draw your investor’s attention at first, they tend to make the pitch sound trite and cocky, rather than professional. Kind of like the corny pick-up lines perpetual bachelors make at their favorite bars. They’ll win a chuckle or a smirk at best, but at the end of the day, they’ll leave the hopeless romantic swiveling on his barstool while the “girl of his dreams,” continues on in search of a man with more substance.
By now, also words like ‘AI’ and ‘machine learning’ have become buzzwords used way too often and improperly. While it is acceptable to use them and they’re alikes, make sure you only use them when it is appropriate and don’t overuse and abuse them.
When speaking to investors, avoid using too much industry-specific lingo. Instead, explain your startup in simple and humble, layman terms: what you do, how you do it, and why the market isn’t already inundated with similar offerings.
#4 – Proclaiming without proof
In the same vein, it goes without saying that every statement you make about your startup, your product, and its potential applications within your target market should be solidly backed by facts. If you want to describe your software platform as “first-of-its-kind,” there most certainly must not be any other products on the market that do what it does (by the way, they’re almost always are). Or, if you tell investors that your startup has no direct competitors (which is an extremely rare case), you’d better be prepared to show them the results of your comprehensive competitor analysis as evidence.
While your value proposition must reflect the value you propose to provide, it’s best that you present your startup as authentically and as modestly as possible. This way, investors can absorb the facts and discover how your offering can be applicable to their own lives, and the lives of those target audience members they’re experienced in service.
#5 – Pitching your whole kit and kaboodle
Finally, while you might want to take the greatest possible advantage of the time you have with your potential investors, pitching every product and/or service your startup has in the pipeline is ill-advised. Doing so will most certainly overwhelm the investors with information, clouding their ability to make keen (and costly) decisions on the product and/or service you want help with developing or launching right now.
Adding traction from multiple offerings lowers the value of any single product or service on its own. Instead, focus on one product or service that (a) needs funding now and (b) serves as a great example of what your startup can offer your target market and audience.
#6 – Not partnering with an experienced accelerator
You believe you have a winning venture but still struggling with securing your next investment? Partnering with an experienced, industry-specific accelerator, like Highroad, can help.
Highroad Launchpad is a unique value-based acceleration program for early-stage startups that truly understands the entrepreneurs. We do this through a tailor-made hands-on process, while also providing the startups with initial capital, office space, expert office hours, critical services, access to clients and strategic investors, and much more. We help you set goals, and achieve them, so you can succeed as a startup in the highly competitive ‘Startup Nation’, and scale globally.
What are you waiting for? Inquire about joining our next cohort today!