Common Mistakes in Startup Pitches to Investors and How to Prevent Them
Author : Equity Match | Published On : 03 Jan 2024
Most companies require a lot of help and startup funding to stay alive. Unfortunately, one of the primary reasons why most startups fail is a lack of startup investments.
What are teams doing incorrectly during investor pitches? What causes them to be refused many times and lose the desired investment?
Let us walk through the top mistakes entrepreneurs make when pitching their ideas to investors. If you do not want your pitch effort to fail, learn these key flops to avoid…
5 Common Mistakes While Pitching to Investors
#1 Sloppy Pitch Deck
It is crucial to consider the pitch deck to be a resort brochure!
One of the greatest investor pitch deck blunders is having too many slides crammed with material that requires effort to read. The deck is a helpful way to back up what the Founder is saying. It must be brief, concise, readable, and unobtrusive.
Every slide must convey meaning in the simplest way possible! Hence, it is required to put some thought and time into creating a pitch deck, since these materials can help you stand out, communicate ideas, and make a positive impression.
Many also may be overjoyed with their pitch decks and scripts, believing them to be flawless. However, founders may be overlooking vital details. One of the reasons a founder may not be acquiring startup funding is because they did not do their study and presented the same pitch to different investors.
When pitching a startup business to investors, learn what VCs are looking for and what their interests are. Furthermore, it is crucial to act on your discoveries by changing the deck and script for each presentation, stressing different aspects based on the investors' thesis and portfolios.
#2 Too Much Content
Most businesses prefer to reveal as much information as possible to highlight their hard work and extensive thought processes to gain startup investments. Given the little time available, this may become overly broad and ambiguous (CreativeHub, 2022).
Hence, it is crucial to maintain a simple, concise, and on-point structure for your startup pitch deck. Additionally, get feedback on your pitch from others!
Include more professionally prepared materials, as well as well-thought-out financial plans, according to Forbes – it is worth devoting more time to generating materials, improving graphics and branding, calculating financial projections, and developing a product road map that impacts the final desired result (Cremades, 2018).
The goal is to keep the investors interested and to demonstrate the significance of the idea so that they provide startup funding.
#3 Lack of Competitor Research
It is crucial to be familiar with the competitors!
When selling to potential investors, the worst thing founders can say is that the solution has no competitors. Even if the product has no near analogs at the time, founders should be aware of some that are relatively comparable.
Who exactly are they? What exactly do they do? How do they manage it? How much do they earn?
Investors like well-researched material; they want to know that founders investigated the market they intend to enter or develop in, and they need to be confident that they know what they are doing to provide startup investments. Yes, enthusiasm for how wonderful the product is contagious, but it is insufficient to persuade VCs of the competency.
#4 Not Having Traction or Facts
Choosing a startup or product to fund is always a risk, and investors want to be safe when it comes to their return on investment.
Never forget that you are not the only one competing for startup funding. VCs listen to dozens of proposals and require facts and data.
The offerings must seem fantastic and indeed need backup.
Not having data to back up the hypothesis, estimates, and promises, the chances of receiving money will drop significantly. Display the data insights, demonstrate traction, and provide figures that speak louder than words.
Similarly, it is crucial to be prepared to explain any graphs, data, or figures to present. If it is not possible to explain why this data or measure is important or why you are making a claim, you are one step closer to losing trust.
This is one of the most common investor presentation mistakes, which can be prevented by following a simple rule: if the measure or figure is shaky, do not discuss it. Draw the listeners' attention to the important information and offer your idea or product at its best.
#5 Omitting Tough Questions
What is the most crucial additional common investor presenting mistakes?
Floundering the part that comes after the presentation, i.e., not answering the questions.
Preparing for the Q&A portion of the presentation is undoubtedly one of the keys to pitching to investors. They will query about difficult topics such as potential hazards and how you intend to mitigate them, your precise financial plan, and your exit strategy. If founders know what to say, they will come across as a more confident possible business partner. It is possible to attract investors to gain startup investments if you prepare responses to such inquiries ahead of time.
The Bottom Line
Startup enterprises must nail the pitch deck if they are to attain their full potential and raise the financing they require in favorable conditions.
Design is unquestionably important. However, the design only allows the door to be opened long enough to deliver the real meat and demonstrate its value.
Many investors in platforms like EquityMatch look for those amazing startups that pitch with the appropriate content! Thus, demonstrating that a founder has made an effort to learn what information to include may be more crucial than impressing angels and VCs with cutting-edge tactics, test results, and a great-looking product. What is important is not pitching until you have included this information in the deck.
