You’ve spent months—maybe even years—pouring your blood, sweat, and tears into your startup. You’ve turned your brilliant idea into an impressive minimum viable product. You’ve talked to customers and know there’s a market fit. Now you’re ready to get in front of investors and raise the capital you need to really accelerate growth.
Not so fast. Pitching investors is its own skill, entirely separate from everything it took to get your startup up and running in the first place. And if you make some common mistakes in front of potential backers, you can easily leave money on the table or diminish your chances of getting funded at all.
Avoid off-putting investors and give yourself the best shot possible by steering clear of these all-too-frequent pitching faux pas.
Pitching Your Idea to Investors – 5 Mistakes to Avoid
1. Failing to nail the intro
You’ll usually only have a handful of minutes—if not less—to initially sell your idea to investors before they start peppering you with questions. That means your opening pitch needs to be tight. Don’t spend too long over-explaining the problem you’re solving or meandering through your backstory. Get right to the core details of your business and value proposition.
The key points to drive home in your intro:
- What your company does
- The problem you’re solving
- Your solution and what makes it unique
- Your target customers
- Revenue and growth metrics (if you have them)
- The size of the market opportunity
Resist the temptation to get too in the weeds at first. You can always expand on details later during Q&A. Your initial pitch should serve as an elevator pitch that grabs attention fast.
2. Not having a clear call-to-action
Investor meetings should always have a clear purpose. Yet some entrepreneurs walk into the room without a solid grasp of what they actually want.
Do you need funds to hit the next milestone? Are you hoping the investor joins an advisory board? Would an introduction or referral help land your first big enterprise customer?
Go into each meeting knowing exactly what you want from that individual. End your pitch by making a direct ask or request rather than just saying, “So…what do you think?”
Sure, you might get offered something you weren’t even expecting. But without stating your call-to-action upfront, you risk leaving things open-ended rather than capitalizing on the opportunity.
3. Failing to understand the investor’s priorities
Even the nicest investors aren’t running charities. They want to put money into founders and ideas poised to make them more money.
Before your meeting, research what types of deals the investor has funded in the past. Try to find patterns in the size of investments they make or the types of products and founders they gravitate towards.
Use that intel to customize elements of your pitch so you can speak directly to their interests and what standards they likely use to assess opportunities.
You’ll immediately lose points if you ask an investor focused on fintech SaaS companies to back your biotech hardware startup. Make sure there’s an obvious alignment around market sector, deal size, potential returns, and other priorities.
4. Not having proof-of-concept
Some investors are willing to take risks on promises and projections alone. But the more evidence you have that your idea has legs, the better.
At an absolute minimum, show that people are interested by sharing stats like:
- Waitlist signups
- Landing page conversion rates
- Social media engagement
Even better, prove your startup’s ability to generate revenue by highlighting accomplishments like:
- Direct sales made
- Revenue from beta program
- Successful crowdfunding campaign
The more concrete the results you can share upfront, the more confident investors can be that you know what you’re doing.
5. Asking for too much…or too little
Finding the right valuation and fundraising target involves a delicate balance. Ask for too much without justification, and you can scare off investors or leave yourself open to dilution later. Too little, and you undermine your worth or show lack of ambition.
As a rule of thumb, make sure your valuation matches your current traction and metrics. Where possible, highlight comparable companies at a similar stage and how their post-money valuations compare.
In terms of amount raised, factor in 18-24 months of operating runway. Remember, it often takes longer and costs more money than expected to hit the next milestone that can trigger a new funding round. Don’t short yourself now only to run out of cash later!
With a dynamic presentation and clear understanding of an investor’s priorities, you’ll be primed to land the backing you need to make your big business dreams a reality.
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