This week, I attended a venture capital (VC)/angel investor conference in the Bay Area and part of the event involved entrepreneurs pitching their concepts to a panel of VCs and angels. I was excited to hear the pitches and get a sense on the pulse of current entrepreneurial concepts.
Perhaps my expectations were too high, but after pitch number three I nearly walked out of the room. After pitch number 20, I was furiously taking notes for this actual blog post. There were so many mistakes, I’ve decided to divide up this blog post into two. Here are the first five mistakes that actual entrepreneurs seeking funding did:
They apologized before they started.
One entrepreneur’s first words before his pitch were: “I’m sorry, this is not what I do normally.”
Ok, I get it. You may not be the person on your team that is the best public speaker. However, to OPEN UP with that statement simply makes no sense. You are essentially telling us you won’t be able to sell us before you start. This tells me one of two things, 1: your start up team poorly planned your strategy for how to raise money (Why isn’t the person who does pitch well here? Is this not an important enough opportunity?) or 2: No one on your team can close a sale and you are the best of the worst on your team. Neither gives the investor a feeling of confidence.
Started out proudly stating they incorporated.
This entrepreneur’s first words described how they are a company by the name of “X” and we have incorporated as an LLC in Delaware. THAT is your attention grabber? Anyone with a credit card can incorporate. Incorporation is not a milestone to brag about. Incorporation is simply required. It would be like me opening up my pitch about my ability to roller skate with “I just bought a pair of roller skates.” Just because I have the equipment doesn’t mean I know how to use it. The same applies here.
They didn’t quantify results.
This entrepreneur said they had “a lot of traction” and it is a “big market”. We’ve raised a little bit of money.
For more on my pet peeves about words like “a lot” or “big”, check out my post on 10 Phrases to Delete From Your Business Plan Now. Vague terms have no place in an investor pitch. On the last point, if you say anything is “little” you are basically discounting it. We have a little company. We’ve got this little website. You are implying by adding the word “little” that it is not important. Let the audience decide what is important. If you’ve raised $50K, that may be a “little” in the grand scheme of things, but saying you’ve raised a specific dollar amount adds much more credibility than saying you’ve raised a little money. Let the investor decide what is “a lot of traction”, “a big market” or “a little funding.”
Stated a problem that isn’t a problem.
This entrepreneur said that: “The problem is the same day delivery market and we plan to combat the Amazons of the world.” I happen to be an avid Amazon Prime member and I LOVE it. How is this a problem? I’m still not quite sure. There was no discussion of cost savings, better efficiency, or any kind of result for the end user. Perhaps there is a market for it, such as Task Rabbit, but this entrepreneur simply assumed we knew what he meant. We didn’t.
Closed with begging.
This entrepreneur closed with “Please talk to me and I can show you how to get back your money.”
Aside from the obvious desperate nature of this plea, investors are not simply worried about how to get back their investment; they are interested in getting a RETURN for their investment. The panel of venture capitalists mentioned returns of AT LEAST a 10X return (some even mentioned 100X returns) and angels on the panel specified a minimum of 3-5X returns. Getting their money back is not something that excites them.
Stay tuned for my follow up post on five more mistakes from this pitching event.