There is an abundance of tips regarding what entrepreneurs should say during investor meetings and pitches. However, you will hardly find a guide that suggests “what not to say,” which I consider to be more significant. Remember, your first pitch to an investor is like your first date – you can’t miss an opportunity to make a good impression.
Being the co-founder and CTO of a tech-based start-up, I had to struggle to win over investors several times; I pitched to 86 investors and got 5 of them onboard, in order to prevent you from making a few blunders, here’s a list of things you should strictly avoid saying when pitching to investors
1. You Claim You have No Competition
You might think that claiming to not have any competition is a wonderful technique to turn the tables, on the contrary, every business in this world has competition. Even nonprofit organizations have rivals. If you haven’t stumbled upon your competitors yet, you probably haven’t done the adequate amount of market research.
Using this statement in your pitch is a rookie mistake, you may seem like a sluggish business person, consider it to be a kill switch for the investor you are pitching to. According to Guy Kawasaki, an American marketing specialist, this statement is one of the top lies of entrepreneurs.
You must ensure your pitch includes the acknowledgement of the fact that you have competitors and why your product or service is more efficient. This will be a portrayal of your sound knowledge regarding the market as well as your awareness of the competition you encounter.
2. We Have No Weaknesses
If you’re naming your strengths, you should also mention your weaknesses and how you plan to overcome them, being conscious of your shortcomings and presenting viable solutions to them, even if they are long-term, is a plus one for you.
If you don’t do it, the investors seated in front of you will, recognizing your flaws and providing an apt description of how you plan on fixing them is one step further towards getting that investment.
3. Signing A Non-Disclosure Agreement
Most startups consider their ideas to be extremely unique, therefore, they may think that sharing it with investors would pose a significant risk to their future; this is highly unlikely.According to my experience, most investors don’t believe in the abundance of genuinely unique ideas, what you are doing now, someone may have done yesterday, and someone else may do tomorrow.
Hence, investors will not sign a non-disclosure agreement because they can’t guarantee that they will not fund other businesses working on an idea similar to yours. Moreover, when you ask an investor to sign a legal contract like an NDA, it exhibits a lack of trust.
4. This is Such a Sure Thing it Won’t Fail
According to a report of Small Business Trends, of all startups started in 2014, only 56% made it to 2018. It is suggestive of the fact that any business can fail, even those that are well-funded by savvy investors. Being an entrepreneur, you should plan for failure, preparing for it isn’t reflective of stupidity or cowardice, on the contrary, it plots an escape from a potential catastrophic disaster.
So, when pitching to an investor, paint both the best and worst case scenario, let them know what you expect. Remember, investors are already bound to throw a million worst case scenarios at you. They have been in the game for a long time, so don’t try to sell your business plan as a guaranteed win.
It is often challenging to impress investors, especially if you own a startup, but that’s not to say you can’t make a good impression on them. Make sure you do enough research on them before pitching. If you do your homework, you have a much better chance of winning them over.
Saumya is writer of this article, she is a strong advocate of more representation for women in tech and currently CTO and Co-founder of InvolveSoft.