We see a number of seed stage companies each month and often see entrepreneurs fail to address essential pitch elements. Following are the four most common mistakes that entrepreneurs make when pitching to a VC.
1. Describing everything but the problem being solved
One of the most important starting points in a pitch is stating the problem being solved. Entrepreneurs often think that the forwarded pitch decks would be read and therefore start with talking about technology, team, financials, etc. The truth is we review dozens of plans each month and not everything is understood or even remembered. Taking the time to frame your magical solution against a well described problem is the best way to set the stage for your pitch. Find ways to have the VC relate to your product by having them experience it through a prototype, animation, or wireframes. Make it even more relatable by illustrating one or two user stories or citing case studies.
2. Saying there is no competition
It is commonplace for entrepreneurs to think that there’s no direct competition or that they couldn’t find any. Usually after a pitch we research the space and in a few good Google searches generate a series of competitors. This makes us cautious especially when we can come up with competitors this easily. If at all there are no “direct” competitors it is well established that in this fast paced Internet economy there will be a growing number of “indirect” competitors. If you wish to be taken seriously, never pitch without describing the competition and a plan to tackle them. When competing with another startup in the same space be ready to explain your differentiated angle. We recommend embracing competitive framework models such as one from Steve Blank and preparing well to have a healthy discussion around it.
3. Pitching as a single skillset founder
Good startups require combination of solid technology and business management skills. If you can only articulate your great data science background but not your customer development strategy then the pitch heads downhill pretty quick. Startups are hard work and can destroy your sanity if going it alone. You’re better off with co-founders who complement you and there to bounce ideas or share in miseries if things don’t go right. Consequently seed and early stage investors most often pick good Teams over good ideas. And when pitching the team, instill confidence in your investors by taking the time to demonstrate how the team complements each other and how it would function well together (the latter especially important if they haven’t worked together before).
4. Bringing co-founders to the table who add little value
While it’s important to have co-founders, never allow yourself to be hitched to a co-founder who cannot bring savvy in their claimed expertise. We see many good ideas and products waste serious time and money because the team relied on claimed skill-set. This eventually manifests in choosing an archaic coding platform or an outdated business model portending serious impact to traction. Competition for VC dollars is hot and founding teams must seek strong team members who bring world-class skills to the table.
Disclaimer: This material is the solely opinion of the author and does not represent an official statement by BluePointe Capital Management, LLC, nor does it constitute a recommendation for the purchase or sale of securities. No representation is made on its accuracy or completeness of the information contained herein. Although the information provided is from sources we believe to be reliable, we do not guarantee the accuracy or timeliness of any information for any particular purpose.