Startup Guide: 33 Pitch Mistakes to Avoid
As you prepare for your pitch, it’s essential to know not only what to do but also what pitfalls to avoid. Here’s a comprehensive list of mistakes you should steer clear of for a successful investor meeting.
Sources: Alexander Jarvis, Entrée Capital
Preparation and Research
1. Lack of in-depth industry knowledge: Familiarize yourself with your sector to show investors you are well-prepared.
2. Ignoring competition: Discuss competitors and demonstrate your unique value proposition and plans to stay ahead. Neglecting competition might imply that you are unaware of market dynamics or overly conﬁdent.
3. Unfamiliar with key terms: Familiarize yourself with essential terms, such as MRR, ARR, CAC, and LTV.
4. Spelling errors: Typos can convey a lack of care and professionalism. Proofread your materials carefully before presenting them to investors.
Presentation and Communication
5. Excessively long pitch deck: Keep your deck under 15 slides. Use bullet points as often as possible, and if you want to include charts, data, or visuals, ensure a clear explanation of what they are.
6. Talking poorly about competition: Speak respectfully about competitors. Address the competitive landscape and how your startup differentiates itself.
7. Buzzwords: Don’t use trendy or cliche terms that don’t accurately represent your startup.
8. Jargon: Avoid overly technical language that may confuse or alienate investors.
9. “Fund my idea”: Ideas themselves are worthless. Understand that investors value a combination of things, including the team, traction, and market size.
10. No product visuals: Even if you are at a very early stage, you need to have at least some product visualizations, mockups, and wireframes in your pitch deck.
Financials and Valuation
11. Overvaluing your company: Provide a reasonable valuation based on current progress, industry benchmarks, and growth potential. Overvaluation can hurt your credibility.
12. Unrealistic ﬁnancial projections: Unattainable forecasts can indicate a lack of understanding of your business, market, or industry. Offer well-grounded, data-backed projections.
13. Using the word conservative: Avoid using this word, particularly in reference to ﬁnancial forecasts. No one will believe you.
14. No business model: Explain how your business will generate revenue. Worse than overly optimistic forecasts are none at all.
15. Business model is too broad: Make the business model slide relevant to your stage. Ensure your business model is concise, repeatable, and easily understandable with a realistic ﬁrst-year revenue projection.
16. Low gross margins: Aim for healthy margins, particularly in the SaaS industry.
Team and Commitment
17. First-time founders: If your startup lacks traction, investors may doubt your ability to execute your vision and navigate the market.
18. No designated CEO: Clearly deﬁne roles and responsibilities within your team.
19. Single founder: While exceptions exist, having just one founder can be challenging because of the overwhelming amount of work involved, particularly before securing enough funding to hire a management team.
20. Not full-time: If you haven’t quit your job yet or intend to have a side job whilst being funded, then you aren’t fully committed to your startup. Investors typically expect founders to be fully dedicated to the startup to show they are serious and focused on the company’s success.
21. Tech company with no tech team: A tech startup should have its own tech team, as outsourcing can signify a lack of core competency.
22. High salaries: Early-stage founders should expect modest compensation.
23. No skin in the game: Show investors you have something to lose and are committed to winning.
24. Asking investors to sign an NDA: Investors typically avoid signing NDAs to save time and prevent legal issues. So, don’t share anything in the early phases you don’t mind your competition getting.
25. Asking investors basic questions: Research potential investors beforehand.
26. Slow follow-up: Respond promptly to emails while seeking investment to display your dedication and professionalism.
27. Ignoring investor feedback: Investors prefer founders who are open to advice and willing to learn.
28. Stealth mode: Although exceptions may exist, being secretive about your startup can raise suspicions.
29. Prior investors not doing pro-rata: When previous investors don’t participate in the following funding round, it might signal a lack of conﬁdence in the startup.
30. Questionable investors on the cap table: The quality of previous investors can inﬂuence the decisions of new ones.
Market and Growth
31. Lacking a clear plan for growth: VCs only invest in scaleable businesses. Show how your business will scale and expand over time.
32. Small market: Limited market size can deter investors for scalability and long-term proﬁtability reasons.
33. Failing to show traction: Provide clear evidence that your solution is needed, will be adopted and paid for, and has room for growth. Use concrete data as proof points, such as user growth or feedback from beta users.