Believe it or not, investors do want to give you their money. All of it (well most of it...). That's precisely why they are called... investors. Because they are supposed to put their money where their mouth is and... invest that same money in investments that meet their investment criteria. Most investors will gladly hand you enormous sums of cash if you have assembled a good team, created a good product, and adequately researched your market. That being said, there are many ways to screw up and miss your chance of getting funded. Many. Many are mostly common sense stuff. But it's staggering to see how many people are able to f* up the common sense stuff. So it's always good to go back to common sense because... it's common sense! To help you succeed in your next pitches, we have listed the top five things you should never ever say to an investor...
“My co-founder is joining part-time”. If your idea is worth $100 million, your co-founder won’t want to stay at his current job. And if you can’t find someone to join you full-time, is your idea really worth $100 million? You just cannot expect to attract investors' attention (let alone money) when you are openly stating that your co-founder is joining part-time. Most probably because he is not yet fully convinced by the project, not yer ready to fully commit or is not even your co-founder but a childhood friend kindly accepting to pose as your "co-founder" in what now appears to investors as... a shady business. Case closed.
“We don’t have any competition”. This is never true for any company in the world, let alone a startup and raises a huge red flag on your own assessment and evaluation of... reality! Every product/service has competition, even if the competition is simply non-consumption. Don’t gloss over your competitive landscape slide because you want to appear to be entering a blue ocean. That's plain stupid. Contrary to popular belief, sharing detailed information on your competitors will not hurt you. It will actually help you. The existence of competitors actually validates that you have a good idea. If an investor sees that you really understand your competitors, he or she is more likely to trust that you’ll be smart enough to beat them. According to Sun Tzu, "Know your enemy and know yourself and you can fight a hundred battles without disaster."
“We need $15,000 USD to rent an office”. If Steve Jobs can build Apple out of his garage, you can build your startup from a cafe with wifi. Remember, Steve didn’t have wifi. Steve didn't have a cell phone. Steve didn't even have... the Internet! And Mark Zuckerberg started working out of his... dorm to get... laid! If you can't find 15,000 from friends and family to rent an office or worse, are actually asking investors to cover that expense (when so many pioneers didn't even need an office to start with), you are casting a shadow of doubt the size of MENA on your fledgling project! Enough said?!
“We have a clear exit strategy”. Some investors will disagree on this, but we side with Mark Cuban when he says, "don't start a company unless it's an obsession" and "if you have an exit strategy, it's not an obsession”. Investors want to see you obsessed about your startup. They want superhuman entrepreneurs who will give everything to turn their ideas into successful companies. If you’re already thinking about an exit strategy then you’re not doing it for the right reasons. Money is never as powerful of a motivator as passion. Never.
“I’m just a little nervous”. Pitching to an investor, venture capitalist, angel investor etc... is not a formal process. You are not in a courtroom under oath although its more than recommended (gross understatement) to never lie! You should be relaxed. Use the 3 Cs: confidence, conviction and charisma (although the third C is probably an ingrained quality but hey, that's a whole different topic...). Wear jeans and a t-shirt if it makes you feel better. This isn't Wall Street, it’s Main Street. Drop the formalities and turn your startup pitch into a two-way conversation. It will make everyone feel better about your idea. And then just... rock!
“My co-founder is joining part-time”. If your idea is worth $100 million, your co-founder won’t want to stay at his current job. And if you can’t find someone to join you full-time, is your idea really worth $100 million? You just cannot expect to attract investors' attention (let alone money) when you are openly stating that your co-founder is joining part-time. Most probably because he is not yet fully convinced by the project, not yer ready to fully commit or is not even your co-founder but a childhood friend kindly accepting to pose as your "co-founder" in what now appears to investors as... a shady business. Case closed.
“We don’t have any competition”. This is never true for any company in the world, let alone a startup and raises a huge red flag on your own assessment and evaluation of... reality! Every product/service has competition, even if the competition is simply non-consumption. Don’t gloss over your competitive landscape slide because you want to appear to be entering a blue ocean. That's plain stupid. Contrary to popular belief, sharing detailed information on your competitors will not hurt you. It will actually help you. The existence of competitors actually validates that you have a good idea. If an investor sees that you really understand your competitors, he or she is more likely to trust that you’ll be smart enough to beat them. According to Sun Tzu, "Know your enemy and know yourself and you can fight a hundred battles without disaster."
“We need $15,000 USD to rent an office”. If Steve Jobs can build Apple out of his garage, you can build your startup from a cafe with wifi. Remember, Steve didn’t have wifi. Steve didn't have a cell phone. Steve didn't even have... the Internet! And Mark Zuckerberg started working out of his... dorm to get... laid! If you can't find 15,000 from friends and family to rent an office or worse, are actually asking investors to cover that expense (when so many pioneers didn't even need an office to start with), you are casting a shadow of doubt the size of MENA on your fledgling project! Enough said?!
“We have a clear exit strategy”. Some investors will disagree on this, but we side with Mark Cuban when he says, "don't start a company unless it's an obsession" and "if you have an exit strategy, it's not an obsession”. Investors want to see you obsessed about your startup. They want superhuman entrepreneurs who will give everything to turn their ideas into successful companies. If you’re already thinking about an exit strategy then you’re not doing it for the right reasons. Money is never as powerful of a motivator as passion. Never.
“I’m just a little nervous”. Pitching to an investor, venture capitalist, angel investor etc... is not a formal process. You are not in a courtroom under oath although its more than recommended (gross understatement) to never lie! You should be relaxed. Use the 3 Cs: confidence, conviction and charisma (although the third C is probably an ingrained quality but hey, that's a whole different topic...). Wear jeans and a t-shirt if it makes you feel better. This isn't Wall Street, it’s Main Street. Drop the formalities and turn your startup pitch into a two-way conversation. It will make everyone feel better about your idea. And then just... rock!
