Top Mistakes Founders Make When Pitching Investors

The top mistakes founders make when pitching investors usually have nothing to do with their deck. Using resources from top pitch deck designers and advisors, you can put together a killer pitch that impresses investors. However, the final presentation involves several other nuances.

Remember that potential investors expect to see a gameplan of how your business idea translates into a saleable product. They also need a quick overview of what makes your idea unique and the team working with the concept. Next, they need to see robust financial projections.

All of this information needs to be compressed into three minutes. That’s the time investors will dedicate to listening to your pitch. And that’s the time frame within which you need to grab and hold their attention to make a memorable impact.

Understand that investors view hundreds of thousands of pitch decks regularly and are looking for ideas that stand apart. The top mistakes founders make when pitching investors start much before they enter the presentation room. Here’s what you need to know.

Top Mistakes Founders Make When Pitching Investors – Not Targeting the Right Investors

When strategizing your fundraising initiatives, you’ll start by creating a target list of investors most likely to back your company. Check the portfolio of companies they have invested in earlier to get an overview of the sectors they support. You’ll also check for the average capital they invest.

This approach allows you to narrow down the list to a selected group according to their investment preferences. The investor class can also influence your fundraising success. For instance, venture capitalists, angel investors, PE firms, or family offices.

Aligning investor goals with your company objectives should also be high on your list of preferences. For instance, partnering with a venture capitalist gives you the added advantage of gaining expertise relevant to your industry. Your company will also benefit from networking opportunities.

If you’re developing a disruptive concept that has never been explored, consider approaching angel investors. These individuals are more likely to be interested in investing in novel concepts. On the other hand, strategic investors could be looking for access to unexplored markets or technologies.

The funding size will also influence your choices. Venture capitalists typically have higher assets under management and can invest more significant sums. Of course, they also expect board seats and decision-making rights but usually expect to maintain their holdings for an extended time.

Accordingly, founders wishing to raise seed funding to develop their MVP won’t garner much interest from VCs. Reaching out to angel investors, family offices, or crowdfunding platforms could give you better success rates.

Not Customizing the Pitch for Investors

When designing pitches, you can’t go with the one-size-fits-all approach. Instead, you’ll customize the pitch according to your targeted investors and the specifics they look for in a deck. Leverage the research you did when creating that list of investors.

For instance, if you’re presenting to investors dedicated to reversing climate change and its effects, you’ll highlight key ESG metrics. Demonstrate what your company is doing to integrate sustainable practices into its operations. You have a win if your value proposition is a circular economy product.

Then again, when approaching a growth investor, you’ll lay special emphasis on the financials slide. Make sure to include numbers that indicate rapid scalability, consistent revenues, and a dedicated customer base. Highlight low CAC, positive reviews and feedback, and favorable federal regulations.

Your objective should be to dive deeper into investor mindsets to understand their priorities and create a compelling pitch. Don’t forget to include a call to action that stays with them. For instance, entice a mentor investor with the offer of advisory rights and the value they can contribute to growth.

Keep it Simple, Stupid.

A rookie mistake founders make is to use elaborate and complicated terminology when crafting the deck. It’s always advisable to work under the assumption that your audience does not know your industry. Accordingly, you should avoid technical jargon even when pitching a tech-driven concept.

Craft the problem and solution statements in one or two sentences that a layperson can understand. A simple value proposition is easy to communicate to your investors, and they can quickly grasp the key concepts. You’ll also ensure their focus on the main business idea without deflecting attention.

Most importantly, you won’t overwhelm the audience with a complex and cluttered deck–one of the top mistakes founders make when pitching investors. Answering questions during the Q&A session will be easier. You’ll encourage engagement and interest while demonstrating professionalism.

Not Giving a Demonstration of the MVP

As successful entrepreneurs and expert funding consultants advise, images, charts, and colors are more effective in getting the point across. Let’s add one more factor to the list–demonstrations. Instead of talking about what the solution does and how it solves the problem, show it.

Use a demo version or wireframe if the product is an app. A short video walking the audience through how the product will work is also effective. Investors should be able to touch or virtually experience the solution physically. Your video should show actual users using products and solving problems.

Images of a working prototype are more likely to be memorable for investors when they leave the presentation. A bunch of words may not have the same impact. If you’re not ready with the MVP, consider funding sources like a friends and family round. Or, a line of credit instead.

Including (or Not Including) an Exit Strategy

Should you include an exit strategy in the pitch? This question evokes much debate, and founders are often unsure whether to inform investors about potential exits. How about including the exit plan at a strategic juncture in your company’s lifecycle?

A seed-stage or early-stage company may not want to talk about exits since it is as yet too small. As long as you have a great product-market fit, this is not the time to discuss exits. Moreover, you’re likely to encounter unexpected challenges as the sector and business ecosystem evolve.

As the company grows and you’re ready for further funding rounds, the pitch will demonstrate a robust data-driven business plan. You’ll also have the necessary metrics to prove market potential and consistent growth. At this time, consider including an exit strategy.

You can talk about the company’s stability, progress, and milestones it has achieved. Also, include information about the inflection points that can lead up to a potential IPO. Investors will appreciate projections of possible returns and the factors that can influence a profitable IPO.

You could also include information about possible vertical or horizontal partnerships. If you’ve explored merger and acquisition deals, talk about the value they will bring to the company in terms of profits and growth.

You’ll place the exit approach at the end of the pitch deck. Or next to the last slide in an investor pitch. Let it follow the slide that demonstrates your pro forma historical and projected financials. Don’t hesitate to ask your investors for advice and feedback for improving the exit strategy.

While we’re talking about the mistakes to avoid when delivering the pitch, you’ll also want an overview of the mistakes to avoid when creating the deck. Check out this video in which I have explained in detail the red flags to avoid.

Not Delegating the Presentation

Understand that it is not mandatory for you, the founder of the company, to pitch investors personally. Not everyone has strong public speaking and communication skills. It is understandable that having built the company from the ground up, you know it better than anyone else.

Use your expertise, knowledge, and skills to craft the pitch deck with the relevant information. Design the pitch and include compelling metrics and other resources. Next, delegate the presentation to a team member with the proper skills to deliver the pitch.

The ideal time frame for delivering the perfect pitch is anywhere from 5 to 10 minutes, including the Q&A. However, most investors will have formed an opinion within the first few minutes. You need to grab their interest quickly.

With just 180 seconds to create the right impact, founders can’t waste that time struggling to get their point across. Be present at the table to answer questions and clarify points when needed. But, know that it’s ok to delegate.

Getting Nervous and Defensive

Pitch decks are not always perfect despite your best efforts. When delivering the pitch in the initial few attempts, chances are that investors will identify gaps and shortfalls. Having seen hundreds of pitches on a daily basis, these people are professionals who understand how companies work.

Use the time as a learning experience and keep an open mind. Refrain from getting defensive and nervous, and never plow on with inaccurate information. Investors appreciate honesty, and it’s best to admit ignorance. Instead, accept not having all the answers.

Answer questions as best as you can and assure them you’ll be back with the details they ask for. Each failed pitch is a lesson in how to improve it when you present to a new group of investors. One of the top mistakes founders make when pitching investors is not being open to learning.

Even if you can tell that the pitch has failed to make a mark, ask for feedback and advice. Make a note of their comments and go back to the drawing board. Incorporate the feedback and refine the pitch until you get the funding you need.

Delivering a Rehearsed Pitch

Novice entrepreneurs typically walk into the presentation room with a carefully rehearsed pitch. Having dedicated hours to creating the perfect pitch deck, understand that it’s not the focus of your conversation with potential investors.

Consider the pitch deck as a prop that you’ll leverage to deliver the pitch. Don’t make the mistake of reading off the slides in a strict sequence. Instead, let your passion and belief in the business idea shine through. Talk about the inspiration behind the concept and how it materialized.

Storytelling is crucial to a pitch, as seasoned entrepreneurs will advise. Relate a personal story about the pain points you encountered that inspired you to look for solutions. Go over the steps you took when researching the market and potential customers.

Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.

Be flexible in your approach, and don’t hesitate to let investors pick the pace. Answer their questions even if it’s not the original sequence you planned for. Pick out the appropriate slide that delivers the answers and present it quickly. You can always go back and elaborate on the crucial points later.

Expect investors to toss questions at you from all angles. Don’t lose your cool, but take your time thinking about the right responses. Stay calm and come across as confident. When your entire life revolves around the company, that should come easy enough.

Not Setting Aside Time for the Q&A

Another of the top mistakes founders make when pitching investors is not setting aside time for questions. Always allocate time for engagement and interactions with investors. They’ll use this time to refine their understanding of the product and business plan you’re presenting.

The market and customer research you’ve done will come in handy when you’re asked questions. Don’t hesitate to reveal your sources and be honest about the data you’ve compiled–even if it is taken from competitors.

It indicates you’re not operating in a vacuum and have a handle on competing products. This could be a good time to demonstrate your USP and what gives you that all-important edge. Most importantly, you need this time to ask questions of your own.

Ask for feedback and their opinions about your business idea and product. You can leverage their expertise to gauge whether the idea has potential and is worth pursuing with more funding. Before signing off, inform them that you will be following up.

That’s another of the mistakes founders often make–failure to follow up. Never assume investors hated the pitch and won’t offer funding. Keep an open mind.

In Conclusion

Competition is heating up in the business ecosystem. With hundreds of new companies emerging regularly, entrepreneurs are vying for investor attention and funding. Even as you understand how to get elbow room and create the right impression, you should also know what not to do.

Learn about the crucial mistakes founders often make so you don’t repeat them. Remember to treat each pitch as a stepping stone to success. Expect to hear hundreds of “nos” before you get a “yes!” That’s all you need to launch the company through its growth trajectory.

You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.