Never Do THIS When Pitching Your Startup to Investors
How often have you heard the axiom, "Failing to plan is planning to fail"? When pitching your startup to investors, you should take it to heart. Talking to VC investors is only worth it if you've got a plan that shows where you are and where you will be in the next 12 months.
This plan must be brutally honest about your current financial status and projected growth over the coming months. We get it—you want to impress investors, but you need to quickly quell any temptation to inflate figures or lie about your successes.
The Biggest Startup Pitching Mistake
Startups have to be disruptive. That's a given. Your groundbreaking idea has to, well, break ground in new and interesting ways. However, if, to make your product look amazing, you have to lie about it, you're on a slippery slope to a ruined reputation and a disgraced brand.
The biggest mistake when pitching your startup is lying to make your company look better than you think it is.
You had enough faith in your startup to reach the investment phase; you're probably past seed funding and maybe even beyond the Series-A phase. Lying at this stage is only an externalization of either your own fears or the doubts of stakeholders. Stomp on that urge quickly and get your business plan back on track.
Why It's Such a Bad Idea
Lying to potential investors isn't just about losing their respect or damaging your reputation. When you inflate your financials or overstate your success, you're either edging around the border of fraud or diving right over it.
Remember Theranos? This healthcare startup raised over $700 million and was valued at $9 billion—on technology that didn't work. Not only did the company shut down, but the founder was sentenced to at least 11 years in prison.
Over to the FinTech arena, and the LendingClub scandal highlights exactly why it's so vital to be transparent with investors. Investors had set out lending rules which the online lender agreed to—then promptly broke. This led to the resignation of the founder, although the business has since recovered a good reputation.
Things You Should Do Instead
So, no fibbing of any kind when pitching your startup. That's clear. What can you do to impress potential VC investors?
Present sensible KPIs and really understand them
Know your competitors and be prepared to talk about them
Explain your product-market fit with figures and research
Do a little digging and find out exactly what the investment firm or individual gets excited about
Know your financials inside out
Present a clear and actionable marketing strategy and brand
VCs want to see passion, ambition, and a clear understanding of your product or service. Pair that with a great business plan, and you wildly increase the chances of funding when pitching your startup.
Final Word
Resisting the temptation to overhype your tech startup is so much easier when you've got real success to show. Book a 15-minute introductory call with Arch Collective and discover how we can adjust your brand messaging or marketing strategy to drive results that impress.
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