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What Not to Do When Pitching To Investors

If we say that building a startup is a roller coaster journey, I would often refer to fundraising as a roller coaster in the dark because you don’t know what’s coming next. 

Fundraising is always hard, long, and frustrating. Nowadays it is even more so. It is a whole different ball game, and if you don’t know the rules – you will probably lose.

In this article, I will share a few of my perspectives on which mistakes to avoid, and then some tips that will increase your likelihood of getting funded. 

A partner at a Venture capital fund is likely to meet one hundred to two hundred startups per year and invest only in one or two, which makes it about a 1% chance for a positive outcome. That’s it. This is nothing like you’ve ever seen before. The default answer will be ‘No’.

This is accordiung to data quoted by Marc Andreessen, co-founder of Andreessen Horowitz, based on research the VC conducted, and a survey published by Paul Gompers, Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev, at Harvard Business Review.

Just think about it, if this was a dating scene, and we heard ‘No’ 99 times and only one ‘Yes’, we would all remain single indefinitely.


7 Mistakes to Avoid When Pitching to Investors

I receive many emails from startup founders asking me to invest in their startups. While I’m not investing in new startups this year, I’ve seen many mistakes that I would advise you to avoid.

1.   Do not send generic emails. Address your email to a person. If you’re sending a generic email, not even addressed to the person you’re reaching out to, why would they even bother to pay attention or answer? 

2.   Avoid using artificial intelligence (AI) for emails unless it’s to showcase your startup’s generative AI capabilities. AI-generated emails can be easily spotted and often lack proper formatting, content, or a personal touch.

3.   Make the investor feel you are interested in getting an investment specifically from them. Learn who your recipient is, and add something personal that would mean you know who you are talking to. 

Writing “I saw your website and believe you will be interested in my startup” and then presenting a startup that is way out of the investor’s interest, would be a big mistake. Do your field research before. 

4.   Don’t offer to meet for coffee. Be brief. First impression is critical. I would advise starting with two to three paragraphs that will include the most significant part of your story and include information about the team, traction, problem, etc. 

Present what is the problem you are trying to solve and what it is that you are looking for. If there are impressive figures or other achievements, this is the place to mention them briefly. 

Take into consideration that whoever receives your email, receives many like that – their attention span is short. Offering a total stranger to meet for coffee or a Zoom call, is out of place and is not a good starting point.

5.   Teasers don’t cut it. Investors won’t read a second email if there is no substantial information on the first one.

Don’t hold off important information or illustrations like videos or presentations. You can never know if there will be a response from the other side so make sure you add on the first email additional information like a presentation, a video, etc. 

Don’t wait for the follow-up email from the investor. If an investor says ‘No’ a hundred times, their decision will be quick, so use your artillery early.

6.   Don’t write complicated or pretentious texts that the reader would need to re-read to understand what your company is all about. Be simple. If someone needs to read your email multiple times to understand what’s the problem you’re trying to solve – they have already made up their mind.

One-pager, full deck, video, business plan – each investor prefers a different type of material, so send what you have, and don’t hold back information that may be vital to your story.

7.   Don’t argue over the email. If they said ‘No’, say ‘Thank you’ and the only time you should go back to them is if something has changed materially (for example, after launching the product, if you have significant traction, a term sheet from other investors, etc.). 

In my next article, I will provide my tips for meeting with investors, after the pitching phase has succeeded.

The article was preveiously published on Forbes.

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