How to Screw Up an Investor Pitch Meeting
A pitch meeting, if you get that far with an investor, is the possible beginning of a longterm relationship. For that relationship to form, you’ll have to do a lot of things right — and avoid the things that will stop investors on a dime. Remember, investors are looking for a very small number of kick-ass companies. Stated differently, they are always alert for reasons to kick your ass out if they sense you aren’t one of that small number.
First a disclaimer. I’ve watched a lot of people pitch, and I’ve seen what has made the investors at the table cringe. I’ve formed my own conclusions about “the kind of founder I’d never ever work with.” For this article, I’ve asked some investor friends what brings a possible relationship to a dead stop, but what I’ve written is certainly not intended to be an exhaustive list. I know that you can list plenty of other reasons why pitch meetings or investor relationships go south — feel free to add your insights to the comments.
Second, another disclaimer. None of the investors I know would be so rude as to literally kick you out of a meeting. Typically, you will be smiled out of the door, but just not invited back. Unless, of course, you do something totally nasty, in which case everyone I know would stop right there and show you out.
Third, this article is not about pitch deck font size or your presentation style. You can find much written about how to craft a proper deck and how to present it. You can view examples (both good and bad) published by all of the major venture accelerators, among others.
I believe that there are bigger issues. They fall into two categories. And those two relationship killers are what aspiring founders need to know.
Killer #1 — Being unprepared or clueless (or being unwilling to remedy that).
Killer #2 — Breaking Life Rule #1 “Don’t be a dick.”
Being Unprepared or Clueless
You are the founder of a company that wants to scale enough that investment is needed. You are trying to convince someone to join you on a multiyear journey (and bring money). You need to be prepared.
When you pitch an investor, you need to demonstrate expertise in two areas.
One of my friends, an angel investor and serial tech entrepreneur, saw lack of preparation as the main reason to back away from talks. He’s a pragmatist and very much a realist. He gave a few examples of founders who don’t get a call back. The common thread is lack of preparation (or cluelessness).
More than one of my friends emphasized the lack of a go to market strategy as a reason to back away. And, I’ll chime in here, too. I worry about founders who are enamored with product but avoid generating customer traction — or who oversimplify going to market. What I notice in particular is a reluctance in product-centric (often inventor-ish) founders to engage the market until their precious product has a level of fidelity they can feel proud of. But, engaging the market should not be about stroking a founder’s ego — it should be about learning what the market wants and puzzling out how best to reach them. And, operating a business is about way more than just polishing a product.
More than one of my friends also emphasized being realistic about valuation. When first time founders hear that, they often think it is just a negotiating tactic — that the investor is trying to get over on them. The truth is that a company that will scale and go big is going to require more than one investment round — and that can’t happen if the valuation doesn’t increase from round to round. An unrealistically high seed valuation implies the forthcoming Series A valuation will have to be massive. The seed investors know that is highly unlikely and will quash the ability to close the next round. So, they see unreasonably high early valuations as a sign that either the founder doesn’t have a long term view or is naively unaware that she needs to think further than this one raise.
Being unwilling to remedy being unprepared or clueless
An investor may not immediately kill a relationship because a founder is somewhat unprepared or uninformed — if the founder is coachable. Your first pitch doesn’t have to be perfection personified, but you do have to be willing to listen and work together with others (your potential investors). A healthy longterm relationship is by definition two-sided. You are working with investors. By the way, even if you are very well prepared, investors will want you to be coachable.
As Danielle Strachman of 1517 Fund put it, it’s a clear relationship killer, “If we are offering feedback and the person doesn’t listen or fights back needlessly.” Whether a founder wants to hear it or not, most investors have seen enough companies and founders in action that they have developed a keen sense of what works and what doesn’t. Being defensive, being inflexible, or not listening when they present feedback is a big red flag. If a founder won’t listen to an investor, will she also ignore what customers say? Or co-founders? Or key employees? In any case, she wouldn’t be delightful to work with.
Other of my friends also mentioned being coachable, not being defensive, and being flexible. I particularly liked how Danielle specifically cited “fighting back needlessly”. I recently was part of a team giving feedback to various founders. One founder argued back twice, once at the conclusion of their pitch and once again (loudly and publicly) while the cohort meeting was adjourning. Remember when I wrote earlier about personally forming some conclusions above the kinds of founders I’d never ever work with? There’s one right there.
On the other hand, a founder who will listen, think objectively, consider new facts and opinions, and play nice with others can be a pleasure to work with. In prior years, I would have lumped that in the category of being a self-aware founder. All of the founders I know who grew rapidly and had successful exits had these qualities. They were decisive, but open and decent about it. Today, I think of it more as simply being a good human being. Just like you don’t want your relationship with your significant other to be a struggle, investors don’t want their relationship with a founder to be a constant battle.
Breaking Life Rule #1 “Don’t be a dick.”
Some founders go well past being unprepared or a tad bit insensitive.
Danielle Strachman again for the win. “Lying automatically kills a pitch. We’ve caught people in lies a few times.” What she refers to here goes beyond just being unaware of, or innocently misinterpreting, a fact. If you’ve been in enough pitch meetings you’ve seen investors fact check in real time — looking up competitors, looking up market data — or simply already knowing more about the market than the founder. Danielle isn’t referring to lying by innocent omission. She means acting with an intent to deceive, which is purely and simply a dick move.
I’d personally lump that together with any sort of founder behavior that is manipulative. We all know narcissists who manipulate and gaslight as easily as you and I breathe. No thanks. And, the “fighting back” mentioned above can sometimes take on a heavy tone that reaches clearly past gentle and rational debate.
What does this mean for a founder?
In hindsight, it all seems pretty obvious, doesn’t it? To convince any investors to work together with you, you need to …
Not that hard when you think about, eh?
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How to Screw Up an Investor Pitch Meeting
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