Common Mistakes Startups Make in their Investor Pitch
At Capital Pilot, we've seen many pitch decks. In the process, we’ve built up some useful insights on typical errors and omissions, as well as approaches that are better than others. In light of this, we’ve compiled a list of the most common issues we encounter in our assessment process. By highlighting these common mistakes we hope growth companies can avoid them and apply better strategies when formulating their pitch.
1. Your pitch deck is targeted at your customers and not at investors
Investors have pretty specific and standard information requirements. Ensure you are addressing them, not selling your customer/client story.
2. Your presentation does not stand alone as an introductory document
It should be assumed that your pitch deck is the first document a potential investor will review – typically delivered by email. It needs to convey all the key investor-focused messages concisely and powerfully.
3. You haven’t highlighted what is unique about your business proposition within its target marketplace and, most importantly, why you and your team are the right people to execute on your business model
Remember that your audience needs to be convinced about why your business model is special and why the team which is delivering it is the best. You can’t do it all in an investor pitch deck but you should try to convey a good idea of the team’s pedigree and background.
4. You haven’t dealt with your traction with customers
Traction and validation are what separate an idea from an investable business opportunity. Where is the evidence that your target customers want what you are delivering? It doesn’t matter what stage you are. Customer survey data, testimonials, growth in user numbers or subscribers (free or pay), and of course revenues are all vital to include to strengthen your proposition and bolster your investment case.
5. Your financial model does not demonstrate clearly your revenue build-up – what the key drivers of revenue growth are - or offer enough detail on costs
The model should support the presentation, and explain the dynamics of revenue and expenses over the 3-5 year projection period. Investors learn a great deal from how logical and reasoned your projections are, and the model obviously also demonstrates your value growth potential. See our resource page for more suggestions.
6. Sales, marketing and go-to-market strategy are three different things and need to be addressed separately in your plan for growth
“Digital Marketing” or “Social Media” don't count as sales or go-to-market strategies. How are you going to communicate with, engage with, and sell to your target customers or clients? And what element of your addressable market are you going to target initially?
7. Your pitch deck could look better
First impressions do count. Not making an effort to make your presentation look good sends the wrong signal. There are many free or low-cost resources out there to help you get your messages across powerfully in a well-designed presentation and it is definitely worth the extra effort. The flip side is that a great looking pitch deck will not make up for weak content and a weak investor proposition.
8. Too many words and too many slides
It’s an investor pitch deck, not a research paper. Think about the investor wading through a mountain of presentations. How can you communicate the key points concisely and in a visually compelling way? Images and charts are better than dense text. Throwing everything but the kitchen sink in is tempting. However, initially, the investor wants a cohesive and complete view of your business in a digestible format, and it will need to stand out from the other 30 they are looking at that morning.
9. You haven’t addressed the competition or the market players you are looking to challenge
An objective assessment of the competition demonstrates that you have done your homework and are realistic in your expectations. This is your opportunity to explain why your business model or customer proposition is different and better than what is already in the market.
10. You haven’t included details of your fundraise
How much are you raising? Are you SEIS or EIS eligible? What is the use of proceeds? What milestones will you aim for following the round? These are the building blocks of your value growth story and key to ensuring your story is complete.
Fundraising is never easy, and it is always competitive. By avoiding common errors you ensure you are not needlessly reducing your chances of success. Make your first impression count!