Sharing information in investor pitches

I was recently meeting with an entrepreneur pitching his startup. During the first few minutes of the meeting, the entrepreneur shared the problem that his startup was solving and what differentiated the company from competitors. All was going well.

I then asked the entrepreneur for some traction metrics, and that’s when the tone of the discussion changed. The entrepreneur shared that he wasn’t comfortable sharing traction metrics during our first meeting and that he would do so if we advanced into further discussions.

There are two reasons why an entrepreneur may not want to share a certain piece of information in an investor meeting. The first is if that information carries negative value. In this specific example, the startup may not have much traction.

The second reason is that the entrepreneur doesn’t trust the investor. While understandable, sending this signal kills the discussion. The reason is that an entrepreneur and investor need to trust each other in order to partner. So if one side essentially sends the message that they don’t trust the other side that’s a step backward, not forward, in achieving that goal. And when this message is sent in the first meeting where building trust is of vital importance, it can be a lethal step backward.

In this case it was the entrepreneur’s unwillingness to share traction information that killed the discussion. Sometimes it’s their unwillingness to share something else. I’ve witnessed entrepreneurs who, in later meetings, are unwilling to have you interact with their team, conduct personal reference checks, or call their customers.

In each case, they’re signaling that they either have something to hide or don’t trust the investor. Neither signal is good.

Originally published at Thoughts of a VC.