5 Things to Avoid When Talking to Pre-seed VCs
I am an Associate at Icebreaker. We are a pre-seed fund which means that we make lots of investments and look at lots of companies. We want to invest as early as possible, and we are often the first investors to take the leap of faith. We’ve made 100+ investments in bridging the pre-seed gap in Sweden, Finland, and Estonia (get to know some of our portfolio cos here).
One of my areas of responsibility is to do the first screening of companies, and if interesting, carry them forward to the Partners. This means taking many first calls with founders.
In these first calls, we rarely see the “perfect pitch” as there are so many mistakes that can be made. However, if you can avoid the most crucial ones listed below, you’ll avoid demolishing the odds of getting funded. And to be clear: perfect pitch ≠ pre-seed money secured. A great pitch surely will increase the odds of you getting funding, but even the best of pitches could not save a poor business.
Let’s dive in!
1. Not describing one’s background.
All too often, I ask what a founder’s background is, and the response I get is some version of this: “I studied X and worked in tech for the last ten years..” And then, they jump straight into describing what they are building.
The assessment and understanding of the team behind a company, especially at pre-seed, is too important to give a high-level, ten-second description.
This kind of response always leads me to rewind the tape or interrupt to ask more questions regarding the specifics of the background: where did you work, what were your biggest achievements there, why did you move on, etc. This often ends up taking precious time from a meeting.
When asked about what you’ve done in the past, it is time to brag: list your achievements, list the successes of the companies you’ve worked for, mention the highlights from that time, and talk about your personal accomplishments (sports, hobbies, etc.).
In the Nordics, we are often loathe to praise ourselves, but in a meeting with a VC, this is what you must do.
2. Rambling when one shouldn’t.
Commonly, I ask a simple question such as: “do you have revenue at this stage?” or “what is your current MRR?” and get an insanely complicated answer in return. No matter what the convoluted explanation to the answer is, my notes will often still look like this:
MRR: X
With simple yes/no or number questions, do not waste time — leave it up to the VC to ask follow-ups if they think the answer is insufficient (our job is to drill deeper).
With more open-ended questions, naturally, it is great to provide context, but you want to err on the side of getting to the point too quickly rather than being too long-winded. Not getting to the point is far more common and destructive than being too brief.
3. Not explaining the problem thoroughly.
Generalist VCs cannot be experts in every area in which they invest. In fact, we often know very little about the industries we invest in, and sometimes, we know nothing! And this is largely true for most pre-seed VCs.
Founders tend to assume that VCs know about the industry and the problem they are solving since it is so obvious to them. Therefore, founders often skip the basics and jump straight into the brilliance of the solution. This can be an extremely costly mistake.
For me to fully appreciate your business, I must comprehend the problem being solved. I must know that it is real and something that people care deeply about. When I have not lived the problem (which I rarely have), this becomes very hard to do without walking through the basics.
Therefore, you should explain the problem as if the VC is five years old.
Explain the fundamental structure of the industry and the problems inherent in that structure that you aim to solve.
I cannot overstate the importance of this. The problem is most often at the core of the business, and If you do this well, you will answer one of the main questions that VCs have:
Is this a real, big problem that people/businesses care about?
4. Going too deep in the first meeting.
If you have successfully framed the problem, it is time to describe how your solution solves that problem. In the first meeting, the Art of Summarisation is key, yet so many founders go ballistic in describing the technical specs of the solution, how the AI actually works, and the user journey in detail. Although important and often impressive, this is not the time to dive into these things — it will only dilute and distract.
Instead, start on a high-level, and trot downwards to the individual, practical level. Let the VC ask about the specifics.
5. Poor understanding of the competitive landscape
“How is this different than X?” is a question that VCs struggle with a lot. If the founder cannot answer this question convincingly, it often becomes the VC’s job to figure out exactly how a given company’s solution differs from that of others. This significantly drags out the evaluation process unnecessarily and is prone to misunderstandings and errors because of a generalist VC’s limited industry-specific knowledge. Furthermore, it signals that the founder does not know their competitors and that the company may lack significant differentiation.
In knowing and being able to explain exactly who the competitors are, what they do, and how you differ, you avoid bad signaling, increase the odds of an accurate evaluation, and shorten the time to receive feedback. Very few do this well, probably because it is not fun to look into competitors, but if you can, you will surely stand out.
I hope you found this article helpful, and if you are an early-stage founder looking for funding — let’s talk
