Perfect nonsense: the absurdity of startup pitch competitions
You have 60 seconds to convince a panel of judges that you and your company have what it takes. 60 seconds to give them all the details they need to establish that your company has exciting things ahead of it; strong market opportunity, great team, sound strategy, commercials figured out, user acquisition sorted… Maybe you could be the next billion dollar opportunity.
If you win there’s a sizeable cheque waiting for you, plus all the fanfare. Sponsors parading you around in front of other founders and media like you’re the new puppy they brought home from the pet store.
Welcome to the circus. Now I don’t know about you but it can’t get much more absurd than this. Sixty seconds to make a call on whether you should give a company tens of thousands of dollars. One minute to convince you they have what it takes to build a successful business.
In reality, this isn’t about how good a business is. This is about how good one person is. We’re judging storytellers — founders with the right charisma and the ability to articulate themselves well. Welcome back to high school debating (although even then there’s a team).
No matter how good an investor or professional you might be, there is no way you can get what you need from a 60-second pitch, let alone a 4 minute or even hour long conversation. Making an educated decision on if you should back a company is not that simple.
This is why we have things like due diligence. Investing in startups is gambling at the best of times, so why would you jump in with both feet when you have little fucking idea of what the company on the other side of the table is really like?
Would you willingly ingest the roots of a tropical plant on holiday because one of the locals you just met 5 minutes ago told you it would change your life? (Although I suppose anything is possible.)
So the real question, then, is what is the point of pitch competitions? If it is so hard to make an educated decision then why do more and more of them crop up?
Let’s call these for what they are — publicity. More often than not it’s about a corporate sponsor trying to look cool and be ‘in’ with the startup community. It’s about attracting people to an event, it’s about networking and practice for the founders.
Because these events are all about the hype — designed for theatricality. I can speak from personal experience as I’ve competed in one of them myself. A couple of years ago I pitched at Web Summit in Dublin. There were some pretty impressive people on the panel, from big name VCs, media and corporates.
We reached the semi finals. It was an exhilarating feeling but I had to ask myself afterwards: What did anyone actually really know about my company? I had four minutes to pitch the entire business, from team, strategy, forecasts and more. I think I had 10 slides.
So what did it do? It got us attention. More people came to our stand and we had a couple of interesting chats with some VCs off the back of it (though none of those conversations led anywhere — might talk to more about the quality of the startup itself). And if I’m being honest, aside from the learning experience, attention was the main reason we did it. Perhaps it’s the only reason many startups do it.
Because let’s be honest. Confidence gets you places. Gets you noticed. It allows you to be able to articulate what you do to grab attention from the people that matter. So if you asked would I partake in another one? Probably. You need to build your hustling skills and if you can’t articulate what you do clearly and succinctly, then what are you actually doing? That’s perhaps one of the better points of all these competitions.
While these pitch formats raise awareness for startups (which is a big plus) there are associated problems with the way in which they do it.
That problem is that they create a view of the startup community that is more artificial than not. Where it’s possible to raise millions of dollars off the back of a good pitch and launch yourself into the field of clouds where you run free and frolic with the other unicorns.
It also leads to many startups getting the wrong impression about how good they really are. If you stand up in front of a panel of VCs, who, after a few minutes of pitching, tell you they’re impressed, it’s easy to get sucked into a false sense of security. And if you go on to win that comp it only gets worse. Because behind many of these pitches the underlying company might not actually be that good…
In many ways it’s like reality TV shows. The producers want a good show and there is little care or thought for the person standing up taking a risk and doing all the hard work. As long as the performance goes on.
There are many forms of pitch competitions out there — Shark Tank, conferences, meetups, podcasts and others. Forums where people are making decisions to back people they hardly know, basing their call off how good someone was at presenting.
Now, is the ability to articulate your vision, your team and your business a key requirement of being a good founder? Hell yes. But when it actually comes to doing deals, most of them are done after several rounds of presenting and analysis of commercials in parallel. Why do you think it takes most companies months to raise? It’s like dating. You need to get to know the other person much better before you hop into bed with them.
I’ve sat on both sides of the table, both pitching for money and having others ask me for it, and the biggest thing it comes down to is people. It’s about the team not an individual. It’s about getting to know them to a point where you can get a feel for how they would handle things when times are good and when they’re not.
People is a big factor we focus on because the reality is, you’re in for a rocky ride ahead. The business you’re investing in will iterate, bend and sway as its product enters the market and begins to run the gauntlet of customer feedback, competitive pressure and more. But while people are so important it is just one part of the equation — you do a lot of additional research along the way…
At the end of the day, if you have the right captain and crew piloting the ship, you have a greater chance of staying clear of the rocks. But even the best captains can’t predict the weather. On that note the weather forecasters can’t either — would love to have a job where you can get it wrong all the time without any threat of losing your job. I digress…
So the question is, do these competitions serve a purpose? Yes most definitely. It just depends on what you define that purpose to be.
And perhaps that’s where pitch competitions lose their way. They’ve been designed to match a world where the everyday person doesn’t have time to listen to hours of talks between a founder and an investor. They’re more interested in the quick fix, the high energy spectacle to immerse themselves in for a few minutes so they can then get back to posting on Instagram.
But hey, the reality is us humans are a strange bunch. There are parallels everywhere. We’ll spend a grant total of 20 minutes inspecting a new house before making the decision to spend (or should I say borrow) hundreds of thousands of dollars on it.
We’ll figure out the rest later. It’s only money, it doesn’t really matter, right?
