The Huge Mistake Entrepreneurs Make in Their Fundraising Pitches and How to Avoid It
Are you talking about the things investors actually care about?
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You’re probably not a teacher, but I am. In fact, I teach entrepreneurship at Duke University. And, as a teacher, one of the more annoying problems I regularly deal with is keeping track of student attendance. However, since most of you reading this aren’t teachers, I’m guessing tracking student attendance isn’t something you regularly worry about. So what would happen if I tried to sell you a product designed to help teachers take attendance?
You wouldn’t care.
But wait! What if my attendance-taking product is revolutionary and industry-changing? What if I spent 30 minutes walking you through the most beautifully crafted slide deck you’ve ever seen? What if it meticulously and thoughtfully explains all of my genuinely incredible features?
The outcome will still be the same. You won’t buy.
In other words, anyone with even an ounce of common sense can recognize the futility of trying to sell a product — no matter how incredible — to someone who doesn’t have the problem the product solves. And yet, this is exactly the trap most entrepreneurs fall into when pitching investors. They try selling investors their products instead of their businesses. Because of this, it’s little wonder so many fundraising pitches fail. Your product doesn’t solve the problem your investors actually have.
Investors aren’t your customers
While we’d never be able to accurately calculate the average length of time entrepreneurs, as a whole, spend talking about various different things during their fundraising pitches, I’ve personally witnessed thousands of pitches, and the patterns are clear. During fundraising pitches, most entrepreneurs spend more time describing their solutions — their products and features — than any other single topic (e.g. team, competition, revenue projections, etc.).
If you’ve watched a halfway decent number of startup pitches, you’ve surely seen this pattern, too. For example, you’ve likely seen fundraising pitches where the founders give product demos. Worse yet, and my personal pet…
