The Naive Mistake You Don’t Want to Make When Pitching Your Startup
The first time I pitched a startup to a large group of investors, I made a mistake so naive and embarrassing that nobody in the audience even wanted to consider investing. Unfortunately, not only did I have no idea at the time, it took me years to realize I’d messed up.
The pitch event was organized by a startup accelerator my co-founder and I had joined after forming our first company. As with most accelerators, the program concluded with Demo Day, an event where all the participating companies pitch their startups to a room full of investors followed by a few hours of networking. The allotted pitch time was eight minutes, which is long for these kinds of things, so my co-founder and I decided we’d pitch together.
The pitch itself went well. During the networking session that followed the pitches, we received plenty of compliments. Some of the investors in the room came over specifically to tell us they thought we gave one of the best pitches of the afternoon.
How many of those investors invested? Zero. Not a single one.
Just as importantly, how many of those investors even bothered to take a meeting with us after? Zero. Not a single one.
If we had such a good pitch, why did nobody even consider discussing an investment?
I suppose you could argue the investors who complimented us were being insincere, but it seems weird to seek us out specifically to lie. Why bother?
In addition, when I re-watch the video of the pitch — even now, with a half-decade of experience teaching entrepreneurship under my belt — I’m still happy with our delivery and the pitch’s overall quality and content. And yet, I’m so embarrassed by my naive mistake, I won’t even include a link to the YouTube video that’s still floating around. (My name isn’t on the video, so you’ll have to get creative if you want to find it… )
It took a few years before I learned the reason no investors wanted to follow-up with us after our pitch. My first company had failed, and I was pitching a new project to an investor who happened to be in the audience during the demo day for my first pitch. “I remember seeing you pitch before,” he said as we were walking out after my presentation. “You had a great pitch back then, too. But different company, right?”
“Yeah,” I replied. “But nobody liked that pitch enough to invest.”
“Of course not,” he responded. “You had two people pitching. It was a very well-done two person pitch. That’s why I remember it. Those can get messy sometimes. But It could have been the best pitch anyone had ever seen, and it wouldn’t matter because having two people pitch is like waving a giant red flag over your heads that says ‘Warning: Do Not Invest!’”
“Really?” I asked. “Investors are always saying how important a good team is. Wouldn’t a great pitch with two people suggest they’d found a team capable of doing high quality work together?”
He shrugged. “Not really. What it tells us is the power dynamics within a company are flawed. It signifies that, despite a severe lack of resources, the founders of the company are either so desperate to be in control of everything or have so little trust in each other that they can’t divide and conquer. Instead, they work on the same things and are significantly less efficient than they need to be. Even if it works in the short term, how are they going to scale? If they can’t trust each other, how are they going to hire other people and trust them to do their jobs?”
When he explained this, we (politely) debated his critique for a few minutes. I argued confidently about the value of a multi-person pitch. But, in retrospect, he was 100% correct.
Thinking back to my first company, my co-founder and I were young and inexperienced entrepreneurs who didn’t know much about building venture-backed startups. Since we didn’t know what we were doing, we didn’t fully trust each other, and we weren’t a good investment.
Over time, we learned to trust each other completely and absolutely. That trust allowed us to focus on separate things, accomplish more, and yes, eventually, raise venture funding for a different company. While I’m sure our investors never decided to fund us based purely on the number of people pitching, we weren’t scaring anyone away either, and that was a critical first step toward success. We showed that the founding team trusted each other, and trust is a necessary quality for every successful startup.