In my time as a venture capitalist, I’ve received thousands – yes, thousands – of pitches from hopeful entrepreneurs, poised to change the world. Of those initial outreach asks, there’s a large percentage that gets immediately tossed and a whole bunch more that get nixed after our first call or meeting. For any interaction there’s always a series of “do’s” and “don’t’s” and the world of venture capital is no different. If you’re in front of any legitimate investor, there are a few things that should never come out of your mouth. Don’t shoot yourself in the foot – here are some pitfalls to avoid.
“Our numbers are conservative.” We’ve heard this a lot. Nobody believes it, and worse, it makes you look like an amateur. As investors, we get it – startups are hard and unexpected things happen (always). We just want a realistic look at your forecast and, even more importantly, how you think about your model. Instead of this, explain your thought process as to how you got to your “conservative” estimate. If for example you structure in the revenue of only two salespeople but forecast in the cost of three of them, you’ve explained to us the logic behind the conservatism in your hiring strategy – and that’s a better move.
“Please sign our NDA.” VCs never sign these things – for good reason. We hear pitches all the time and can’t be exposed later on by someone we didn’t invest in, claiming his idea was similar to the one we chose to back. Also, VCs invest in great entrepreneurs – we aren’t in the business of stealing ideas. This request makes you look like you don’t know the ropes. Rather than come out and ask for such a document to be signed, voice the fact that you’re pre-market, or whatever stage your business is in – we’ll be able to take it from there with the proper understanding and decorum to respect your privacy.
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Article by: Josh Linkner
Published by: Forbes.com