Tech Transfer eNews Blog

10 things entrepreneurs should never say at an investor meeting

By Jesse Schwartz
Published: February 27th, 2019

In his recent post for Forbes, serial entrepreneur Alejandro Cremades tells start-up founders 10 things they should never say to investors. “There are volumes of advice on what entrepreneurs should be saying during investor pitches and meetings,” says Cremades. “Knowing what not to say can be even more important.”

Even if an entrepreneur goes into a meeting ready to answer every question an investor might ask, the whole meeting could be blown by saying any of the following sentences:

  1. “You need to sign this Non Disclosure Agreement.” Some entrepreneurs think they have the most unique idea in the world, and that disclosing it would spell disaster for their company. The problem is that many investors don’t think that there are that many truly unique ideas. They can’t sign an NDA, because they can’t guarantee they won’t fund a similar idea from someone else. According to Cremades, “What should be more important is getting your idea out there and funding it before and better than your competition.”
  2. “We have no competition.” If an entrepreneur truly believes there is no competition, he or she hasn’t done enough research, and investors will view him or her as a total novice and lazy entrepreneur. Once the competition is researched and discovered, founders should absolutely include them in every pitch to investors. “Also never talk poorly about your competition,” writes Cremades. “Always be respectful, as the world is small and those competitors may get big enough to acquire your own business at a price that could be life changing.”
  3. “We don’t really know our unique selling proposition.” Given that there will always be competition, entrepreneurs must be prepared to assure investors that their business has some unique advantage, which is typically not price. Just saying you’re “the best” isn’t going to work either. Cremades writes, “What’s better about your team and operations? What is better about your product and service? Know it. Own it.”
  4. “We have no weakness.” Even in the face of a business’ greatest strengths, there will always weakness, too. “If you don’t know them, you are really not aware,” says Cremades. “That alone is a big weakness, and probably the most dangerous.” Therefore, knowing weakness is itself a strength, because it means it can be fixed. Investors understand and appreciate this.
  5. “This is such a sure thing it can’t fail.” This is a particularly naïve statement, as it is well documented that most start-ups, even those that are carefully vetted and well funded, do fail. Being an entrepreneur means being ready to fail. The best way to approach investors in this regard is to paint the best and worst case scenarios for the business. “Just don’t try to sell this as a guaranteed win,” says Cremades. “They know better.”
  6. “I don’t have an exit strategy yet.” Most investors base their decisions on the probability of achieving a highly profitable exit sooner rather than later. No investor will go in without an exit strategy in place. “So,” writes Cremades, “not having an exit strategy or saying you’ll never sell of go public means you don’t have anything to offer them.”
  7. “We really need the money.” Investors want to fund start-ups that are already on great footing. To them, making an investment will just amplify the good results. “If you’re begging, it’s a sure sign you are already in trouble,” writes Cremades. Instead, entrepreneurs should present their business as a limited opportunity from a position of strength and confidence.
  8. “I just need your money, not your help.” Investors aren’t in the business of simply giving out loans. They invest the way they do “because they are looking for opportunities that they can really blow up with their expertise and connections,” according to Cremades. Also, refusing their help could prove insulting and make the entrepreneur appear ignorant to his or her own weaknesses.
  9. “We’re going to have a big party now.” Entrepreneurs can find ways to celebrate their accomplishments and milestones, but investors aren’t going to put their dollars into throwing big, extravagant parties. Founders should at least wait until their investors start seeing a return. “If you make them enough money,” says Cremades, “your investors might just throw you a nice party voluntarily. Focus on that.”
  10. “I need a big salary.” Investors aim to fund things like research, product development and company growth — and definitely not big salaries. They might throw in money for office rent or supply expenses. As Cremades puts it, “Just don’t think this raise means you’ve made it and you can kick back and buy a fleet of Maseratis.”

Source: Forbes

Posted under: Tech Transfer e-News

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