I just reviewed several hundred startup pitches for Capital Factory. Most were on paper and video; 20 were invited to pitch in person.
Interesting patterns emerged:
- Everyone makes the same classes of error.
- Those who avoided just one of those errors stood out in the crowd.
- These are problems with the business concept or the founder’s attitude, not specific to raising angel money.
You’re probably making a lot of these errors too.
Not that I blame you! After all, these became clear to me only after seeing hundreds of applications; you don’t have the luxury of that perspective.
So for the next few weeks I’m doing a series on these mistakes and what to do about them. This post serves as a hyperlinked table of contents.
Here’s the list:
- Invalid competitive advantages
“Superior SEO” and “unique features” are not competitive advantages.
- Lacking an unfair advantage
You need one killer advantage that no one on Earth can beat you on. (‘Cause you might get beaten on everything else!)
- No one said they’d buy it
You don’t need statistically-significant studies before you begin, but it’s astonishing how many founders blaze ahead before they’ve found even a single person willing to give them money.
- Incorrect positioning against competition
The two faults here are opposites: Believing that uniqueness means competition doesn’t exist, or defining yourself by the competition instead of constructing your own message.
- No significant route to customers
If your marketing strategy is to run A/B tests and build RSS subscribers, you’ve already lost.
There’s also this list, equally common but I didn’t feel the urge to write an entire blog post on each one:
- Unable to describe the company in 60 seconds.
We’ve all heard of the elevator pitch, but when asked to produce it almost no one succeeded. This is important whether or not you’re raising money because it means you understand your customers and why they buy your stuff.
- Building for yourself instead of the market.
“Scratching your own itch” is how many great ideas begin, but it’s not a business strategy. Often you assume your customer is the same as you — sees the problem the same way, wants to solve it your way, and wants to pay for it. But you’re explicitly not like your customers; for one thing, you have enough initiative and insight to quit your job to start a company. It’s easy to let your idiosyncratic preconceptions prevent you from observing what the larger market will accept.
- Pretending your faults don’t exist.
You have all sorts of shortcomings: First startup, inexperienced, ignorant about how “sales” works, buggy software, whatever. None of it’s a problem if you’re willing to acknowledge and cope with it, but if you persist in lying to me and your customers about it, that’s a problem. (And a lie by omission is twice the lie.)
- Don’t know what you don’t know.
I don’t care that your resume doesn’t prepare you for a startup — mine didn’t either! But if your answer to any question is “How do I know? I just do,” then I know right away you’re not only ignorant but incapable of fixing that ignorance. How do I know this will result in your business drifting aimlessly until you finally run out of money? I just do.