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WITH US enterprise capital fundraising at 6-year lowRaising investment capital for your startup has develop into tougher than ever. Potential investors are tightening their budgets and taking a wait-and-see approach before risking their capital. Still, some of the best startups—like Airbnb, Uber and Square – born during the recessionSo, if you’re an entrepreneur looking for capital in this environment, it’s possible you’ll be wondering about your probabilities of success.
As a serial entrepreneur and current CEO of Builderall, I’ve given over 3,000 presentations and helped founders raise tens of millions. In my experience, seven common mistakes often derail enterprise capital efforts. If you’re looking to raise money for your startup in this uncertain economic environment, avoid the following:
Mistake #1: Rushing to throw the ball
Many founders rush through their pitch, but speed isn’t all the time your friend in the enterprise capital world. Your goal is to establish key points and allow them to resonate, not to finish your pitch as quickly as possible.
Think of it like telling a good joke at a party—you wouldn’t rush to the punch line before everyone had a likelihood to get it, would you? The same principle applies when pitching. You want investors to hang on to every word. But that’s unimaginable if you’re rushing or skipping key pieces of data.
One effective technique is to use strategic pauses. Between slides or after a key point, pause for about three seconds to absorb it and observe the audience’s reactions. Don’t be afraid of silence. Patience in delivery may be a powerful strategy.
Mistake #2: Missing Trust Metrics and Key Differences
Balancing detail with brevity is difficult but essential. There are a few critical signals you need to share that may help build trust and differentiate your online business. While most founders want to focus on how great their product is, there are two questions that are probably more vital:
- Why is your team uniquely qualified to lead this company?
- What makes your organization stand out on the market?
When it comes to your team’s qualifications, be happy to provide details akin to years of experience, prestigious university degrees, previous achievements, existing patents, and/or impressive experience in startups or corporations.
I once coached a founder who was struggling to raise capital. After reviewing his pitch, I said, “The problem is you have no real startup experience.” He then told me that he and his co-founder had sold their last company for $80 million, but he didn’t think it mattered because it was in a different industry. Let me inform you, your track record is 100% relevant to whether investors will trust you with their money.
Next, I can almost guarantee that whatever amazing idea you’re pitching—we’ve probably seen it before. That begs the query, how are you going to do it in another way once you go to market? That’s where your existing driving force comes into play: your existing user base, early subscribers, patents that have been accepted, and strategic partnerships all come into play. These elements show that you just’re not only one other idea, but a viable business that’s already making a splash.
Mistake #3: Talking too much for too long
I know—it seems like a contradiction based on the first point, but hear me out. Talking nonsense is one other fatal mistake. You should plan to give a nine-minute presentation, but you don’t want to “rush” through those nine minutes. Instead, be unyielding about what to include—and what to cut—so that the pace feels natural while still covering the key data points that make your online business compelling.
I often ask recent founders to pitch their startup in just two sentences: What do you do and why should I care? Then you have lower than 10 minutes to explain the market problem, the size of the market, your online business model, your solution, your traction, your team, and your query. That means you would like to be very specific about what details will tell your story most effectively.
I’ve seen many founders get nervous and overdo it, stuffing themselves with unnecessary details and filler. This often backfires. If you talk too much or too fast, investors may think you’re not being direct, or they could get bored and lose interest.
Mistake #4: Forgetting Who You’re Targeting
Remember, you are pitching to investors, not prospects. Investors aren’t interested in how great your product is; they need to know about your market, margins, and differentiation.
I once sat through a presentation for a young female jewelry startup where the founder was trying to sell me jewelry the entire time. As an investor, I wasn’t her audience and the presentation fell flat. Instead of selling me a business, she was selling me a product. When you talk to investors, they need to hear about the business opportunity, not the product.
Mistake #5: Undermining Your Credibility with Weak Language
This may look like unnecessary semantics, but words like “hope” subtly signal uncertainty, and investors don’t like to take risks with “hope.” They want clear predictions backed by data and logic.
Instead of claiming “we hope,” use phrases like “we will” or “we project.” This change immediately adds credibility to your presentation. Be assertive; your words should exude confidence, not wishful considering.
Here are some examples:
- Instead of claiming, “We believe our product will succeed,” convey your confidence by saying, “Our product is positioned to succeed.” This subtle change conveys confidence and reinforces your offering.
- Replace “We believe our revenue will increase” with “Our forecasts show that our revenue will increase.” This not only sounds more authoritative, but also indicates that your assumptions are based on solid data.
- Don’t say, “We’re aiming for 10% of the market”; as an alternative say, “We’re on track to take 10% of the market.” This adjustment shows that you just’re actively working toward a clear, achievable goal.
- Change statements like “We expect to launch in Q2” to “We will launch in Q2.” This small change projects certainty and reliability, which are key to building investor confidence.
These subtle language changes replace hesitation and probability with assertiveness. They emphasize that your offer is built on credibility and supported by a solid, well-thought-out plan.
Mistake #6: Using general statements as an alternative of precise data points
When pitching to investors, generalized claims can raise suspicion. Investors will wonder if you are trying to hide the truth or if you are giving too many details.
For example, as an alternative of claiming, “We have a huge subscriber list,” focus on specific details like, “We have over 20,000 subscribers.” Details not only make clear your claims, but also greatly increase your credibility and trustworthiness.
Here are some examples:
- Don’t say, “Our team has a lot of experience.” Say, “Our team has eight years of experience in this industry.”
- Replace “Our product is very catchy and our customers rarely leave” with “Our product has an 89% customer retention rate.”
- Instead of “We are predicting rapid growth,” say “Our forecast indicates 30% month-over-month growth in the fourth quarter.”
- Replace “We dominate the market” with “We currently have a 45% market share in our region.”
These sorts of changes in wording help transform vague statements into specific, data-backed statements, which helps build investor confidence and shows that your proposition is based in reality.
Mistake #7: Telling as an alternative of showing
Our final lesson: show, don’t tell. Showing something visually relatively than verbally will have a greater impact and can be more likely to be rememberedInstead of telling investors, “We have a great interface,” show them screens of the interface and allow them to judge for themselves whether it’s great or not. Instead of claiming, “We’ve grown exponentially over the years,” show a line or bar graph illustrating your impressive growth.
Here’s one other example: telling investors how much your customers love you has far less impact than showing screenshots of social media posts where your customers are raving about you in their very own words. Remember this mantra: less talk, more visualization.
Summary
Mastering the art of pitching is about greater than just avoiding pitfalls—it’s about crafting a narrative that resonates with investors and builds trust. But by avoiding these seven mistakes, you significantly increase your probabilities of securing the capital you would like to take your startup to the next level.
In today’s difficult economic climate, communicating clearly, showing as an alternative of telling, and providing data-backed arguments will set you apart. Investors want to support entrepreneurs who can overcome adversity and lead their ventures to success. Continually refine your offering, build strong relationships, and show investors why your startup is price investing in.