Rick Smith, the Co-founder of Crosscut Ventures, provides common-sense advice on how to avoid critical mistakes when pitching to potential investors. Specifically, don’t underestimate the competition or include unrealistic projections, since this will make you look like you don’t fully grasp your own market. Also make sure you highlight the competence and experience of the management team.
- The Plan has become the deck…spend your time developing a 15 page pitch deck rather than a 40 page single space business plan
- Don’t hire a consultant…venture capitalists are looking for people passionate about their business, not consultants passionate about the business
- Do not forget about the management team…many times investors will hear about great products but not the management team…“we’re investing in management teams not products or ideas…”
- Avoid unrealistic projections…they indicate that the founder does not have basic business sense
- Underestimating competition…be realistic, venture capitalists will find the competition, it helps if the founder provides the information and it helps to show that you understand the market
- Don’t put a valuation in the plan as the market will set the value
- There are other mistakes, but those six are seen almost every day