Several venture capitalists at Dig South shared the biggest mistakes startup founders make when pitching their company to investors.
Amy Salzhauer, managing partner of Charleston-based Good Growth Capital, said startups do not need to have perfected presentation materials. She said it is more important for them to know the amount of money they need and what exactly they plan to do with it.
“I shudder when I see these beautiful presentations, but the numbers aren’t there, and the strategy isn’t there,” Salzhauer said. “Before you come in, really think it through. You should know your ask.”
Salzhauer said that, before a pitch, founders should also thoroughly research the investment groups and the individual investors on those boards. She said an entrepreneur should be able to specifically explain why their product or software would benefit from a particular investor’s experience.
“You should want us to have something special to add to the deal,” Salzhauer said.
Unreasonable valuation of a startup makes it difficult for Frank Dalton, partner in Atlanta-based Fulcrum Equity Partners, to move forward to an investment, he said. Many entrepreneurs are overly optimistic about their company’s worth, he said, because they read about startups that quickly make it big in Silicon Valley and expect the same results.
Paul Iaffaldano, chief investment officer at BIP Capital in Atlanta, said the pitching process takes time, and the entrepreneur and the investors should be vetting to see whether the fit is right.
“We don’t want to get married on the first date,” he said. “This is a process.”
Dalton added that entrepreneurs should be able to answer three questions in a pitch: “Why you? Why now? And why is what the heck you’re doing important?”
Salzhauer reinforced that founders should ensure their investors’ interest and vision matches their own.
“Think about whether your goals as the entrepreneur are going to match the goals of the people who are going to be financing your company, because they’re not just going to be sitting on the board,” she said. “They’re going to be helping to determine the direction of the company.”