5 Common Mistakes That Keep Venture Capitalists From Investing
Entrepreneurs rely on support and funding from venture capitalists (VCs) to kickstart their businesses and take them to the next level. But the VC world is a cutthroat one, and vanilla presentations that lack value, potential profit and that “spark” VCs crave won’t result in anything more than a deleted email and ignored pitch deck.
Entrepreneurs need to position their pitch decks in a way that creates the “perfect formula” -- the combination of business idea and presentation that venture capitalists are looking for.
Sean Brown is the founder and CEO of GO VC. Brown breaks down some of the top reasons why VCs aren’t responding to your pitch deck and what you can do to not only catch their eye, but also leave them wanting more.
1. You are sending mass emails.
The primary mistake many entrepreneurs make when they send investors a cold email is that they neglect to do any research before emailing them the pitch deck. Investors can immediately tell when they receive a generic, cold email that's been sent to multiple firms.
“Doing this is not only an immediate turnoff to investors, but it demonstrates that you aren’t taking the time to personalize and craft an email specifically for that investor,” explains Brown.
It’s imperative for entrepreneurs to conduct adequate research on the firm and not only gain a solid understanding of what types of companies the VCs invest in, but also stay up to date on firm news and current events. When research and attention to detail reflect well in the initial email, the investor is more likely to take notice.
2. Your email is too long.
In addition to conducting proper research, entrepreneurs need to pay close attention to the elements of their email, honing in on the subject line and the email body. In the subject line, entrepreneurs must convey the unique value proposition of their business in one sentence. This step is critical.
Brown emphasizes, “If the subject line doesn't hook an investor, chances are they won’t even open the email, and the entire opportunity is forever lost.”
If investors do open the email and see a page-long email body, they won’t read enough to get to the deck. Keep the email body to one paragraph and include a fact or two about your company's traction that will pique investors' interest to read the deck.
This circles back to doing your research before pitching. “Stay in the know of what that firm is up to, and translate your knowledge and interest in the VC firm in your email,” says Brown.
3. Your deck doesn’t tell a story.
Another mistake Brown has frequently seen is entrepreneurs failing to tell their story in a way that’s compelling to investors. Entrepreneurs often mistake lots of slides and visuals for sufficient storytelling, but it’s quite the opposite. Less is more in this case.
Don’t include more than 10 to 15 slides in your pitch deck, and share a compelling narrative about your company. Stories are what draw people in -- emphasize the human element of your business venture.
Give investors all the information they need to create an informed and thorough understanding of your business, but structure it in a way that makes them look into the future of the business, in terms of potential.
4. Your executive summary isn’t well thought-out.
Your deck should kick off with an executive summary. The executive summary serves as a brief overview of your entire business plan. Your presentation should start with this element, and it needs to be very carefully constructed. It should include:
- A description of product or service and the problem it solves
- The company’s management structure
- A summary of goals and objectives
- Financial projections
- An overview of funding requirements
This is the first glimpse of your business that investors see. Spending 15 minutes on the executive summary will not suffice. Plan to spend days crafting your executive summary, making sure it’s not only thorough but also articulate.
5. Your deck is full of small mistakes.
One of the biggest VC pet peeves is entrepreneurs making seemingly minor mistakes that have a significant impact on their overall presentation -- small counts of unprofessionalism add up quickly. Make sure that every aspect of the presentation is triple-checked to avoid minor, yet negligent mistakes, before it is sent to any investors.
“Small tasks, such as not converting a PowerPoint presentation to a PDF, can be a blunder,” says Brown. “Your presentation needs to be in a clean, easy to read format, the way that you originally designed it to be consumed.”
When sending the original pitch email to the investor, make sure the presentation is in PDF format. After the presentation, your deck will most likely be shared -- a PDF format makes this process easy.Spelling errors can be detrimental. All elements of your pitch deck, including the initial email to investors, need to be free of spelling errors. This small mistake demonstrates a lack of attention to detail -- something very important to an investor.