5 Painful True Reasons You're Not Getting Funded - and What to Do About it
Oh, the fundraising process — a painful, necessary evil. Whether you're in the early phases and are seeking angel funding or scaling with growth capital, raising money is never easy and takes time.
I sat down with seasoned growth investor, Jason Tagler, who is Partner at Camden Partners and Founder of Pitch Creator. With seeing over 1,000 pitches in his lifetime, Tagler certainly understands the pain points associated with fundraising. As such, he shared a direct public service announcement for all entrepreneurs struggling through the fundraising process.
1. You don't have a read-me pitch.
A read-me, what? A read-me pitch is a highly distilled business plan that gives investors the details they care about most in a highly digestible format — a format that is also easy to access and share. Knowing that VCs spend less than 4 minutes on average to engage with a pitch deck, it can benefit you massively to have a) primed them with pertinent details and piqued their interest beforehand, and b) have a pre-prepared document for them to review and reference afterward. You need a read-me pitch. Period.
2. You lack basic presentation skills
Tagler acknowledged that you don't need to be the world's greatest presenter if you have invested in a plan and the right type of pitch deck. However, you do need to invest the time to have a minimum level of presentation competence. For some people who are naturally good at presenting and selling, this doesn't require extra work. Unfortunately for other people, it does. If public speaking is a weak area for you then definitely invest time into it as a separate skill. Read books and articles or join Toastmasters (most cities have at least one chapter). Or, consider taking introductory courses that cover the minimum presentation skills you will need to pitch investors.
3. You don't practice enough.
Giving a compelling verbal presentation to investors is just like other public speaking roles--success is highly correlated to the amount of preparation and practice. So, practice on colleagues, advisers, and mentors who understand your business and sector. You should also consider practicing on friends, who don't understand your business as well or at all. This forces you to adapt your presentation to the level of knowledge of your audience. It also forces you to adapt to the amount of time you have with each type of audience. Practice a lot and ask for feedback.
4. You make basic, tactical mistakes.
Have you ever heard someone say, "our company doesn't have competitors?" Tagler has and it makes him cringe every time. Yes, they're easy to correct, but one misstep like that in a pitch will immediately inform an investor audience that you, the entrepreneur, aren't knowledgeable of your competitive landscape. Typically, those companies don't get funded. Other common tactical mistakes include too many slides for the time that you have with investors, using jargon or acronyms that investors don't understand, and having slides that are too cluttered with information and are therefore distracting to your audience.
5. You think that if you have a good business, then the way you pitch shouldn't matter.
Absolutely wrong. The way you pitch is critically important because investors are inferring a lot of information from that limited time they spend with you. Investors are considering the quality of your presentation and gauging the following:
- Can you recruit the right team?
- Can you sell to customers?
- Can you raise money in the future (this is critical to investors because if you need to raise money in the future and can't do it then anyone who has invested in the business up to that point will lose all, or most, of their money)?
- Are you passionate? If you are not passionate about your own company, then why should someone else put money behind it?
- Are you committed? No investor wants to back a CEO who will give up when going gets tough.
Simply put. The pitch matters—more than you think.
As Tagler's 5 reasons suggest, there's no "easy button' when trying to raise capital. There is, however, a more efficient way to do it. Be self-aware of your pitch strengths and weaknesses, find the voids, and seek to improve on it. Just don't forget to enjoy the journey along the way.