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- Importance of Honesty
Importance of Honesty
Read time 1.6 minutes.
Recently, I saw a pitch where a founder made a fundamental mistake which cost them millions.
So this founder had an awesome product, very revolutionary, his storytelling was strong, and he had investors hooked. The valuation was a little high (I’m going to change the numbers here for confidentiality). Let’s say he was asking for $18M Post-Money.
During the pitch, the VC was very interested; you could tell from the body language, questions, interactions, etc., that this founder was on his way to getting a deal.
Suddenly the air was sucked out of the room. What happened?
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During the pitch, the founder said that the company had 21 partnerships with potential customers (it was a B2B product).
The first question he was asked was to expand on those partnerships: how much revenue, responses, duration, etc.
The problem? The founder didn’t have any partnerships. He had verbal commitments that companies would test the product if he were able to raise funds, create a market-ready version of his prototype and bring it to market.
As soon as the founder was asked this question, he was forced to clarify that the partnerships weren’t actually partnerships. This immediately killed his credibility. Suddenly, the investor had no idea what else in the pitch was the truth or a lie.
If you learn one thing from me: NEVER LIE IN A PITCH.
Founders have developed this horrible habit of stretching the truth. The “fake it till you make it” mentality that was once prevalent in Silicon Vally is complete BS. It became popular 15 years ago. Today, we live in the age of misinformation. Everyone is on high alert for those trying to trick them, into making a poor investment. This means you need to do everything you can to come across as trustworthy.
Investors won’t invest in someone they don’t trust.
Do you misrepresent information in your pitch? |
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