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- Timing Information Drops
Timing Information Drops
Read time 1.8 minutes.
Recently, I’ve been working with some investors to help their portfolio companies raise. This has involved listening to many of their existing pitches the past week to see where they are at so I can chart the path forward.
Today, I want to share one mistake that I’m seeing a lot that I feel stems from a misinterpretation of the advice you’ll hear from my people, including me.
The Misinterpretation
I will always advise founders to tell the truth. You should never lie to an investor.
What I’m seeing, however, is that most founders take this as needing to start their pitch by laying out all the negatives first. This is a horrible mistake.
Examples of negatives I’ve seen founders discuss in the first 5 minutes of their pitch include:
Lack of equity ownership (founder had 17% at the seed stage and knew this would scare investors)
Unscalable sales strategy
High-cost sales strategy
Lack of technical expertise
Lack of sales
If I’m telling you to be honest about these things but not to talk about them early in your pitch, then when should you talk about them?
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The Strategy
Always make sure that you hook investors before you share any negatives about your company.
Ideally, the problem + solution is enough of a hook to get them interested, but in most cases, at a minimum, you’ll need to show the problem, solution, traction and market. This will allow you to showcase the high potential and minimize some risk.
Once you start strong, there are two times that are best for sharing negative information:
At the start of addressing a topic. If you have a sales strategy but it isn’t scalable, start by talking about how it isn’t scalable but then counter with the positive point that it is leading to many sales.
At the end of the pitch. Right before they ask question so after you are clearly done, and the room has the half moment where everyone is wondering what will come next, you can say, “Before we get to questions, there are a few things that have come up in past meetings I want to address.” Simple and clear.
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Onwards and Upwards,
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