Top Startup Mistakes that Annoy Investors
Top Startup Mistakes that Annoy Investors
5 MIN READ, APRIL 17, 2023
5 MIN READ, APRIL 17, 2023
As a startup founder, it's important to understand what investors are looking for and how to avoid making the mistakes that can turn them off.
Investors play a critical role in the success of a startup. They bring not only the funding needed to grow the company but also the experience, knowledge, and connections that can help the startup succeed in the long term. However, many startups unknowingly make mistakes that can irritate and annoy investors, leading to missed opportunities and potential long-term damage to the company's reputation.
We've asked Ece Taskincay, a VC investor in the MENA region, about the most common startup mistakes that annoy investors, and how best to avoid them.
Investors play a critical role in the success of a startup. They bring not only the funding needed to grow the company but also the experience, knowledge, and connections that can help the startup succeed in the long term. However, many startups unknowingly make mistakes that can irritate and annoy investors, leading to missed opportunities and potential long-term damage to the company's reputation.
We've asked Ece Taskincay, a VC investor in the MENA region, about the most common startup mistakes that annoy investors, and how best to avoid them.
An Expert’s Opinion
Ece Taşkınçay has been interested in venture capital ever since her graduate school days in Barcelona. Her journey with VCs started as Investment Analyst at one of the biggest VCs in Spain, managing €100M funds. She then moved on to 500 Emerging Europe (€70M fund) in Istanbul, where she was focused on the pre-seed stage. She is currently a Strategy and Business Development Manager at Koç Holding, the biggest holding conglomerate in Türkiye, covering investments in startups from seed to growth stage, as well as VCs both in Türkiye and globally.
Ece Taşkınçay has been interested in venture capital ever since her graduate school days in Barcelona. Her journey with VCs started as Investment Analyst at one of the biggest VCs in Spain, managing €100M funds. She then moved on to 500 Emerging Europe (€70M fund) in Istanbul, where she was focused on the pre-seed stage. She is currently a Strategy and Business Development Manager at Koç Holding, the biggest holding conglomerate in Türkiye, covering investments in startups from seed to growth stage, as well as VCs both in Türkiye and globally.
When is the right time for a startup to start approaching investors?
Approaching an investor can happen at any time, and there's no specific right or wrong time to do so. However, my recommendation to founders is to only reach out to investors when they are prepared with a proper pitch deck and actively seeking funding. Cold reach outs, such as through email or LinkedIn, with the intent to network and meet investors, may not be the best strategy if the pitch deck isn’t ready. I doubt this is a good strategy for both sides- for the founder this may be distracting, reaching out to investors just to connect instead of focusing on the product. From an investor perspective, when the founders pitch long before they start fundraising, their interest may be lost over an extended period of time, seeing as the industry is highly dynamic.
Approaching an investor can happen at any time, and there's no specific right or wrong time to do so. However, my recommendation to founders is to only reach out to investors when they are prepared with a proper pitch deck and actively seeking funding. Cold reach outs, such as through email or LinkedIn, with the intent to network and meet investors, may not be the best strategy if the pitch deck isn’t ready. I doubt this is a good strategy for both sides- for the founder this may be distracting, reaching out to investors just to connect instead of focusing on the product. From an investor perspective, when the founders pitch long before they start fundraising, their interest may be lost over an extended period of time, seeing as the industry is highly dynamic.
What are the most common mistakes made by founders when pitching to investors?
Believe it or not – too long of a pitch! If you’re talking to a well-prepared VC, chances are they’ve already done their research and don’t need a detailed overview of your company. They actually probably already have questions ready!
Keep it short and simple. If your presentation is scheduled for thirty minutes, only ten of them should be allocated for pitching, and the remaining twenty should be an open space for investors to ask questions.
Another thing to keep in mind is: Make sure you research your competitors. Some founders fail to mention competition in their pitch, which means they’ll be unable to provide an answer when asked about what differentiates them from competition. The fact is, every startup has some form of competition – like market competitors, indirect competitors, or someone providing another solution to the same problem your startup is addressing.
Try your competitor’s products – you should be your competitors’ customer. This shows your prospective investors that you’ve done your research and are able to distinguish your products from others’.
Believe it or not – too long of a pitch! If you’re talking to a well-prepared VC, chances are they’ve already done their research and don’t need a detailed overview of your company. They actually probably already have questions ready!
Keep it short and simple. If your presentation is scheduled for thirty minutes, only ten of them should be allocated for pitching, and the remaining twenty should be an open space for investors to ask questions.
Another thing to keep in mind is: Make sure you research your competitors. Some founders fail to mention competition in their pitch, which means they’ll be unable to provide an answer when asked about what differentiates them from competition. The fact is, every startup has some form of competition – like market competitors, indirect competitors, or someone providing another solution to the same problem your startup is addressing.
Try your competitor’s products – you should be your competitors’ customer. This shows your prospective investors that you’ve done your research and are able to distinguish your products from others’.
Should founders research VCs and investors before pitching?
Definitely! It’s unlikely that investors will expect founders to know a lot about a fund, but founders should certainly do their due diligence anyway. If you’re the one reaching out to investors, always send your pitch deck to the designated personnel in the VC. For example, if your startup is operating in AI, find the “AI guy” in investments or VCs, and reach out to them.
Always personalize your approach, show that you’ve done your research, and make your one-liners interesting. Don’t just send the same pitch deck with the same email to all the investors! Again – show the investor that you’ve done your research, and that you’re approaching them specifically for a reason.
Definitely! It’s unlikely that investors will expect founders to know a lot about a fund, but founders should certainly do their due diligence anyway. If you’re the one reaching out to investors, always send your pitch deck to the designated personnel in the VC. For example, if your startup is operating in AI, find the “AI guy” in investments or VCs, and reach out to them.
Always personalize your approach, show that you’ve done your research, and make your one-liners interesting. Don’t just send the same pitch deck with the same email to all the investors! Again – show the investor that you’ve done your research, and that you’re approaching them specifically for a reason.
Conclusion
Pitching to investors is an essential part of the journey for any startup founder – and it is also usually the first communication point between them before possibly entering a professional collaboration. It can be a daunting task, but avoiding some common mistakes can make the process more manageable and ultimately more successful.
Some mistakes for a founder to avoid making when first interacting with a investor include approaching them before the pitch deck is ready or when the startup’s not fundraising yet, having too long of a pitch, and failing to research competitors.
Remember that pitching to investors is not a one-size-fits-all process. Tailor your pitch to the specific interests and needs of each investor and take the time to research and understand their investment style and portfolio.
Pitching to investors is an essential part of the journey for any startup founder – and it is also usually the first communication point between them before possibly entering a professional collaboration. It can be a daunting task, but avoiding some common mistakes can make the process more manageable and ultimately more successful.
Some mistakes for a founder to avoid making when first interacting with a investor include approaching them before the pitch deck is ready or when the startup’s not fundraising yet, having too long of a pitch, and failing to research competitors.
Remember that pitching to investors is not a one-size-fits-all process. Tailor your pitch to the specific interests and needs of each investor and take the time to research and understand their investment style and portfolio.
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