Pitching your idea to investors can be nerve-racking. Even with lots of practice, it’s easy to find yourself clamoring for the right words. That being said, certain mistakes can mean the end for you and your business. With that in mind, we asked seven members from Young Entrepreneur Council (YEC) the following question:
“What’s one word or phrase that you should never use when pitching an investor?”
Here’s what YEC community members had to say:
1. “We Just Need X Percent of Y Industry”
“It’s easy to say, ‘If we just get X percent of this $Y billion industry then we’ll make Z.’ If the intent is to demonstrate your potential, you should identify your total market potential based on customer data and then carve out your target customer and their estimated population. You’ll be left with a more accurate representation of your potential while demonstrating that you know your customers and did your homework.” ~ Andrew Thomas, SkyBell Technologies, Inc.
2. “No Competition”
“Making the statement that your company has no competition while pitching an investor can imply that your product or service has no market. The statement can also bring them to question whether you did any market research before pitching your idea. Either way, it’s not a good idea to make that statement.” ~ Phil Chen, Systems Watch
3. “If I Pitched This to Mark Cuban…”
“Get rid of this phrase because it’s so overused it has become a cliché. This phrase turns investors off and has lost its power.” ~ Joshua Lee, StandOut Authority
4. “No Brainer”
“Using the phrase “no brainer” makes you come off as extremely arrogant. While it’s good to have confidence in your idea, you need to remain humbled in your pitch to investors.” ~Josh Weiss, Bluegala
“Lots of entrepreneurs want the investor to know that their numbers are “conservative” and that they’ve discounted the possibilities. This is used all the time and they’ve seen “conservative” numbers not get hit again and again or just not make any sense. It’s better to express projections as worst, likely and best case scenarios and leave conservative out of the discussion. Keep the worst and best in the appendix and use the likely.” ~ Brian Fritton, Patch of Land
6. “First-Mover Advantage”
“Digital development moves at a hyper-speed pace, which means there is almost no such thing as a first-mover advantage. It’s a phrase that entrepreneurs pitching to investors should leave out in their presentations, and instead focus on what differentiates them from the intense competition.” ~ Brett Farmiloe, Markitors
“Never say you can guarantee a return or guarantee anything. It creates suspicion and makes you look very amateur. Everyone knows the only things you can guarantee in life are that we are all going to die and we all pay taxes. Nothing else is ensured and when you suggest that it is, you will raise suspicion.” ~ Raoul Davis, Ascendant Group
Oops Photo via Shutterstock
Right on! I see about a hundred pitches a year, as a member of an angel investor group and judge of some major competitions, and this list matches my impression very closely. I agree completely with #1 and #2 and their standing as the most and second-most common and annoying. And I’d add in IRR as #3 (http://timberry.com/you-can-take-your-irr-and-shove-it/). I’d put #6 first-mover advantage as #4, #7 guaranteed would be my #5, and then add your “conservative” (good point) as #6. And I don’t mind the no brainer stuff when it works, and I’ve never heard the Mark Cuban one.
Really good post.
I’ll admit that I am quite new to investor relations. This is why you need a communication manager or planner just for this purpose. This can make or break your deal.
@Aira I totally disagree. I am a member of an angel investor group. We’ve seen dozens of pitches and invested in several. Angel investment has nothing to do with “investor relations” as practiced by publicly traded companies. We want to deal directly with the startup founders, never with a communication manager or planner. Ironically, your suggestion of having such a person involved would be far more likely to break a deal than make one.