10 Things Not to Say During a VC Pitch

Dear SaaStr: What should you not say to a VC during a pitch meeting?

1. “We hope to sell for $20m-$100m in a few years to a BigCo.” While this may be the right strategy, the VCs likely won’t make enough money off an outcome like this. You won’t sound ambitious enough.
2. “We’re a bit burnt out after doing this for years.” I feel you. I’ve been there. But say this to a VC, and that’s not a sign of founders they want to invest in for the next 5–10 years.
3. “We need the money to get sales and marketing going.” While logical, again, this isn’t what VCs want to hear. They want to hear you already have at least a tiny core revenue engine going, and the capital is going to feed it. Not jump start it.
4. “Our CTO is leaving.” Important to know. Disclose it. But have a plan in place to address it before you pitch VCs.
5. “We need a lot of money because our burn rate is pretty high.” It’s not the VCs’ problem if your burn rate is too high. You need to make sure your startup is at least structurally attractive to the VC fund you talk to. Bigger funds can fund bigger burn rates. But you still need to be structurally attractive.
6. “I actually don’t know all that much about that key competitor.” The best founders always know the competition cold. And respect it.
7. “Our sales are flat but we’ll make it up later in the year.” Prove it. This isn’t the risk VCs want to take.
8. “Our market is pretty small.” That’s OK if you have some proof you are going to expand it. ESignartures were a $1m a year market when we started Adobe Sign / EchoSign. Today, they are a $3B market. But you need to show a clear path for your small market becoming a very large one.
9. “Our product wins because it costs less than the competition.” This almost never wins in SaaS, at least not big. It’s not an enduring competitive advantage.
10. “Oh those aren’t actually customers, they’re trials.” Be very careful exaggerating metrics. Don’t count trials as customers. Don’t count deals that haven’t quite closed yet … as closed. Don’t blend 3 months of revenue into “Quarterly MRR” to make your revenue look bigger. You’ll likely get caught. And worse, maybe it wouldn’t have mattered at all to the VC if you’d been honest and clear up-front.

“like that” image from here

Published on July 30, 2022