Don't fake it til you make it...
Don't fake it til you make it..- and other advice for teams pitching at KMS “ KRK Pitch Contest” in May 2022
Kraków Miastem Startupów - (Krakow - the town of startups) - is a non-profit organisation that supports the start up community in Krakow. They asked me to be on the jury of a competition they are holding this week, as part of Targi Pracy i Przedsiębiorczości „Majówka z pracą”
“KRK Pitch Contest” Pitch Contest to znana w środowisku startupowym konwencja pozyskiwania inwestycji przez firmy na wczesnym etapie rozwoju. Polega ona na organizacji konkursu, podczas którego startupy prezentują pomysł biznesowy w formie krótkiej prezentacji przed grupą zaproszonych inwestorów. Od 20 do 28 kwietnia będą przyjmowane zgłoszenia. Pomysły będą oceniane pod kątem innowacyjności i gotowości rynkowej, a 8 najlepszych startupów zostanie zaproszonych do udziału w Pitch Contest 11 maja. Startupy zostaną ocenione przez inwestorów (Venture Capital, Business Angel) i ekspertów, którzy następnie przyznają nagrody o łącznej wartości 5.000 złotych.
This short letter to the finalists is a personal appeal against the rising level of BS that I often encounter in the startup community, based on 48 years of business experience*.
What not to do
Don’t exaggerate
Don’t over promise
Don’t be arrogant
Don’t talk about how you or the jury feel about the business
Don’t lie
What you should do
Talk about what you have already done and achieved in specific not general terms
Demonstrate that you have already been working hard
Represent the voice/opinion of real users and clients of whatever it is you are offering, not fictional made up ones.
Convey that you will be respectful of investors’ money, and you will be as careful with it as you are of your own cash.
Get across that you are responsible, serious people who are really dedicated to doing your best.
Why did I feel the need to write this ?
The startup and entrepreneurial community is full of people who seem to have been fed a diet of “pitching as show business”. This is not good for those pitching, it is horrible for the judges, and a bad education for the audience
Real investors invest in people. You need to convey reliability and common sense in your pitch.
Anything you do or say during a pitch that gives a sense of being an unrealistic BS-er will be a turn off to most investors. Serious investors know that nothing is certain, and that most startups fail. Giving the sense that it will be easy does not usually build confidence, it reduces it.
There is nothing wrong with a “BAG**” a “big audacious goal” for your start up in terms of addressing a serious problem at a large scale, but your pitch needs to explain in a credible way not just what the problem is but how you and your co-founding team might be the people to successfully work on it. Build credibility and confidence by being realistic and humble.
What does this mean in practice?
When asked a difficult question about clients and potential clients don’t say
“That won’t be a problem - the market is worth a billion Euros, it shouldn’t be hard to get 1% which is 10 million Euros”
Instead say
“Getting clients is our biggest challenge, because we are a startup and we know how hard it is to be credible. We have spoken to 40 directors of companies we believe are our best prospects and 15 of them have confirmed they want to buy our solution when it is ready at our target pricing.”
When asked a tough question about how you are going to grow your team
Don’t say “we are a cool startup: it shouldn’t be hard to get people to join us once we have the money to pay good salaries”
Do say
“Attracting talent will definitely be a challenge. I’ve three developer friends who have committed to join us once we are funded. We know that we are competing with small and big companies. We regularly attend networking events, and give talks in two local universities which we think will help us attract the sort of engineers we need. As well as that we are going to listen to our investors and mentors, and get their advice on how to attract and retain talent.”
When asked a tough question about how you are sure you will have product market fit, don’t say
“We just know that the market will go crazy once we launch. Founders have got to have vision and faith”
Do say
“It’s not us that know when we have product market fit, it’s the market that decides. We have got 17 companies who have agreed to do paid pilots and we promised them to incorporate their feedback into further releases of our product if enough of them are ready to commit to purchase a "post pilot" upgrade. The ultimate test of product market fit is when a client decide to buy, and remains a long term clients and is happy to give references. That’s how we will know. We are not there yet, but we have a clear plan of how to get there.
Conclusions
Talk about what you have done, especially activities that demonstrate determination, persistence and sales skills. Actions speak louder than words. Investors will be trying to figure out what you are like. Think of the “perfect tense” in grammar. “We have talked to potential clients”, not “we are talking”. “We did this”, not “we are doing”. Completed actions are impressive, and verifiable.
Be honest about the challenges. Professionals know that business is hard, even when you do have money and track record.
Describe what you are doing through the eyes of clients and users of your planned products and services. It doesn’t mean anything if you say your product is cool, awesome or disruptive. If your clients and users are full of praise about what you have done and and are offering, that is impressive.
Finally - this appeal is only my personal opinion. If you know people who BS-ed their way to finding investors, faked it then made it, and made a success of their venture, then my advice would have not been right for them. The ultimate test of any business is whether it delivers goods and services of value to clients, while keeping the employees happy and making a decent sustainable profit. If you are doing that you are successful (in business terms), no matter what anyone else says.
* I started my first entrepreneurial activities when I was 8 years old at a school in Oxford in 1974.
** The more commonly used BHAG (Big Hairy audacious Goal) acronym never made sense to me. I don’t use terms that I don’t understand