One of the many interesting sessions at the recent European Space Week in Prague featured some of the most common mistakes that startup entrepreneurs make when pitching their idea to investors. Here is an impression of the presentation about this topic by Star Tech Ventures.
Most common mistakes in startup pitches
In random order, here are the most common pitching mistakes, plus tips on how to avoid them!
- Not having a clue of the realistic value of your startup. Please pay your university or an organisation like EY to do a comparable appraisal. Do not use a DCF (Discounted Cash Flow) appraisal.
- Not including how much you are asking your investors for. Make sure to have a clear idea about how much, when and for what you need an investment, based on a realistic valuation of your startup and its products. It is okay to give a range, if you can’t come to an exact number.
- Spending your investment too fast and too much. Your investor wants you to spend with care and stay motivated to be successful. Don’t bet everything on one round, but plan multiple investment rounds.
- Not hiring enough staff. If you don’t trust your startup to risk hiring people, why should your investor?
- Lack of hiring plans into the future. Make sure you understand the limits of your current headcount and where and when you need to bring in new blood.
- Not having a basic proof of concept. Make sure you have a proof of your concept. There are many labs, technology transfer incubators and even grants to help you develop one.
- Presentations that are too long and provide only generic information. Make sure your presentation is concise and to the point. Focus on the market opportunities, more than on your products.
- Not having an investment roadmap and exit strategy. Aerospace is a capital intensive sector and startups will need a large amount of investments in later stages. Ensure you can tell your potential investors how you plan to go from this round to the next and what the key milestones are between these two points.
- Being too grant centric. It is not a good idea to build your business plan or financial model purely on grants. What if you don’t get one of the grants you are counting on? Base your business on income from paying customers instead.
- Overfocus on the technology. This is a very common mistake in space startups. Spend time on potential applications and which customer pains are solved by your technology instead.
- Not knowing who your customers are. Make sure you can explain who your potential customers are and how you plan on reaching them. Are these customers prepared to pay for your products and how do you know that?
- Not having revenue now, but we will tomorrow! In that case, your investor will wait until tomorrow. Don’t show a revenue hockey stick if you are not making money yet.
- Not having any competition. Really? There is always competition. What is your Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM)? Make sure you know what these terms mean!
- Not understanding your exit path. Where do you want your startup to go to? It is your company, plan your desired exit strategy ahead.
- Not allowing time for questions. If you are given a certain time slot (which usually is shorter than you would want), ensure you leave time for questions. Take a breath after your (short) pitch, son’t try to oversell. Ultimately you and your potential investor are on the same side.
- Not presenting your ESG (or not knowing what this acronym stands for). Many investors are interested in your environmental, social, and governance (ESG) strategy, on top of your business plans. Make sure you have one!
Checked all these common pitching mistakes? Then you are ready to pitch!
About Star Tech Ventures
Star Tech Ventures (STV), is a new Italian venture capitalist (VC) fund with a specific focus on the aerospace and security sectors. The STV fund is aimed to boost the Italian technology transfer ecosystem, by investing in the most promising startups arising from Italian research centres, universities, technology transfer offices, accelerators and companies.
Acting as catalyst for change, STV aims to accelerate the translation of research and new ideas into scalable new businesses.
Are you a visionary investor or an ambitious entrepreneur, then let’s get in touch!
Read more about the aerospace business
You will find lots more articles on doing business in the space (data) industry in our series about business opportunities.