Investors are are looking to check a number of boxes before they hand over any money. Don’t check a box, don’t get the money. Pretty simple. According to new research from the University of Houston, here are the three most common reasons why VCs say no.
They don’t understand your business
Ultimately, you need to communicate the problem, how you solve it better than anyone else, why your team is the most qualified to address it, and the market potential. You want to paint the picture of the investment opportunity. If the picture is muddy, investors aren’t going to invest.
Explain your business to your grandma or a six year old. If they understand it, you’re on the right track. If they don’t, you’re in trouble.
They don’t think you’ve done the legwork
You need to communicate that you know your business, the industry, the players, the market, your customers, and the financial situation so well, investors will trust you will use their capital to successfully grow the business. If you haven’t done the leg work, how can investors possibly trust you will use their money wisely?
They don’t see you have a strategy
Investors want to know you can consistently acquire customers and grow the business. That means you have to have a proven marketing and sales strategy for achieving growth or the potential numbers to prove it. If the strategy is “our product is awesome, it will sell itself,” investors aren’t going to invest.
Remember, your job in the pitch is to inspire confidence and trust with investors. Don’t check the boxes, don’t inspire confidence and trust, don’t get the capital.
Three reasons why VCs say no.
If you’re not sure if you’re pitch inspires confidence and trust, give me a shout and we’ll figure it out.
Be Brilliant!