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Matt Hunckler

What’s the Biggest Mistake Entrepreneurs Make When Pitching for Seed Funding?

seed funding mistakes

Seed funding isn’t easy to come by, especially when most founders handicap themselves from the get-go.

Despite the wealth of knowledge online and platforms like Angel List and Gust, I hear that founders still make the same mistakes over and over. So, I asked several experienced investors from around the United States:

What are the biggest mistakes founders make when pitching for seed funding?

And here’s what I heard from these seed investors: most entrepreneurs make similar mistakes (and all can be avoided). Read the expert-investor responses below, and follow these 3 strategies to mistake-proof your next pitch. Be sure the read the “Seed Funding Action Items” at the end of each section…

1.) Do Your Homework Before Asking for Seed Funding

“It’s remarkable to me how many entrepreneurs approach us without doing any research in advance,” says Brad Feld, managing director at VC firm, Foundry Group.

And Feld isn’t alone. Most investors also find the lack of prep from entrepreneurs a bit frustrating.

Dave Knox, Partner at The Brandery

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Perhaps the biggest mistake is they way that an entrepreneur approaches. I get numerous requests where an entrepreneur reaches out to me cold. I read email so its not that I skip over these emails. But instead in almost all of these cases, I can tell that the entrepreneur has put ZERO effort into reaching out to me. They don’t customize the request. They don’t take time to read about The Brandery. And they don’t look into my connections or background to see what we have in common. Take the time to get to know an entrepreneur and target the people that are a great fit. If you spend the time to learn more about the investor, it will do wonders to your success rate.

Seed Funding Action Items:

  • Research your contact’s investor fund or investment group website
  • Read and review contact’s personal website (if they have one)
  • Researched the investor on LinkedIn and Angel List for connections or background you may have in common

2.) Focus On Building a Relationship Before Asking for Seed Funding

We’ve talked before about how to get seed funding and this first important step: build a real relationship with your potential investor. And this one sounds simple but executes hard.

Ting Gootee, Partner at Elevate Ventures says, “Seeking outside investors is no different from establishing a long-term relationship where both parties hope to realize certain benefits.” 

Ask any investor out there, and I’ll bet that anyone with a heart would agree.

 Dr. Tony Ratliff, Angel Investor

Tony Ratliff The first number one is that the entrepreneurs try to close the deal on the very first contact or pitch. When really they should be trying to point out the problem, share their story and get us to take the next step. It’s kind of like dating -you don’t ask to get married on the first date. Most investors want to invest in the entrepreneurs, not necessarily the idea because start-ups pivot all the time. So don’t try to get married the first time you approach an investor.

Seed Funding Action Items:

  • Be genuinely interested in other people. Ask questions.
  • Seek to understand your potential investor’s motives. What are they looking for in an investment? How do they want to get involved (beyond writing a check)?
  • Be vulnerable. Share a personal story.

3.) Prepare Your Seed Funding Pitch

Every seed investor has his or her own interests and qualities they look for in a seed investment.

“Have some level of proof of concept,” says Scott Orn, Partner at Lighthouse Capital. Others look for their own must-have ingredients to clear the threshold into that land of “OK, I’m interested…”

Ezra Galston, VC at Chicago Ventures

Ezra Galston

One of the biggest mistakes are entrepreneurs who focus the majority of their time/energy on explaining market sizes or revenue models or other ethereal subjects. We will spend our time researching your market and drawing our own conclusions. We care about how an entrepreneur executes and want to hear data points on accomplishments, growth, and traction, whether those take the form of revenue, users, or team. But more than bullets, we care about how those accomplishments happened – because, again, the focus is on executional ability

 Andy White, Partner at the VegasTech Fund

Andy White

There are a ton of great products out there that no one knows or cares about. You have to show that you understand your market and the demand for a solution to a big problem. Then you can show off your really cool tool.

Seed Funding Action Items:

  • Research your industry inside and out.
  • Practice your pitch with a trusted advisor.
  • Do you know what your investor is most interested in learning about your business? If not, it doesn’t hurt to ask.

The most important thing is to keep improving your pitch for seed funding. If you a potential investor decides to pass, follow up and ask why. It’s ok to request feedback on your pitch and presentation, too.

So, when you venture out to raise seed capital, don’t pass up the opportunity to learn something.

Have you made your own mistakes in your quest for seed funding? What lessons have you learned?

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About Matt Hunckler

Matt's a founder and organizer at Verge. He's a connecter, writer, and habitual start-upper.
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