Five ways start-ups scare away investors

Anne Wickham, 17 May 2016
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There seems to be an obsession with ‘entrepreneurship’, ‘innovation’ and ‘disruption’ right now.

I’m concerned this is fueling a myth that anyone can make millions if they pursue their Big Idea and that start-ups have a monopoly on creativity.

Most of all, there’s a lack of understand about how it’s actually consumers that are driving so-called disruption through evolving demand.  It’s not being masterminded by geeks in isolation.

When I was on the Advisory Board of a tech acceleration hub I was on the receiving end of “Shark Tank” pitches week after week. I was consistently stunned by how many would-be entrepreneurs would talk on and on about themselves and their idea without providing any evidence that they’d done any market research or business planning whatsoever.

It inspired me to share five phrases I believe are almost guaranteed to scare away investors:

  1. “Our target market is everyone.”
  2. “What we’re doing is new. We don’t have any competitors.”
  3. “All the friends I’ve talked to love my idea.”
  4. “We don’t really have a marketing budget so we’re going to use social media”.
  5. “We hope people will pay to use the service/buy the product after they’ve got used to using it for free.”

As an external PR consultant to several highly successful start-ups (you know who you are!) over the past 15 years, I’ve seen first-hand how a great business plan, hard work and a willingness to evolve your model are all critical to a successful IPO or exit plan.

However, even with all of these in place, poor communication can be a fatal stumbling block.

If you think you have a great idea, my advice is to track down a PR expert and ask them: “Do you think you could launch this for me?” and listen carefully to their feedback.  If they can’t quickly grasp your story then you’re not ready for the big bad world just yet.

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