In this article and the corresponding video, we discuss the top five mistakes entrepreneurs make in their pitch decks.
Mistake #1: Inaccurate calculations of market size
Many founders incorrectly calculate the size of their company’s addressable market. When figuring out your market size, you should:
- Differentiate between the U.S. and global market sizes or a market size of your home country and the global market size,
- Incorporate growth rates to show the revenue potential of the market, and
- Consider market sizes for all revenue streams.
Most investors look for startups addressing a billion dollar market in total, and following the three tips above will help you get there.
Mistake #2: A poorly formulated go-to-market strategy
Many startup founders confuse go-to-market strategy with product or user traction. Your company’s traction, or the number of customers you currently have, is not your go-to-market strategy, but rather its result. You can think of a go-to-market strategy as a roadmap, or a compass, for achieving your revenue goals. If you do not have such a strategy laid out, it becomes hard to defend the validity of your projections in front of investors.
In addition, your go-to-market strategy reduces execution risk by clearly laying out your plan of action, and de-risking your company makes it a more attractive investment.
Mistake #3: No long-term strategy
The business model of all startups includes at least one way in which they can make money. Although a “low hanging fruit” monetization strategy is crucial in the short term, it does not highlight the long-term revenue potential and the company’s long-term growth prospects. A long-term strategy represents your entire vision and the direction in which you see your company evolve.
Mistake #4: No unit economics
Financials, and specifically unit economics, are usually a weak point in most startup presentations. A typical financial summary includes revenue projections, costs, and selected financial metrics. However, it often lacks the underlying assumptions on which the entire financial model is built. This is what we refer to as unit economics. Unit economics varies by business model and may include a price, a subscription rate, or even a customer segments’ breakdown.
Mistake #5: Too many technical details
Too many technical details can kill a presentation. While it is important to describe the business rationale behind creating your product and how it is different from other products available in the market, it is not necessary to go deep into the intricacies of the product design. Investors are not technical people and they are infinitely more interested in how much money they can make in the end than what specific design element your solution uses to be more efficient. In case they want to know more, they can always ask for more details during the Q&A sessions or as part of due diligence.
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