The 5 Most Common Startup Pitch Mistakes And What to Do

Iterative Winter 2024 is having it's Demo Day on tomorrow (Wednesday, 8 May). To help companies prepare, we've host pitch practices every few days where companies pitch to other founders, Brian and I. They get immediate feedback, learn from each others pitches, iterate over a few days and pitch again. You'd be surprised how much pitches improve by doing this.

Having now done this for 8 batches and 100+ companies, these are the 5 most common startup pitch mistakes and what to do.

Act 3 Problems Are Act 1 Problems

This is a phrase I got from fiction writers. It means if the ending of your story sucks, it's probably because the beginning sucks. Applied to startup pitches, the beginning of the pitch should always be centered around the problem your startup is solving. If you don't communicate that well (typically because it's too vague) then the rest of your pitch won't be very effective. The problem, and how you define it, is the context necessary for investors to understand whether your solution is significantly better, your market is sufficiently large, you're the right people to do it, etc.

What's Your Secret?

Everyone loves a good secret. At Iterative, we define secrets as something a startup (1) knows that very few people know or (2) believes that very few people believe. For Airbnb, it was that people were willing pay strangers to let them stay in their house. For Uber, it was that strangers would pay to have other strangers drive them around. Nobody believed it at the time but they turned out to be right and since they were right when everyone else was wrong, they become valuable companies. The most interesting part of the pitch is the secret. It's what makes investors sit up in their seat and pay attention. Remember that investors spend hours a day listening to pitches. If you say something they've never heard before and it's outlandish enough to be interesting but not so much so that it's stupid, you'll have their attention. You know you've got them when they say something like "Wait, that can't be right. Can it?"

Explain Your Growth

If you’re growing quickly, can you explain why? If you can’t explain why, it suggests that you don’t understand what’s happening so when the growth slows (it always does) then you won’t be able to start it again or build off of what’s happening. Similarly, if you’re growing slowly, you need to be able to explain why you’re growing slowly, what you’re going to do differently and why you think it’s going to change your trajectory.

Raising $X to Reach Y Milestone

Good investors don’t care about the % of the $ you’re fundraising is going to marketing, engineering, etc. What they care about is they’re going to give you $X of money and you’re going to turn that into some significant business milestone. We tell all of our companies to phrase their fundraising ask this way. We’re raising $1M to get to $2M in ARR. As an aside, you typically shouldn’t ask for more $ than the milestone. It’s weird to ask for $1M to get to $250K in ARR.

So What?

After a few of the pitches, I found myself thinking "So what?" The pitch was mechanically good. The delivery was good, the pitch was well structured, etc. but I just didn't care about the company or what they were doing. If you're trying to fundraise, that's bad.

When you hear the best founders pitch, it sounds like they starting a rebellion. There is something wrong with the world and they're going to do something about it. The pitch feels more like a manifesto. A good way to build this into your pitch is to answer the question "If your startup is successful, how will the world have changed and why will we better off?" If you can't answer that question, you probably (1) haven't thought hard enough about what you're doing.

Yes, investors want to invest in startups but what they really want is to invest in rebellions. Google was a rebellion against information freedom and the advertising industry. Web3 is a rebellion against the traditional financial system. The internet was a rebellion against physical borders. All big ideas are rebellions.