Startups - how to blow it with potential investors

Oh dear. I’ve had a day when I’ve seen another very enthusiastic person with an early stage business and absolutely no clue how to get their idea across. Okay to be honest he wasn’t that enthusiastic………… and he smelled a bit strange……………and smoked the smallest ‘roll-ups’ I have ever seen but anyway – back to my point. How is it people blow investment opportunities so badly? It appears like a sub-conscious wish to fail it can be so bad. To save people who really want to screw up but don’t have the energy to figure out how to do it, I have compiled a list of real ‘show stoppers’ when you’re looking for investment or approval for a new corporate venture.

• tell the potential investors that you are working across several businesses – they will be ‘delighted’ that you are going to spend all your time on other endeavours and let the idea (and hence their investment) die worse than a blue comedian in a convent
• say that you’ll let them know about the core idea after they invest – people putting resources and/or money your way always enjoy a mystery
• be vague – no-one likes a number monkey who is on top of all the facts about the business. Build up the sense of excitement by not really know what you are talking about
• make sure you haven’t over-burdened yourself with knowledge about your market – in fact it’s really ‘impressive’ if you know less than your audience. That makes them feel superior and puts them in a good mood
• bring along the cigarette packet you had the idea on and ask for a couple of million – come on, it’s a good idea and must be worth at least that
• predict sales aggressively – if you have a hockey stick you can trace around the curvey bit to model your sales in the first years. If your sales growth isn’t near vertical after a couple of years then you’re not trying hard enough. Take some more drugs or whack yourself on the head until the numbers appear sensible
• do remember what I call the “10% of China” syndrome and back up your business model with sensible facts like that the numbers for you software startup are ‘only’ 10% of Microsoft’s revenues

There are a few others but my brain is already twitching with horrific incidents of the above.

Note: The tips above should be taken with a sense of irony and the ridiculous…..if you don’t have these personal attributes then just try just doing the opposite of what I say above. I take no responsibility if you learn nothing from this blog as you’d probably have to be the sort of person who runs around the office blindfold with scissors in their hand.

Copyright Richard A D Jones 2005