Following up from our first interview with Panakes Partners, we travelled across the pond to ask Joe Mandato, Managing Director of Californian VC firm De Novo Ventures, what are some of the most common pitching mistakes he has come across in his career.
Many startups make the mistake of thinking investors need as much information crammed into a short pitch as possible to get a good idea of the product. Filling up every square inch or a powerpoint slide is, at best, confusing. In fact, it’s one of the things that puts them off most, according to Mandato.
Set specific time allotments to every part of your pitch and stick to them. Don’t let your presentation take up more than 20-24 slides. A lot of time is wasted on introducing the team, and allowing each to speak about themselves, so make sure you don’t get lost in too much detail.
One of the first steps you need to take when developing a new product is ensuring a there is protection for your intellectual property in the form of a patent or at the least a patent application for your idea. Although a costly investment for early-stage startups, a patent application shows the investors that you are taking steps to own the idea and that it is safe for them to invest in it.
Make sure you can prove to your investors you have a granted patent, or at least an application filed, in your market of choice and that you have carried out due diligence to avoid potential litigation over IP infringement.
An investor’s main concern is how can we generate a substantial return on theinvestment (ROI) in this product or company. So one of the first things they will be looking at is your projected revenue and growth rate for the next five years, as well as your projected liquidation and exit options (whether via initial public offerings or buyouts). They won’t invest if your idea does not show a projected return of three to five time the initial sum they put in.
Don’t seek investment until you can demonstrate a compelling case for the investors. You need to show a good understanding of anticipated revenues, when they will begin, and what the projected five-year growth plan looks like.
Medtech VC firms today are very risk-averse and require some tangible evidence of early successes, like a secured patent, before agreeing to invest in your company . So don’t be surprised if they decide not to provide you even a seed or A round funding, which today, seems to be the most difficult to raise.
You have to consider the best back-up scenario, which should include money from pre-qualified angel investors or if are comfortable doing so, from friends and family.Look for institutional funds later in the innovation process.
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