A pitch is not an easy situation for startups: Every sentence has to be perfect. One false word and you risk losing everything—at least that’s the fear of many founders. That worry is not entirely unrealistic, as a Twitter thread by Twitch co-founder Justin Kan shows. The investor describes three clear red flags: If he hears them in a pitch, investing in the startup is immediately off the table for him.
1. No murky numbers
The first no-go Kan mentions are key figures that can only go up. Values like the number of downloads of an app to date, a company’s turnover to date, or the number of total users logically cannot decrease. Once a download has been done, it can’t be undone. At the same time, these kinds of figures say nothing about the current success of a product and the development of user numbers, turnover or downloads. And they leave a bad taste in his mouth: Are the founders trying to fool the investors? Justin Kan writes:
“Impressive numbers are obviously important, but not at the cost of trust.
2. Outsourced product development
Justin Kan reports that quite often, “business/finance bros” pitch ideas to him for tech startups, even though they have no clue how the product is actually built. Not every founder has to be tech-savvy, but every founding team has to be able to at least build a prototype themselves. Kan says that a ‘third-party development shop’ is not a suitable replacement for getting a functioning product off the ground yourself.
3. No frills
With regard to “over-hyping and excessive name-dropping,” Kan advises against hiding behind trendy buzzwords. Cool but empty phrases come across like card tricks, meant only to distract him from the startup’s actual work. Instead, founders should name concrete figures and talk about their vision, their team and their product. Above all, however, they should show why they are passionate about their product.