The dangers of pitching if you are a startup… That’s the topic for today’s episode, where are we going to be digging into the concept of pitching.
What is it?
Do you need to do it?
Is it part of the accelerator that you’re taking part in? And if it is, is it a part that you really need to focus on or not?
I mean. Why should you do it? So let’s dig into that.
Before we do, for those of you new here, who don’t know who I am.
My name is Dan Holloway. I’m a business coach and a mentor. On a mission to help 1 million creative entrepreneurs to earn a stable, diverse income from doing what they love. So if that’s you, then you’ve come to the right place.
Now this is a topic that I know quite a bit about, because for the past, nearly a decade now I’ve been mentoring and coaching startup founders, from pretty much every vertical, in every market you can imagine.
And to give that some context and give that sort of some numbers, then here’s what I’ve been doing for the past nearly a decade.
I take part in mentorship programs for a number of startup accelerators across London, here in the UK. And a couple of communities internationally.
Now they run cohorts, i.e. groups of accelerators and training schemes. And investment bootcamps.
Each of those cohorts has usually between 10 to 30, give or take, businesses taking part in them.
Each of those businesses has anywhere from one to, in some cases three, four, even five co-founders as part of their team. And I take part in, it varies between two to five or six cohorts each every year, for nearly a decade.
So when you add up all of those numbers, when I say I have mentored and coached hundreds of startup founders, I genuinely mean hundreds.
Now, most of those accelerators and most of those startup bootcamps and investment bootcamps. They are essentially those that are aimed at getting and prepping those startup businesses to a point where they are investment ready.
Now I use that term very, very specifically. Because these accelerators and bootcamps, they are not necessarily funded via the startups themselves paying for that training.
They are funded by taking equity, share in many cases, of those businesses that actually seek investments, gain investment, grow and then exit. i.e. Sell for a profit.
So those accelerators will have a certain amount of percentage in those businesses. They will set them up to get investment. The investors invest. The business grows. The business sells. Everyone gets paid. And that percentage of that business goes back to the accelerator.
That value could be a small amount. It could be a very large amount, depending on what the exit value is of that business.
So it’s very much a hedging your bets kind of a game, right?
Now the danger however of pitching. If you’re a startup. Are these.
I have lost count of the amount of times I have spoken to startup founders and those startup founders. When you really talk to them about it in depth, they actually don’t want investors. They actually don’t want to give away parts of their business. They don’t want to have a relationship with various board members.
There’s an awful lot of things that they don’t want to do, but they are at the startup event because they feel like they need to learn what they don’t know.
But the problem with that is because they don’t know what they don’t know. They assume that the accelerator or the bootcamp is going to teach them.
And often that’s not the case.
Because, like I said, I have lost count of amount of times. I have spoken to founders of startup businesses. And when I really dig into it.
They’re not startups at all.
A startup by definition is one that is going to scale and it has high growth potential towards an exit process.
That’s basically what startups are.
But the amount of businesses and founders of organizations that I’ve spoken, to who are essentially small to medium enterprises, local businesses, or lifestyle businesses.
Businesses that could very, very, very easily bootstrap themselves, i.e. Organically pay for their own growth as they go. Slow and steady.
Those kinds of businesses don’t need investment.
Those kinds of businesses do not need to pitch for investment.
Those kinds of businesses do not need to be in an accelerator or a bootcamp, because all of that energy they spend. All of that time they exert with those programs…
Could have been spent much more effectively, much more efficiently, much more profitably, elsewhere.
By directly building an audience, nurturing an audience, prospecting for clients, selling their services and actually making money and doing what businesses do, which is doing business.
All the while they are sat learning stuff that they don’t frankly need to know. They are not growing their business and they will never grow their business.
And the biggest danger of all that I see time and time again, are those founders who honestly, are put off by the concept of business from what they learn and what they are exposed to within the pitching based environment.
Because it can be really hard!
There are organizations out there and I have mentored at a few of them.
Who feel like it is their responsibility to tear down a co-founder, in front of its founder, to see what they are like as a dynamic between each other.
I have seen mentors who will lay into, verbally and emotionally, a founding team of a business, trying, in their opinion.
Very unethically, I believe, and quite bullishly and bullyingly.
They feel like it’s their responsibility to tear them down to them, build them back up stronger.
But what ends up happening is that founding team looks at that experience and thinks, ” why do I want to be in business? If that’s what it’s like?!”. And they lose all motivation.
But that’s because they put themselves in an environment where they trusted that what they were going to be put through is the best thing for them. But in fact, it’s not!
So I realize I am ragging slightly on the, well, not even slightly. Probably quite a bit. On the pitching concept, but let’s see some of the positives.
Now we’ve talked about the dangerous and that’s just some of them.
But you can guess what the others would be. Because those are the big ones and others are fairly similar.
So, if you caught a previous episode of this podcast, where I talked about, if you waited too long to launch your business, you will miss your shot. One of the things I talked about in there was a kind of business type where actually you need investment.
So if you really dig into your business and you understand that it’s not a lifestyle business, it’s not a defensible market. You do need to grow quickly. You do need investment. You do need capital with which to grow. You cannot do it on your own. You cannot bootstrap.
Even to the point where even something like crowd funding is just too slow, for you as an opportunity for gaining capital, growing and scaling.
If none of those are going to work for you. Then pitching is the, by far the best approach for you to gain investment.
Because it will refine down your message, it will refine down your offer. It will refine down your ability to quickly gain and nurture trust with people who are essentially going to give you their money, for which you to then grow it and then give them a return.
There is a massive amount of trust in that relationship. But you need to pitch for it to get it.
Now, if that is you, then I strongly suggest that you look deep inside and you think:
“Do I really want to go through this?”.
“I am going to be in a very confrontational environment, a very high pressure environment, a very stressful environment”.
If that is going to dramatically destabilize my mental health. If it’s going to impact me emotionally, it was going to impact my relationships beyond that, which I’m comfortable and beyond that, which I am comfortable to repair in the short, medium or long term.
If that doesn’t seem like something you want to do, don’t go there, because pitching is the start.
You then have to grow. You have to scale. You have to manage your board. You have to manage investors. You have to manage the ups and the downs, the pros and the cons and the peaks and the waves. And then the pits of dispair.
What pitching is, is the start of a massively volatile, very stressful roller coaster. It’s fun if you’re the right kind of person, it’s hell if you’re not.
So whenever I speak to founders, especially early stage founders, one of the first things I do with them is really dig into, “is this, what you want, is this what you want to dig into? Is this what you would feel you are ready for? Do you think this is going to break you as a person, you, as a team, you as friends, you as partners?”.
Because if it is, it’s not worth it!
No amount of money is worth damaging yourself for, in my opinion.
I don’t buy into the hustle till you die approach to business.
I don’t believe in the eighteen hour days, bleed for your organization approach.
I don’t think that’s healthy. I don’t think it’s sensible.
Personally, I think it’s just damn right stupid.
Some people love it. I don’t.
But if you do love it, and if that is you. We’re not vibing. We’re not the kind of people for each other to work with.
I won’t work with you. You probably won’t work with me, and that’s okay. Everyone’s different.
Either side of that line you sit on, is either good for you or it’s not good for you. But at least go into that with your eyes wide open.
And if you’re not too sure, as I say on all of these episodes that I put out there into the world, if you want to talk to me by all means, you are more than welcome to book a call.
Head over to https://danholloway.live/call, links are in the description below, and we can talk.
If we’re a good fit to work together. Great. If we’re not, then I will point you in the direction of the next logical step that I believe would help.
This isn’t a sales call. It’s the discovery call. And that’s how I roll. If I can help you, I will. If I can’t help you, if we don’t vibe, then there’s no point.
But it’s a few minutes of our lives that we can establish a relationship. We can talk, we can connect minds. So what’s that going to hurt?
I hope that’s been of interest to you, and I hope that’s really helped you to understand what pitching is all about and whether it’s right for you or not.
Thanks for joining and I’ll catch you in the next episode.
Business Coach & Mentor
to Creative Entrepreneurs
Founder, The #DanKnows Vault