Management Perspectives

It is once again time for that ‘deep dip’ on that crazy startup roller-coaster. It seems to be a blend of ‘2001 meets 2008’ with a pinch of ‘March 2020’ in the early lockdown days thrown in. Every day, markets are fluctuating, big companies are firing, crypto companies are under fire, new AI tools are being released, crushing the spirit and the business of startups, and it feels like reality has gone virtual. One thing is certain though, the way you tell the story of your startup matters now more than ever. Here are a few myths about the fundraising process, and how you can actually overcome them and write a winning pitch deck.

MYTH 1: DATA AND METRICS ARE THE ONLY THINGS INVESTORS CARE ABOUT.

There’s no doubt that your numbers count a lot; but numbers are not enough. When you tell a story to investors, you need to engage them, show them that you understand your audience deeply, you feel their pain, you know what they are using now to ease that pain, why it is not enough, and why your solution is truly needed. If you can do that, it proves that you understand your market and that there is a real problem that still needs solving.

I am not saying that you do not have to have numbers at all. As a matter of fact, numbers can make them believers and they will be scrutinising your numbers—past, current, and projected. But if you write a compelling story about why you started your startup, why there is an acute need for your solution, why it is different, and what will you do that others did not, it can increase your chances manifold.

MYTH 2: STORYTELLING AND CREATIVITY HAVE NO PLACE IN THE BUSINESS WORLD.

When we start off as young kids, we have endless creativity. We play, we paint, we make up games, we live in a world of pure imagination. Then we go to school, college, business school, and our creativity juice spigot is shut down in place of large, seemingly impressive words and structured writing. It is time to get back to that primal source of creativity that is very much still alive, albeit a bit obscured by chalk, markers and button-down shirts.

What this means is that, if anything, storytelling and creativity have a much more important place in the world right now. With ChatGPT and other AI tools that can help us make things more efficient, what will set you apart is creativity, empathy, and the ability to see beyond just the writing box. If you can show your innovation, your areas of genius, and your unique creativity within your story, and also what makes your startup shine and stand out from everyone else, it is a great indication to investors that you will be able to use that creativity and gumption to create lasting differentiation.

MYTH 3: INVESTORS ARE ONLY INTERESTED IN WHAT YOU ARE DOING ‘RIGHT NOW’, NOT HOW YOU GOT THERE.

Investors do not need to know every single hairy step that got you to where you are right now. However, showing them your journey can showcase a lot about who you are. Share what gave you this idea in your ‘Founder Story’. Talk about what compelled you to take this crazy journey and leave the comfort of a nine to five job with an actual salary that was ensured each month. What did you try along the way that worked or did not work? Why did you decide to create the product that you are working on now? These things can be woven in throughout your pitch deck, but they do not have to be what you start the story with. Because usually it is more important to show them the state of ‘now’. Yet peppering in these anecdotes and showing your pivot points can show that you've had a thought out and intentional journey up until now and that you knew how to watch for signals and pivot when the time was right.

MYTH 4: IF YOU HAVE A GOOD PRODUCT, NOTHING ELSE MATTERS.

Stewart Butterfield, the CEO of Slack, said in an interview with Reid Hoffman: “If there was one piece of advice I wish I could phone back and give to my (younger) self, it would be- concentrate on that storytelling part, on the ‘convincing people’ part. Because if you cannot do that, then it doesn’t matter how good the product is.” This is from a startup CEO and founder who is known for creating amazing products that are used by hundreds of millions of people around the world every second. If he realises that just having a good product is not enough, then we better get a jump on our story!

A great product sitting on a shelf for a server is really not that great. In order to get your product out there, you have to be able to tell a stellar story about what truly sets it apart from others, why it is needed, how it works, who it is geared for, and how it will truly transform a market. If you cannot do that, it really doesn't matter how great your product is.

MYTH 5: RAISING CAPITAL IS THE END GOAL OF EVERY START-UP.

When I see announcements about startups that have raised big rounds or even those that have been acquired, sometimes for a very paltry few million dollars that don’t even amount to what they raised in capital, it makes me very sad. Often times, founders are so gung-ho about raising their round that they lose sight of the fact that funding is just the fuel that you need to drive your vehicle forward and attain significant growth and scale. It is a means to an end, not the end itself. Granted, raising a big round is a cause for celebration and an indication that you are on your way and that investors have faith in you and were actually able to see into the future and hedge their bets on you. The question is, do you really have what it takes to take that money and grow a product to a multi-billion-dollar market? Investors are looking for big returns; 10X. They have a commitment to their investors, and they must be able to show that your company has the potential to give them those returns. They are looking for the lasting differentiation that will give you the long haul success. In an era where everything is so tenuous and changes are happening every day, you want to make sure that you are showing them that you are in it to win in the long run; raising funding is a great way to get there, but not the destination.

So make sure your stories stick.