Feb 23, 2021
Keane Angle
Louise Saludo

The Top 10 Things Fundraising Founders Shouldn't Do According to 31 Investors.

There is also so much to learn from others' mistakes. So, we conducted another short study to learn about the common mistakes that founders make.

With startups and pitch decks, founders don’t know what they don’t know.

The fundraising process isn’t straightforward and if teams never made a pitch deck before, raising funds can be stressful.

Like with any new skill, the critical first step is learning what not to do. This means learning from the mistakes that others have made to avoid them.

However, investors, consultants, and founders all have very different opinions on what’s right and what’s…less right in the world of pitch decks.

It’s kind of like making the perfect pizza: it comes in many forms and they all have lots of variance in terms of quality, ingredients, and prep. But at the end of the day, it’s all pizza. Being that we at STORY love pizza, we can tell that some pizzas are exquisite, and others aren’t.

The same goes for pitch decks.

Enterprise investor, Nethanel Sztrum, claims that only 1 out of 100 companies succeed in fundraising.

Startup finance expert and DunRobin Ventures founder, Bharat Anant confirms this. According to him, the average founder faces an 86% failure rate in the Seed round alone.

So, thinking about the basics - what big mistakes should founders watch out for?

One would think that a quick Google search is an easy remedy . However, as one goes down the rabbit hole of endless search results, founders will soon discover a universal fact: investors all have different opinions.

Some recommend that founders reach out to only a few investors, others think they should send out as many decks as they can.

Some believe a little ego goes a long way, others want founders to leave the ‘tude at the door.

At STORY, we like data. And we like basing our opinions on it.

So, we gathered a whole bunch of opinions, analyzed them, and gleaned a data-driven understanding of which mistakes that founders should avoid, according to investors.

STORY’s analysis of 31 investor opinions

We conducted a targeted search for top fundraising mistakes, and as expected, we were met with hundreds of SEO-fueled articles from investors, consultants, and founders.

We found resources such as blog posts, podcasts, webinars, and interviews dating mostly from 2014 to 2020. We only kept resources from verified investors and tossed out the rest. Buh-bye random PowerPoint template blog post.

From hundreds of search results, we ended up with 24 unique pieces of content that featured the opinions of 31 investors.

Following this, we closely analyzed these resources and tallied a total of 171 mistakes. That’s right, 171. Lots of mistakes.

Fun fact: in doing this research, we accidentally also shed light upon the disparity of opinions about pitch decks - and how there’s almost no clear alignment from investors on what these ‘big mistakes’ are. Out of those 171 mistakes mentioned by the 31 investors, we found 125 unique mistakes that didn’t immediately overlap with others.

This means that only 26% of investors had overlapping opinions on what these top mistake actually are.


This was also too broad.

Next up: we reworked our analysis a bit to find some more common ground.

So, we classified each mistake into 13 categories and tallied them up

This article highlights the top five most common fundraising mistakes that founders make according to investors.

Quick side note: some investors cited only one major mistake while others mentioned up to 16…not exactly an even distribution. To even it out, we did some imperfect math so that a single investor that mentioned multiple mistakes falling into one category were only counted once. Thus, one investor that cited eight different design mistakes was counted as only one mention of a design mistake.

Enough math!

Here are the top 5 mistakes that 31 investors think founders make when fund raising (plus a few extra):

  1. No investor outreach strategy
  2. Not knowing what a pitch deck needs
  3. Attitude and behavioral issues
  4. Inaccurate or far-fetched claims
  5. Business model issues

Honorable mentions:

  1. Lack of a clear company vision
  2. Lack of education or knowledge on deal terms
  3. Miscommunication with investors
  4. Leaving out a critical, standard slide
  5. Poor presentation skills
  6. Too long of a pitch deck
  7. Pitch deck design issues
  8. Pitch deck file or access issues

Onto the breakdown.

#1 [58%] No investor outreach strategy

To raise funds, investors mostly all agree that startups need to reach out to the right investors – not just investors in general.

This means targeting investors who fund businesses of the same stage and industry.

Enter: investor outreach strategy.

According to investors, it’s detrimental to attempt fundraising without a clear strategy to contact, outreach, follow up and nurture relationships with investors. Founders wouldn’t launch a product without a strategy, so why would finding the right investors be any different?

This mistake category garnered 58% of mentions, thus becoming the top agreed-upon mistake according to more than half of investors. Investors state that founders often reach out to parties who don’t share the same goals and values as they do. As a result, everyone ends up wasting each other’s time.

In a short mini series about fundraising lessons, NFX General Partner, James Currier, claims that the large volume of responsibilities a VC has wears them down. He claims that understanding VC psychology is key to pitching more effectively.

Here are some examples of fundraising mistakes under this category

  • Not reaching out to enough investors
  • Reaching out to few investors (yup!)
  • Treating fundraising as a side job
  • Making fundraising a trial and error process
  • Pitching out of order (Series-A first and then Seed Round next)
“Beyond that, you need to target investors who fund businesses of your stage, industry, business model, and return profile–otherwise you’re wasting everyone’s time. So if you’re a SaaS seed-stage company, don’t go pitching a consumer-focused Series B investor.” - Clara Brenner Founder & Investor at Urban Innovation Fund.

The bottom line? Founders shouldn’t fundraise haphazardly. Like everything else, it’s best to have a plan.

#2 [39%] Not knowing what a pitch deck needs

The second most mentioned fundraising mistake among investors is not knowing what’s expected from a good pitch deck.

Under this category, investors mention pitch deck-related mistakes from format to content. According to investors, a lack of research and knowledge of pitch decks can hurt a startup’s chances of getting funded.

Here are a few mistakes that investors mentioned in this category:

  1. Lack of knowledge on key metrics
  2. Creating a complicated narrative
  3. Making non-descriptive slides
  4. Using pitch deck templates (one investor said not to use templates)
  5. Declaring goals or metrics before introducing the product or service
  6. Confusing VC pitches with sales pitches
  7. Failing to show tangible proof that a market exists for the product or idea

This category garnered 39% of mentions from investors. The data suggests that many startups fail to meet the minimum level of expectations, thus investors move on before even giving the startup a shot at a meeting.

Ben Lim, an Investor and Partner at NEXEA, believes pitch decks should be prepared with investors in mind.

‘As an investor, I go through multiple stacks of investor decks, information memorandums, and documents every day. Remember that investors have received tons of pitches and they have short attention spans.’

Additionally, Bryan Landers of Backstage Capital urges founders to be descriptive and straight to the point.

‘Be specific. Be obvious. Don’t do: “The next big thing in music creation.” Do: “Make music with the help of an Artificial Intelligence.” Or even: “A consumer music creation app with AI assistance.”’

#3 [32%] Attitude and behavioral issues

It’s hard to work with someone with a bad attitude. The same thing goes for investor-founder relations.

Attitude and behavioral issues were the third most mentioned fundraising mistake. Investors in our research cited many instances of founders being too arrogant and even too eager.

Investors believe that the attitude of founders and teams greatly reflect their mindset, therefore making it a huge determining factor when deciding on which startups to back.

It’s a common practice for investors to ask questions and make suggestions during the pitching process. However, some founders often become too defensive or antagonistic which comes off as disrespectful and arrogant.

On the flip side, investors recount experiences with founders who are too eager to please them. During these instances, founders become easily swayed by investor suggestions despite the uncertainty of the pitch outcome.

This leads us to believe that investors prefer a certain level of confidence that doesn’t bleed into the realm of arrogance – treading a fine line is a good thing.

Another common mistake, according to investors, is taking rejection too seriously. Investors believe that being discouraged by negative comments or outcomes can lead to failure.

Here are a couple of examples from this category:

  1. Being rude
  2. Trying to sweet-talk  in negotiating valuation terms
  3. Being too eager to please
  4. Lacking conviction
  5. Being too dogmatic about the business model
  6. Coming off as egotistic

This category comes in third with 32% of investors having mentioned this. The data reflects that investors believe the right attitude and mindset can lead founders and teams to success.

Open AI Investor, Sam Altman believes that founders shouldn’t suck up to investors.

‘If you don’t seem to have any strong feelings or conviction, and you agree with every suggestion the investor makes about your business, you'll risk coming across as lacking a clear vision. You should always listen to what someone smart has to say, but you should be firm on the things you really believe.’

Investor and Entrepreneur, Charu Sharma, advises founders to never be discouraged.

'You certainly want to keep learning from market signals and customer feedback. What I specifically mean is that most investors won't get what you're doing, so don't let them discourage you.’

#4 [29%] Inaccurate or far-fetched claims

The foundation of a healthy working relationship is trust. This is why investors often refuse to back founders who make inaccurate and even far-fetched claims.

Investors cited experiences with founders who were more inclined to say what they thought the investors wanted to hear instead of telling them the truth. It’s surprisingly common among founders to inflate forecasts, market sizes, and more.

According to investors, founders who make false claims to appease investors set themselves up for failure. As transparency issues arise down the road, founders might find it difficult to seek funding from other investors as a result.

Examples from this category include:

  1. Showing unrealistic financial projections
  2. Stating that the start up doesn’t have competition
  3. Making things up about the business
  4. Inflating the data or market opportunity
  5. Over-inflating the company’s valuation

This category ranks fourth with 29% of investors having mentioned it.

Michael Garbe, General Partner at Ripple Ventures claims that:

'When founders come in and have an unrealistic valuation in mind, it often leads to a larger amount of dilution than they originally expected, which starts the relationship off on a bad note.’

Logan Burchett, Investment Analyst at Venture First believes over-inflating your forecasts is never a good idea.

'Many founders have a tendency to generate overly optimistic revenue forecasts, even for internal cash planning. However, when you inevitably fall short of your revenue forecast, you ultimately fall short on cash. This not only jeopardizes the existence of your startup, but also leaves investors disappointed and dubious about the competency of your team.’

#5 [26%] Business model issues

The fifth category in our research, simply put, is the absence of a scalable business model.

According to investors, as much as they want to say yes, sometimes the business model isn’t as promising as hoped.

At the end of the day, both parties are still in the money making business and commercialization is crucial for investors.

A few examples under this category are:

  1. Putting little thought into commercialization
  2. Lack of a scalable business model
  3. Scaling a business idea prematurely
  4. Being a niche product and mistaking this as a competitive advantage

Want to know how to create a killer business model slide? Read our report here.

Investor Dave Hersh quotes Startup Genome Project’s report that shows 74% of high growth internet startups fail due to premature scaling. He adds, ‘You should not force a company to be bigger than it should be just because you want it to be.’

Kera Demars, HustleFund’s Head of Marketing, gives insights on why the scalability of a startup’s business model is crucial:

‘Investing is a risky business. Roughly 9/10 startups won't succeed. Generally speaking, investors are looking for that one big winner to provide a 100x return. So, in order to keep the business running – and to invest in more companies – VCs aren’t just looking for businesses that can survive. They’re looking for the next Instagram.’

Michael Garbe of Ripple Ventures claims that:

‘We see this a lot from technical founders looking for venture capital funding. They come up with a great technical solution to a problem, however, they really haven’t given any thought as to how the product will be sold. Most founders fall in love with their products, and so they should. However, if they are going through life with blinders on, they forget that it isn’t the solution they should be in love with, it is the problem.’

Honorable Mentions

As investor opinions are polarized, our study grouped 171 investor opinions into 13 categories. We won’t be going into much detail about the eight remaining categories to avoid crowding this already lengthy article.

Here are the remaining eight categories:

#6 [ 23%] Lack of a clear company vision

According to investors, founders are notorious for using vague copy and terminology to sound professional and fancy. Their advice? Ditch the bells and whistles and be concise.  

#7 [ 23%] Lack of education or knowledge on deal terms

Investors don’t like surprises during due diligence. According to them, founders need to deliver the results they promised.

#8 [23%] Miscommunication with investors

Just because investors made a few business model suggestions doesn’t mean it’s a yes. Investors believe that founders need to be clear when communicating to save time and effort for both parties.

#9 [19%] Leaving out a critical, standard slide

Investors believe that to get their attention, founders need to nail the basics. This means delivering the content and format that investors expect.

#10 [16%] Poor presentation skills

Investors state that if founders are passionate about their business, they won’t know it until they see it. VCs believe good presentation skills are crucial during the fundraising process. Investors need founders to be articulate and concise when pitching.

#11 [ 16%] Too long of a pitch deck

Nobody wants to sit in a 2-hour meeting. The same goes for investors. According to them, founders need to make every slide count. Don’t say something in three slides when it could be done in one.

#12 [ 10%] Pitch deck design issues

A pitch deck represents the startup and its story. Investors claim that having an unprofessional look and feel is off-putting. So, take the time (or spend some money), and make it look great.

#13 [10%] Pitch deck file or access issues

Founders should make accessing pitch deck files easy for VCs, according to investors. This means optimizing the deck for mobile and desktop viewing (hint: don’t send a raw PowerPoint file, try sending a PDF).

First time founders should learn from the mistakes of others

As stressful as fundraising can be, founders simply cannot afford to make mistakes. Yes, the success of established founders can be inspiring, however, much can be learned from the mistakes of others.

Despite the polarity among investor opinions, our data reflects that there are three major areas where founders make mistakes during the pitching process:

  1. Investor relations
  2. Business communications
  3. Business structure

Under these three major areas are the top five mistake categories:

  1. No investor outreach strategy [58%]
  2. Not knowing what a pitch deck needs [39%]
  3. Attitude and behavioral issues [32%]
  4. Inaccurate or far-fetched claims [29%]
  5. Business model issues [36%]

The results of this quick research is clear: the right strategy, story, and mindset leads to success.

An effective storyteller knows who they’re telling their story to— thus, strategizing investor outreach should be a founder’s first step in fundraising. During this phase, founders should be able to answer questions such as:

  1. Which investors are likely interested in my product or service?
  2. What companies have these investors backed?
  3. How do I tell a narrative that’s interesting to these particular investors?

Moreover, founders need to know what constitutes a great pitch deck. There are two ways to approach this next step. Startups can either hire a proven consultant to help tell their story or they can try and do it on their own.

Going solo involves more work in terms of research, writing, editing, and learning new skills founders might not have. This means knowing the startup’s competition, market,  valuation, and such. More to that, founders need to write all the information they gathered in a compelling narrative that speaks to their target investors.

Lastly, go through the fundraising process with the right attitude and mindset. Yes, fundraising requires a lot of time, effort, and work. Apart from this, imminent rejection can put startups down. The right attitude and mindset sets successful founders apart from those that failed.

Remember, there’s more to pitching than making pretty slides.

Finally, our data reflects that story and content is more important to investors than pitch deck design as design issues ranked second to last out of 13 fundraising mistake categories.

However, good pitch deck design is table stakes - startups need it well designed to stand out and look professional. A great pitch deck is meant to tell a compelling and complete story as to why a business is worth the investment. Design is a part of that, but the STORY being told is so much more than pretty and slick-looking slides. That's why we're called STORY and that's where we can help.

This quick research has been useful for us, we hope startup founders feel the same way.  

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