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Lies Entrepreneurs Tell While Raising Capital

Pitching to raise capital involves walking a difficult tight-rope between being too humble and small and being bombastic in attempt to seem bigger than you are.  Difficult, because there are a few common techniques used by CEOs to portray success that walk along the edge of dishonesty.

Here are five common examples of credibility-sapping statements made by foolish founders.

  1. My Customers – I remember a CEO who, during his pitch, kept referring to his customer-base of over 100,000 customers. Sorry folks, but a pre-revenue company doesn’t have customers. Customers pay money. Companies with customers are post-revenue. Pre-revenue companies have users. Users try out a company’s product without paying.
  2. My Team – Constantly referring to “my Team” and “we” when the company is a “team” and a “we” of one.
  3. To Tell The Truth – Never ever ever say “to tell the truth” while pitching for money, proposing marriage, or telling the truth.  Be honest, forthright, and believable, and you won’t need to utter the term that infers anything said prior was less than the truth.
  4. We Don’t Have Any Competitors – The most totally disruptive inventions of all time had competitors. The wheel competed against walking, riding horses, and the Native American travois. Radio competed with theatre, television with radio. If you don’t have any competitors, you’re either a liar or stupid.  Investors don’t invest in liars, stupid people, or stupid liars.
  5. Our Products Sell Themselves – “We’re going to go viral” or “Tech Cocktail will write an article about us and we’ll instantly capture 5% of the market thanks to the exposure.”  Products that sell themselves are like companies that fund themselves.  Selling takes knocking on real doors or having a solid plan and understanding the costs, motivations, and methods of customer acquisition. If you think your product is so good that it will sell itself, send if off to raise money for you too!
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About the Author

Glen Hellman (@glehel), is an angel investor, serial entrepreneur, and works for venture capitalists as a turn-around specialist. He is the Chief Entrepreneureator at Driven Forward LLC, frequently muses on his blog, Forward Thinking, and works with entrepreneurs to help them figure out what to do and get them to do it.

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