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HomeStartup4 pink flags for VCs when reviewing pitches from deep tech startups

4 pink flags for VCs when reviewing pitches from deep tech startups


Welcome to our new column by Primary Sequence Ventures accomplice Phil Morle.

Each fortnight Morle will share his knowledge and insights with Startup Each day readers and likewise focus on it on the Startup Each day present. 

His first column is a part of the Enterprise Capital Primer for Scientists sequence, based mostly on a whole bunch of workshops he’s given throughout his time as a deep tech VC. 

On this essay, we’re imagining a pitch from an early stage deep tech firm, in all probability nonetheless working inside a college.

An investor pink flag may not be apparent to a founder.

Why would it not? They construct up over years as indicators of weak point and they’re greatest prevented. Realizing what they’re makes it potential to keep away from them.

This isn’t about the right way to construct a powerful pitch. Extra about avoiding an unintentional weak pitch.

#1: After an hour, we don’t perceive what you might be constructing

It’s too frequent that we depart a pitch with out actually understanding what an organization is constructing. That is normally brought on by mis-targeted language or by a poorly balanced construction to the story. Crimson flags embrace:

  • Scientific phrases with out a proof for what they imply. Think about you might be explaining the idea to a college classroom and you’ll in all probability keep away from this. I’ve by no means felt patronised in a pitch so don’t fear about that.
  • 45 minutes of ‘Drawback Slides’. It’s all the time good to have the issue speculation someplace close to the entrance however it may be achieved shortly.
  • It feels too theoretical. Present a demo. It’s all the time one of the best ways to deliver one thing to life.

#2: You don’t show urgency

The speed that an organization leaps in the direction of impression is a powerful indicator of future success. Firms which don’t show urgency can wave a pink flag together with:

  • Not framing velocity. That is usually a framing drawback as a result of an investor might not know what ‘regular’ seems to be like. Present the vital streams of labor in your organization towards some regular vary to show that you’re leaping quicker.
  • Not doing what you stated you’ll do. We meet founders and inventors many occasions earlier than we lastly make investments. We all the time make an observation of what they are saying they’re going to do subsequent and normally have a dialogue about what feels vital. Getting these issues achieved earlier than the subsequent assembly is highly effective.

#3: You’re asking for analysis funding

Scientists are very skilled at making use of for grant funding to pursue their analysis and generally we’re mistaken for a kind of funds. VCs are your accomplice to construct an organization.

We do fund analysis however within the context of an organization that has accomplished its primary analysis adequate to begin commercialising. Crimson flags embrace:

  • Pitch is all concerning the science. We have to know your concepts for a corporation you need to construct. We additionally should be satisfied that the science stream is full sufficient to begin working with prospects to construct. firm.
  • IP is broad and shallow. In analysis, it is not uncommon to indicate {that a} platform innovation works throughout a number of contexts. For instance, if creating a way to develop extra oils into the biomass of a plant, it is not uncommon to indicate this working throughout a number of crops species and rising areas. The issue is, all of them are years away from commercialising. Higher to go deep with one and present the traits I described in #2.

#4: Somebody apart from you is representing your organization

VCs need to meet you. As a result of our work collectively begins at such an early stage, you’re the solely a part of the corporate that exists at the moment and can play a vital position within the years to return. It’s common to have paid consultants or members of a college tech switch workplace representing an educational crew. It is a pink flag for many VCs I do know.

  • This put up first appeared on Phil Morle’s day by day weblog, the place he writes about what he’s studying in deep tech enterprise constructing. Learn extra right here. Comply with him on Twitter at @philmorle



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