Reid Hoffman, co-founder of LinkedIn, and who some have called, arguably the most successful angel investor in the past decade, wrote and posted a presentation on Slideshare, identifying what he calls the 7 Myths of Startup Financing. I found this presentation fascinating since it is presented by someone successful on both sides, that of and entrepreneur looking for financing and on the other side as an investor looking for an opportunity for a super return on his investment. Mr. Hoffman’s presentation was taken from his blog post “What I Wish I Knew Before Pitching LinkedIn to VCs”, at reidhoffman.org. Here are his 7 Myths of Startup Financing without edit or comment.
MYTH: The startup financing process is about one thing — money.
TRUTH: A successful financing process results in a partnership that delivers benefits beyond just money.
MYTH: If your team is strong, show the team slide early in your pitch.
TRUTH: Open your pitch with the investment thesis.
MYTH: All investment pitches have the same structure.
TRUTH: Decide whether your pitch is a data pitch or a concept pitch.
MYTH: Avoid bringing up anything that might paint your business as risky and decrease investors’ confidence.
TRUTH: Identify and steer into your risk factors.
MYTH: Arguing that you have no prospective competitors is a strength.
TRUTH: Acknowledge all types of competition and express your competitive advantage.
MYTH: Don’t compare yourself to other companies because you think you’re unique.
TRUTH: Pitch by analogy.
MYTH: Focus on today’s pitch. The future will take care of itself.
TRUTH: Think also about the round after the one you’re currently raising.
Keep these myths and the real truth in mind as you prepare your presentation decks after going through the Success Formulas process.