People ask these questions often, especially in startup obsessed circles. Why don’t good startups get funded and why do bad ones? It seems there is finally an answer. I recently came across this piece from iBusiness Angel on Twitter (Hat tip: Brett Commaille).
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The piece looks at why good startups don’t get funded and bad ones do. It’s actually quite simply in the end — leadership. The piece argues that the quality of a pitch is highly dependent of the quality of the leadership team.
Defining leadership as “the level of influence that a person or a pitching team has. No more, no less”. It’s simple an it makes sense. When pitching to an investor it’s not just about the product or how great your pitch is. According to iBusiness Angel there are several elements that makeup the trifecta plus two of pitching to investors.
First, the ability to connect with investors and speak their language. Meeting investors on their level and making the appropriate promises gives investors some confidence that you would be able to connect with others.
Second, track record is a great thing especially a good one. However, it’s not necessarily about good or bad, just about having one. This says to investors that you are not wet behind the eyes also it helps them decide on their investment appropriately. Also a track record that shows good leadership is a bonus.
Third, relationships. Too often people forget the value of relationships when it comes to starting a business. Getting to know an audience before you pitch to them makes the process a great deal easier and puts you at an advantage.
Fourth, the team is far more important than the spreadsheet. “If the business plan takes a secondary place to the quality and energy of your team, then it will have found its rightful place,” says the iBusiness Angel advice. A good team will always understand how best to make the business model work.
Finally, your pitch quality shows the quality of your leadership. It’s that simple. If you pitch it right and present it properly they will invest? Apparently, it’s all about your team’s effectiveness.
You can read the full piece here on why good startups sometimes don’t get funded.
