MAIN MISTAKES MADE BY STARTUPS
1. Lack of preparation
A well-designed, clear presentation, pitch deck, website and, preferably, a working product / prototype / layout should always be part of every startup (regardless of its scale and ambition). A good level of English is definitely required. A surprising number of startups do not have a complete set, or they need to improve it significantly.
2. Weak presentation and pitch deck
It is important that these documents are well written. A good and understandable description of the product, target audience, market, competitors, financial indicators and forecasts, traction, development plan, and team members. In a pitch deck, the most important information about the product should be disclosed. If you intend to enter global markets or attract foreign investors, you should write all amounts in US dollars or euros. There was a case when a startup indicated income in Kazakhstani currency. The amount of 2 million tenge initially impressed the judges, but when converted into dollars, it turned into 5 thousand US dollars. Imagine people’s reactions.
3. Bad English
If you are entering other markets, attracting investments or partners, then good English is a MUST HAVE. If you don’t speak English, be sure to involve team members who know the language. There is no shame in admitting your mistake, finding an English speaker and coming back later with the answers.
4. Lack of Presentation Skills
Startups often overlook the importance of presentation content and presentation style, which is why they lose points in competitions and with investors. This happens all the time. An effective 3-minute and 30-second pitch helps startups explain what they do and communicate their value.
5. One information for everyone
It is common for startups to prepare one piece of information for investors, partners, customers, and the media. Despite the fact that each of these groups needs to convey a different message.
It may not be important to your client what is important to an investor.
Preparation of stakeholder information should take one day. Your life will be much easier as a result.
6. Poorly Known Market and Competitors
Especially when meeting with investors, this is one of the most common mistakes. The size of the market is often overestimated by startups or they don’t fully understand their own market. As a result, investors have many questions and doubts. Analyzing competitors is the same. The presentation must be carefully analyzed and real numbers should be presented.
7. The amount of investment “from the ceiling”
It is common for startups, especially in the early stages, to overestimate the amount of investment they will need. However, they have a hard time explaining what these investments will be used for, how much startups cost, and what share they will give in return. Experienced investors are always scared off by this.
8. Misunderstanding your client
It is often the case that early startups do not understand the problems of their customers or select the wrong target audience. This means: the product is good, the technology is good, and the team is good, but there isn’t much interest. Consider this, but have you chosen the right target audience? Sometimes, however, the problem lies in the wrong monetization model.
9. Poorly calculated financial model
The process of calculating a business model is not easy, but it is essential. This is especially true if a startup is planning to conduct an assessment after receiving investments. Additionally, in today’s reality, we recognize the importance of calculating the burn rate (the rate at which the company loses money) and monthly operating expenses (monthly operating expenses).
It can take months to attract investments, especially in our current economic climate.
Consequently, investors need to know how much a startup spends each month and for how long it has already been funded.
10. Low activity
This is more of a characteristic of specific teams than a mistake. In spite of this, we see that proactive startups achieve much better results than passive ones, year after year. An active person will always write first, establish contacts in every way possible, communicate, apply, search for information, etc. Active – they take fewer actions, believing their idea is already cool enough. Passive – they do not take action, believing that their idea is already cool enough.
11. A prototype has not been developed, a product has not been developed
A It is common for hardware- and sometimes software-startups to underestimate the cost, timing, and team needed to develop a prototype or product at the prototyping stage. The medtech startup we discussed planned to launch within a few months with a good idea. Tests, certifications, and production questions were not satisfactorily answered. In contrast, a drone startup made it to the finals of the prestigious CHALLENGE. In addition to knowing all the changes in the European legislation regarding drones, they also planned the production accordingly.
12. Fear of online and inability to behave in it
There was fear on everyone’s mind when it came to going online: startups, investors, corporations, and even us. In March, it was unclear how work would change and how people would interact. The rise has begun since April, when everyone adapted to the new format. All work with startups (from acquaintance to investment) was conducted online. All of us have become accustomed to meeting and pitching over Zoom, Google Meet, and Hangouts.
New “failures” emerged as startups failed to adapt to this format. We will highlight some of the most unexpected cases from our experience: a pitch from a car while driving (we moved the time), a pitch from the bathroom (thankfully in clothes) and a pitch from the bed (the speaker was raised, but did not wake up). As a result, here is some general advice for startups:
The Internet channel must be stable, reliable, and fast;
To avoid “overlays” of the sound of the speakers, it is better to use headphones; test sites in advance (see how to open a presentation, turn on the camera, and check the sound).
Good natural light is an optional but nice bonus.
What has changed since the pandemic? View from other sides
It comes from investors. Investing in portfolio startups helped most investors weather the pandemic in its early stages. By summer, almost everyone had adjusted to the new reality and started investing in new projects. Investors are now paying closer attention to startup forecasts and development plans, as well as how they can adapt to change. Investors, however, are trying to distinguish between short-term trends (hype) and startups that will grow after the pandemic.
What’s next?
There has been a lot of interest raised by the pandemic. In one sense, the borders were closed and offline usage was heavily reduced. As a result, everyone switched to online pretty quickly, which made the borders disappear entirely! For the first time in history, people from all over the world had equal opportunities. As a result, you can now attract investments from all over the world, pitch funds previously inaccessible because of their remoteness, go through acceleration and incubation programs, compete in startup competitions in various countries, etc. Rather than the conditional “country,” the idea, sober calculations, and rational implementation will win. This freedom, still new and unaccustomed, is used by more and more people. As the conference organizers, we would have been unable to attract participants for several more years if we had remained offline. This has been accomplished online.
We We expect that next year there will be many startups related to big data and artificial intelligence, but also medtech, longevity, mental health, and everything related to physical and mental health. It won’t be easy, of course. The economic crisis and the second wave of the pandemic make it difficult to plan anything. It was in times of crisis, however, that truly groundbreaking projects and companies emerged.