Startup pitches are often brimming with buzzwords:
- "We're revolutionizing HCM with Big Data and Machine Learning!"
- "We have a team of NLP ninjas and Ruby rockstars!"
- "We're already at $1mm ARR!"
Trying to get people excited about your startup is good, but hype and buzzwords can backfire if they're misleading. As an engineer turned VC, I see a lot of pitches whose audience is typically business folks, and where technical buzzword usage is liberal and sometimes manipulative.**
Here's a typical conversation:
Founder: "Our elite engineers are building cutting edge machine learning algorithms to predict stock market prices."
Me: "Can you elaborate on machine learning a little bit?"
Founder (who is used to talking with investors coming from a business/finance background): "I mean, you know… Machine Learning, man. It's like all the rage these days."
Me: "Yes, I know. I'm an engineer. Please tell me about one or two of the heuristics that you use."
Founder: "Oh. Well, actually, we use some 3rd party software that does the machine learning stuff for us, so I'm not sure what that's doing under the hood."
So much for building cutting edge algorithms. At this point in the conversation, I make a mental note to pass on the investment. There's nothing wrong with using 3rd party software to do some of the heavy lifting, but there's a big problem with trying to mislead investors. As a VC, I immediately assume I'm looking at an iceberg. That is, if I've uncovered a few false statements, then there are likely many more beneath the surface. Even if the rest of the pitch is good, it's too hard to build a strong founder-investor relationship when there's no trust.
If you're pitching investors, please remember that while it's fine to reference hot trends and buzzwords in your pitch, make sure you do so honestly. Don't claim to do things that you don't do. Hiding behind trendy terms is risky because: 1) eventually you encounter someone who can see that you're misrepresenting yourself and 2) that person, when asked, will share their findings with other investors.
** To be clear, this is not a knock against non-technical VCs. Someone like me is as prone to being misled by business or financial claims as they are to being misled by technical claims.