THE FIVE THINGS NOT TO SAY TO AN INVESTOR

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THE FIVE THINGS NOT TO SAY TO AN INVESTOR

• The Capital Network of M.I.T. and Babson College

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• We have no competition. Every company has
  competition and it can come in many forms.
  Saying you dont have any shows that you are
  naïve and that you will be unprepared for
  competitive challenges. Focus instead on the
  value proposition of your product. Outline how
  it solves a customers point of pain or saves
  them significant money.

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2. This is an 80 billion market! Yes, the
total may be. Industries such as computer
software of health care are gigantic. But your
company will be addressing a much smaller
subsegment of the total market. This speaks to
focus you need to target the most appropriate
and much narrower segment of the overall market
and define it as such.
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3. Even if we get just 1 percent of the market,
well be an X-million company. investors
invest in market leaders, not also-rans. And who
will have the other 99 percent of the market?
Build your revenue model from the bottom up by
realistic assessments based on your customer
acquisition, not by assuming youll get a small
and insignificant share of the total market.
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4. Yeah, but Push-back and defensiveness
toward an investors question is a sure way to
find yourself in perpetual bootstrapping mode.
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5. We have talked with General Electric, Cisco,
and General Motors, and they are all interested
in using our product. unless you have letters
of intent or memorandums of understanding from
companies of this stature, you instantly diminish
your credibility by making such boastful claims.
And you have waived a warning flag of an
unintended sort. Companies this large usually
take a long time to make decisions about buying
new products. A sophisticated investor will read
into client names of this magnitude as having
very long sales cycles.