What You Should Never Say To An Investor

What You Should Never Say to an Investor

Brett J. Fox shares ten communication mistakes that can undermine investor confidence. His central advice: know your business and numbers, prepare thoroughly, and protect your credibility.

Investor-Pitch Playbook

1. Don’t call your startup “the next Uber,” Google, or Facebook. Comparisons can suggest that you don’t have a clear understanding of your own business. Explain your company’s unique value proposition and why it can succeed on its own merits.

2. Don’t claim you need only 1% of a large market. Pairing a broad market-size claim with an arbitrary market-share assumption can make your strategy seem unfocused. Niche down: define the specific market you serve, then show how your product, marketing, and sales plans can capture a meaningful share of it.

3. Don’t lead with an exit strategy, especially at an early stage. Investors already understand possible exit paths. Focus on building a strong company. If asked, Fox recommends saying: “I’m focused on building a great company. The exit will take care of itself.”

4. Don’t say you have no competition. Investors expect every startup to face competition—including existing ways customers solve the problem. Know the competitive landscape and explain how your company differs.

5. Don’t label financial estimates “conservative.” Investors know startup forecasts are uncertain and may discount projections they view as overly optimistic. Present estimates that are realistic but ambitious, and be ready to explain their assumptions.

6. Don’t be unable to estimate the path to cash-flow positive. Make your best estimates for:

   • Revenue break-even
   • When the company will become cash-flow positive
   • How much funding it will take to get there

Forecasts will be imperfect, but the goal is to show that you understand and have planned for the financial path.

1. Don’t require investors to sign an NDA. Fox says investors generally avoid signing NDAs because of the legal risks. He recounts a second-meeting diligence session in which his co-founder requested one. The investor refused, and the meeting nearly ended before the co-founder agreed to proceed. Fox’s advice is to treat disclosure as part of fundraising and not let an NDA request derail the process.

2. Don’t present “build it and they will come” as your marketing plan. Investors expect a concrete customer-acquisition plan. Explain how customers will discover, evaluate, and buy the product rather than assuming demand will appear automatically.

3. Don’t tell jokes unless you’re confident they’ll land. Fox describes jokes falling flat in investor meetings, interrupting momentum and creating awkwardness. When in doubt, skip the joke. Prepare and rehearse with co-founders before presenting.

4. Never say anything that isn’t true. False claims can permanently damage credibility. If you don’t know an answer, say so and commit to following up. Then respond promptly, ideally later that day.

Metrics and Planning Points

No company performance figures, fundraising targets, or growth KPIs are provided. The financial planning measures Fox says founders should know are revenue break-even, timing to cash-flow positive, and the funding required to reach cash-flow positive.

Fox also mentions his experience raising more than $100 million and helping entrepreneurs raise rounds ranging from $50,000 to $150 million.

Speakers and Sources

• Brett J. Fox — Presenter; shares anecdotes from his fundraising and startup experience.
• Fox recounts remarks attributed to Mary Cox, a board chair, about startups’ difficulty forecasting revenue. Other anecdotes involve Fox’s co-founder John and an investor named David.