(2024-05-20) Procopio Dear Startup Investors Its Not Us Its You

Joe Procopio: Dear Startup Investors: It's Not Us, It's You. There are essentially two questions that infuriate most serious entrepreneurs.

• Why aren’t investors interested in my startup?
• Why do those same investors fund so many startups that fail?

The connection between those two questions is rarely discussed

I’ve been an entrepreneur for over 25 years. Still am. I was an investor for 10 years. I’m not anymore, for the very same reasons why those two questions make entrepreneurs so furious.

I had a long talk last week with a venture capital investor friend of mine who is frustrated, to put it mildly, at what he calls a lack of “deal flow that doesn’t suck.”

Maybe it’s not us, I told him, maybe it’s you.

Maybe the kind of startup that smart founders want to start is no longer the kind you investors want to fund. And maybe the founders who start the kind of startup that you investors want to fund aren’t the founders who can make a startup successful.

I can pinpoint the beginning of that era to when the pitch deck replaced the business plan as the main descriptor of a business idea. Furthermore, the average entrepreneur’s reliance on the pitch deck as their startup idea’s calling card wasn’t truly standard until the early 2000s.

somewhere during that evolution, say over the past 10 years, the pitch deck stopped being about the business and started being about the pitch deck.

The depth of the problem and the size of the iceberg became clear to me about five years ago, when someone I was working with spent more time focusing on fonts and images and the wordsmithing of the slide titles in the pitch deck than the actual market research, business model, execution plan, financial forecast, and, you know, all the things that cost money and generate revenue

This doesn’t happen in a vacuum.

I’m not saying every investor will be turned off by font choice. I’m speculating that in the 2020s, a lot of businesses are being built primarily to be the thing that can be described in the killer pitch deck

The truth is, the savvy startup founder is going to tailor their pitch, and their business, to mimic what’s already being funded.

Let’s Look at the Track Record
It’s lousy. And as the economy gets worse, the margin for error is drying up.

It’s on you, dear investor. I’m not saying you have to take on the responsibility to educate or regulate, but it’s time to differentiate. Founders aren’t going to stop pitching bad ideas–it’s what we do. And founders aren’t going to stop trying to achieve maximum pitch deck sizzle, because no founder wants to be the first one to rely solely on honesty and facts when everyone else is seemingly shoveling investor money into their terrible ideas.

There’s enough of a technical infrastructure baked into the system now, thanks to decades of technical advancement and innovation, to allow smart founders to harvest that tech with optimum, innovative execution.

Be on the lookout for the ideas that aren’t like the nine-out-of-10 that have littered the failure bins over the past decade. They will come at you from unexpected places.