An investment teaser is only one page long, so quick to write? Unfortunately not. There’s a lot of work behind that one page, and you can’t avoid spending the time on it. In our years of working with start-ups and accelerators, we have seen many failed investment teasers. Let’s collect the most typical mistakes. What do you need to look out for so that you avoid them?
The typical mistakes we often see in teaser documents are
- Making claims without backing them up
- Not thinking things through financially
- Using too many marketing phrases
These mistakes all have the same root cause: Investors look at a startup differently. What does your company do, why does it matter and what problem is solved for whom? Also important is the size of the market, that you have a USP, and that you can plausibly explain how much money you need and what you will achieve with it. While it is easy to write down the questions, it is hard to come up with good answers – and we see founders struggling with it repeatedly. Let’s take a look at the typical mistakes and how you can avoid them.
Making claims without backing them up
Our product is a game-changer!
- Why and how is your product a game-changer?
- Is the market ready for such a change?
- Will customers care, or are they happy with the way “the game” works?
- If your product is revolutionary, will users need to re-learn their current routines?
- Will the benefits of your new product be worth the effort?
- Why are competitors not doing this?
If you know the answers to these questions (and you should!) then you need to add them to your teaser document. A “game-changer” statement needs to include some sort of backup that makes the claim credible.
“Our product is a game-changer because we know from our market research that X % of current users have a strong need for FeatureX which we can deliver at a competitive price point / have developed some new technology for / …“
Not thinking things through financially
Back-of-the-napkin calculations are fine but can’t replace a well-thought-through financial plan that is based on your strategy for product development and market entry. Yes, that is difficult, and takes time and a lot of effort but will pay off every step of the way!
We’ll sell 250 subscriptions per month, growing 15% per year!
- How much traffic to your website will you need and how much will that traffic cost?
- What is the conversion rate?
- What is the churn rate?
- What are your customer acquisition costs?
- How many FTEs will you need for marketing, customer service, product development, etc…?
We strongly recommend that you take the time to make a financial plan in detail(!). There are templates and examples available for different industries and business models. You don’t need to include all the details but you should have an executive summary of your financial plan in your investment teaser.
Using too many marketing phrases
“Our unique product is a premium offering that is unlike all others”
Selling your idea to an investor is different from selling your product to a potential customer. Investors are bombarded with investment proposals and do not have the time to read long and (mostly) meaningless marketing phrases. As the investor Bernd Krczal put it:
“The documents need to be short and precise. I do not have that much time to read through long elaborated documents.”Bernd Krczal – Interview
Short and to the point. There is no other way to put it. Say what it is, what problem it solves, and why users want or need it. Explain why an investor should invest in your company.