Fundraising has always been, and will remain one of the most challenging elements of building a startup for a first time entrepreneur. We have already covered how to answer some of the most common investor questions.
Communicating effectively throughout the process with an investor is also imperative to your success, even when communicating digitally. There are also many things entrepreneurs should never say to anyone, but there are certain phrases that people say to investors all the time, that upon those words being uttered, the meeting is instantly over, even if it officially continues for an hour.
Here are three things entrepreneurs should never, under any circumstances, say to an investor:
“Can you sign an NDA?”
How does anyone, in their right mind, think it is ok to ask an investor, or for that matter, anyone they are going to for advice or assistance, to sign an NDA? I can tell you as someone who meets and helps entrepreneurs a few times a day, that if someone asks me to sign an NDA, all I hear is “Listen, I want your help, but really, I don’t trust you enough to tell you what I am building so please waste your time helping me, even though I am not paying you, and even though I think you are a dishonest person who is going to steal my idea or give it to my competitor.”
In other words, asking me, or an investor to sign an NDA, is not only ineffective, it is highly offensive, not to mention, a waste of your time, but more on that later.
“I have no competitors.”
Any entrepreneur who says they have no competitors says it because they think it will make a positive impression that the whole market is sitting and waiting for their solution while everyone else missed the opportunity. The reality? Quite the opposite.
If you tell an investor that you have no competitors, you are either not prepared for the meeting and didn’t do competitive analysis or you don’t understand the meaning of a competitor. Alternatively, if you say you have no competitors, you might actually be lying to the investor and even worse, to yourself.
No matter which one of those reasons is true, saying you have no competitors is about the dumbest thing you can say to an investor and makes the worst possible impression.
Why? If you have competitors, if you have many competitors, other companies trying to solve the same problem as you, that means one thing. There is a real problem that people want a solution to, which means there is a huge opportunity. Others are trying to solve it? So what? Many are trying to cure cancer. The problem still exists and whoever solves it will get a Nobel prize.
“No one can steal my tech because I have patents.”
Oh man, when I hear these words mentioned by an entrepreneur, I genuinely do not know whether to laugh or cry. This is similar to the NDA question in that, even if you have patents or an NDA, neither of them will really protect you in the wild jungle that is startup life.
Think about it. Imagine you have a signed NDA or a patent for your technology, and a huge multi national corporation who you showed it to, steals it. Now what? You are going to spend the next 5 years of your life and the 30 cents you have in the bank to litigate and sue this company? Really? That is what you think is the most effective use of your time and money? News flash: It isn’t.
I know that patent attorneys might take offense to this, but in 2019, your defense or your barrier is not a patent or an NDA, it is execution. You don’t have to be the first to do it, and if others try to do what you’re doing, you need to beat them not on timing, but on building the best version of your vision.
Apple wasn’t first. In fact, Apple was told they don’t stand a chance because Nokia and Blackberry own the market. Facebook wasn’t first or last and Zuck was told he has no chance because MySpace has market dominance. And the list goes on.
Don’t be first and try to prevent others from entering the market. Instead, focus your time and resources on executing in a way that no one else can copy. That beats your patents and NDAs any day of the week.