Angel Hacks: 3 Myths Founders Believe In and You Should Not

3 myths to check in a pitch

As an angel investor, I’ve encountered hundreds of pitches throughout my career. I even invested in a few of them. Over time, I’ve noticed recurring myths that founders often believe in (and in some cases, I believed too). These myths can cloud their judgment and hinder their startup’s success. In this article, I aim to bust these myths to help you, my fellow investors, analyse pitches and make informed decisions on startups to invest in.

"My product is so good that it sells by itself”

This myth is often implied rather than explicitly stated - This is never said by founders but you can tell it when you ask questions about their sales process. If a startup plans to sell its product by merely listing potential buyers and presenting its solution, they’re likely falling into this trap.

If they don’t apply enough effort to defining personas, understanding the purchase process, qualifying leads, and preparing counter-arguments for objections - the sales process probably does not exist. If a founder stumbles or guesses when asked about conversion metrics, they likely believe in this myth. While it’s rare, a product can sometimes sell itself. If a founder claims this, always ask for metrics.

“When it starts growing, I will dedicate 100%”

This myth emerges when discussing the founder’s dedication - Again, this may not be said, but once you start asking about the dedication of the founder’s team, this can come up. “While the business doesn’t pay the bills, I will get these jobs”. It’s a red flag if a founder plans to fully commit only when the business starts growing. This approach is particularly tempting for founders with a technology background who might take on other jobs until the business becomes financially interesting. However, this approach is flawed.

A business requires the founder’s full dedication to grow. Without this dedication, the business will likely stagnate and fail to reach its potential. Founders must be willing to invest their time and energy into the business from the get-go. Only then can they steer the business towards growth and success.

“My partner came from company XYZ, and I came from ABC, we know what to do”?

Founders from big companies often exude great confidence, especially if their previous company is in the same industry as their startup or if it’s related to the industry they are willing to serve. They believe that if they were successful in companies with such high levels of demand, a small company where they will make all the decisions would be a piece of cake. They may have great backgrounds and experience in the industry, and they might be considered fantastic employees in those companies, however, the startup game is different from the corporate world.?

And the truth is, coming from corporate can be tricky as in these companies we have all the resources, we have partnerships and contracts signed. Do you want to hire someone? Just place an order under the contract with recruiting firm XYZ, and in 3 days you get a short list, in one week you interview 3 amazing people, and in one month you have someone sitting in the chair. In a startup, it is a whole different story (I’ll save this conversation for another post), these tasks become more challenging. So, don’t be swayed by impressive company logos on the team slide. They can be amazing in the previous companies but not perform in a startup. Success in a corporate setting doesn’t guarantee success in a startup.

The startup scene is a wild ride, filled with ups and downs. These myths I’ve discussed here are just the tip of the iceberg. There are many more misconceptions that founders and investors alike must be wary of. As investors, it’s crucial to see through the smoke and mirrors and focus on the nitty-gritty realities of the startup world. By busting these myths, we can make smarter investment decisions and have a better shot at success in this crazy, unpredictable game.?

Remember, investing in startups is not just about spotting potential. It’s also about discerning fact from fiction.