The Five Worst Things Sports Tech Startups Do When Pitching VCs
By Peter Stein, Co-Founder
If you oversee a sports tech startup, you can study, ask around or Google to your heart’s content all the best ways to appeal to potential venture capital investors. There’s practically an entire science devoted to it. But like most endeavors, there are do’s and don’ts to the process. Are you fully aware of the pitfalls to avoid? The words best left unspoken? The classic blunders? Don’t sweat it. Here’s a quick, down-and-dirty guide for the worst mistakes a sports tech startup can make when pitching a VC:
1. Being too niche. Build a niche product or service, and you limit your influence and earning power to a niche market. Target a market that is broad enough to show a variety of promising revenue streams. Lacrosse represents an upscale market, but consider the sport’s reach — the number of players, coaches, parents and teams willing to invest in your lax widget. Why not tweak your model to appeal to other sports? Multiple generations? Every demographic? Niche entry points simply act as a Trojan Horse for larger markets.
2. A shaky ask. If you don’t have an appropriate amount of investment in mind that you’re requesting from a venture capital firm, you’re already lost at sea. Typically, you’ll want to ask for 18 months of runway. In any case, be sure you know what the number is, project confidence about that amount and be able to back up why it equates to a year-and-a-half buy-in for development of your product and scaling of your business.
3. Failing to know your audience. If you’re pitching to a sports tech fund that is firmly in the space and knows it, there’s no need to over-explain challenges they’ll be intimately familiar with. In fact, it may suggest a lack of knowledge and preparation. If the VC is outside the sports tech space, you’ll need to swing to the other end of the spectrum: Be certain they understand the attendant hurdles that are unique to the market by spending time discussing your solutions and why they’re scalable.
4. Slacking on due diligence. Why might the VC you’re reaching out to be interested in what you have to offer? Have they invested in similar startups like yours in the past? Is there an indication that they’ve previously been drawn to comparable products? What has worked for them? What hasn’t? And for your own sake, what can the firm offer beyond just its money? Press? Key contacts? Money helps. Fit is important, too.
5. Not asking enough questions. You want to make a strong impression. Seed funding will send your startup off and running. But you must know the unknowns. Qualifiers will make a difference to your business. Don’t bound blindly into your pitch in search of funding without gaining an understanding of timelines, next steps and any other expectations you may not have anticipated. Don’t get trapped in a partnership that turns out to be a blood oath you can’t deliver on.
