When it comes to pitching to investors, making a strong impression is vital. Founders work hard to craft compelling presentations that showcase their startups’ growth potential. However, there is one common mistake that many startups make: the use of cumulative graphs. While they may seem like a simple way to illustrate progress, these graphs can actually hinder an investor’s understanding of a company’s true trajectory.
Key Takeaway
Avoid using cumulative graphs in your pitch deck. Instead, opt for granular, month-by-month data to accurately showcase your startup’s growth. Transparency and authenticity are crucial when presenting to investors.
The Problem with Cumulative Graphs
Investors despise cumulative graphs for several reasons. Firstly, these graphs can be misleading. By adding up numbers over time, cumulative graphs make growth appear more significant than it actually is. This can create a false sense of momentum and inflate the perceived value of a startup.
Secondly, cumulative graphs lack specificity. Instead of providing investors with a clear and concise snapshot of a startup’s growth, these graphs provide a broad overview that obscures important details. Investors need accurate and detailed information to evaluate the potential risks and rewards of an investment.
Lastly, cumulative graphs can be seen as a red flag for dishonesty. When founders use cumulative graphs, it begs the question: why aren’t they providing investors with transparent and authentic data? This lack of transparency can erode trust and credibility, making it less likely for investors to consider funding a startup.
The Better Alternative
Instead of relying on cumulative graphs, startups should present investors with granular, month-by-month data that accurately reflects their growth. By breaking down their progress into smaller increments, founders can provide a clearer picture of their startup’s performance and demonstrate their ability to achieve consistent and sustainable growth.
Investors value transparency and authenticity. By presenting information in a more detailed and honest manner, startups can build trust and credibility with potential investors. This, in turn, increases the likelihood of securing funding for their ventures.
