When I was in High School, I had a math teacher who took 50% off your grade if you submitted a correct answer to a problem but did not show work. His reasoning: In the real world, no one takes your answers (or assertions) at face value — you need to show how you got there.

The other day, two entrepreneurs came to see me with an investor pitch they insisted was ready. Everything seemed in order until they reached the slide that said “Funding Requirements” — and all it said was $10M first round funding required. That’s it. No discussion of how they got to this nice round substantial figure.

I was stunned. These two had both worked for startups and were obviously bright. Did they honestly believe that investors would just agree to give them $10M without explaining to them what they would do with the money? (I was thinking myself that $5M each would make for a nice start in Brazil!)

At a minimum, your funding requirements should be backed up with a few words on use of funds, milestones, and any expected follow-up funding required. Show your work.

There were several other places in the presentation where this same poor attention to detail manifested itself.

On their Financial Projections slide, they showed me a classic hockey stick chart with projected revenues starting from the low hundreds of thousands in year one, rocketing to several hundreds of millions by year five.

Not seeing any references to one, I had to ask: “What’s your revenue model?”

“We have several avenues to revenue, from OEM deals with major manufacturers to distribution deals with industry channels, to direct sales,” came the reply.

Which begged the question: “What’s your revenue mix?”

The exchange of looks between the two of them gave me my answer. They didn’t show their work because they didn’t do the work.

Can you imagine going to an investor with a seemingly half-baked business plan? Because that’s what an investor pitch is — an oral presentation of your business plan.

Don’t attempt to set up a meeting with an investor if you haven’t done your homework and can show all your work. You will only succeed in getting you and your team branded as amateurs or incompetents. And it is a reputation that will haunt you.

Do Your Homework. Show Your Work.

© Eye on Startups & The Startup Guidebook