What Not to Say to Investors: 5 Messaging Mistakes That Can Derail Your Pitch

When it comes to raising capital, the way you talk about your healthcare startup can be just as important as the science behind it. Investors are evaluating not only your idea, but your team's credibility, awareness of risk, and ability to execute.

Whether you're navigating your first raise or prepping for a follow-on round, five key phrases can undermine your pitch. Reframing them can allow you to address the topics and build confidence and trust with investors.

1. 'We Don't Have Any Competitors'

Although your innovation may be new or improve on an existing technology or product, try to avoid the notion that no one has created anything like yours.

"While it could be true that you have no competition at all, if you're telling investors in a pitch, 'we don't have competitors,' that more so signals a lack of market awareness, like you haven't done the work to [find] direct or indirect competitors," Nell Smircina, DAOM, Search Fund Principal at Novastone Capital Advisors, told Cure.

Competition shows that both the unmet need and market demand that your solution addresses. However, your focus should convey how your concept differs from competitors' ideas.

"If nobody cares about this problem and nobody's trying to solve this problem, why are you adding a company to the mix?" said Smircina. "You want to get investors excited about what the potential is, but at the same time show that you are not being naive or unrealistic to the potential risks involved."

2. 'Our Competitors Have Weak Solutions'

While you should differentiate your intellectual property from competitors, Vivian Cervantes, Senior Vice President of Healthcare for Investor Relations at CORE IR, said don't poke holes in what your competitors are providing.

"Everybody's proving out the science, so it's tough to say, 'oh, that's not going to work,'" she said.

Instead, share what is happening in the industry and what you're doing to stay competitive. Emphasize that you want success for your competitors.

"Because at the end of the day, a success met by one therapeutic pursuit…whatever data comes out of that, could be helpful to the industry," Cervantes said.

Similarly, stay away from over-promising a grand solution.

"As an investor, the landscape is confusing," said Cervantes. For instance, "When we're dealing with oncology…you don't want to say you're finding a cure. More like, you are working towards a therapeutic that could slow progression or that could give hope to families and patients."

3. 'This is Going to Take a Long Time'

It's tough for investors to hear long timelines, even though they are often inherent in the healthcare and biotech world due to the duration and time commitment of executing clinical trials, collecting and analyzing data, and undergoing the regulatory process.

"[It's] a process, and when you speak to an investor, it could be overwhelming to hear about the whole big kit and caboodle," said Cervantes. "What you need to do is break it down for them."

Explain that your timeline has multiple value-generating milestones you intend to hit, such as completing preclinical studies, entering a phase 1 trial, collecting health economic data, and beyond.

Tell investors that with each goal you reach, you plan to gain their patience and continued support.

"[This] is to continue their interest and convey that there's progress being made," Cervantes said.

4. 'Funding Will Make Us a Big Success'

Telling investors that you just need money and then everything will be OK overly downplays the actual execution risk, said Smircina.

Tying valuation to how much you've raised should also be avoided.

"Sometimes you'll hear, 'We're worth X amount because we've raised this amount,'" said Smircina.

However, she said valuation doesn't tie to how many dollars spent, but rather the milestones achieved.

"The focus should really be around your path to creating value--the risks that you're managing and why your team is the one to do it," she said.

5. 'We're Having a Lot of Issues'

In early-stage healthcare companies, investors put a significant premium on the strength of your team, management, and advisors.

"That's because in this sector, execution and judgment are as important as the science itself, and how founders frame challenges is a big part of that impression," Smircina said.

Sharing your vulnerabilities with a potential investor, like the fact that you are having a hard time securing IP, could imply that your team lacks the expertise or is not prepared, which creates risk that could lower your valuation.

While you don't want to be dishonest or hide challenges, knowing when and how to share them is key.

"Early conversations with investors are about building confidence in you and your team. Leading with vulnerabilities can create doubts about your ability to execute and manage risk, even if they're common challenges in your space," said Smircina.

She said sharing challenges is better framed as "known risks with a clear plan to address them" rather than as open vulnerabilities.

"Investors want to see you've thought risks through and feel confident in moving forward," she said.

For example, you can say something like, "Securing IP in this space requires X, and here's how we're approaching it with X."

Be sure to focus on your team's ability to navigate complexity.

"Investors know there are always risks, but they're backing founders who anticipate them and have a credible plan," Smircina said.