CFOs are pivotal in securing funding for their organizations. A recent survey by OneStream, a finance platform, indicates that the competence of the CFO ranks as the second most important factor in investment decisions, following opportunities for market expansion.
To gain the trust of investors, it’s essential to craft an engaging narrative supported by clear and precise details that illuminate the company’s overarching vision. During intense investment presentations, where the chance to make a lasting impression is minimal, finance leaders might be drawn to clichéd statements or attempt to shape their vision around what they believe investors wish to hear. Such an approach can lead to significant setbacks.
Finance leaders aiming to refine their pitch decks should steer clear of these eight phrases that are likely to frustrate investors.
1
‘Our financial projections are conservative’
Investors prefer transparency over unwarranted optimism. As Ivan Nikkhoo, founder and managing partner of Navigate Ventures, a venture capital firm, points out, suggesting that projections are conservative indicates that expectations should exceed those projections.
“This situation can create problems for everyone involved,” he warns. “A CFO must build credibility and trust with investors, not over-excite them. Even if you manage to do the latter, you’ll likely fall short of expectations later on, which can harm trust.”
Instead, offer a realistic base case scenario, an ambitious goal, and a downside scenario, clearly explaining each one, including the rationale behind them. Be specific about the robustness of your forecasts, the sources of growth, and potential risks.
2
‘We are pre-revenue now but will reach £300m in two years’
“Ambitious revenue targets aren’t exclusive to pre-revenue companies,” says Nikkhoo. “I’ve encountered business leaders who have labored for years but still assert that their minimal revenues will skyrocket in the next year or so.”
“As expected, I find this hard to believe. This mentality quickly erodes credibility with seasoned investors.”
3
‘In three years, we’ll be selling to big tech’
“Quality companies aren’t sold; they are sought after,” asserts Nikkhoo. “This principle holds true, even for the wealthiest acquirers. If a company proves to be effective, there will always be buyers. However, if you build solely for the purpose of selling and no acquirers appear, you risk failure.”
4
‘We’re a great business’
Investors seek more than just a good business; they want to understand why now is the moment to invest, says Jess Jackson, investment manager at Praetura Ventures, a venture capital firm.
“Key indicators, intellectual property, and traction all play a role in our investment choices – but these elements alone don’t suffice,” she notes. “Most pitch decks fail to establish a sense of urgency about the investment opportunity. When evaluating pitch decks, we want to see the momentum driving the company.”
CFOs can illustrate this momentum by, for example, emphasizing recent market acquisitions or detailing how forthcoming regulatory changes will benefit the business. “Effective pitch decks not only inform but also engage. Exceptional pitch decks create a sense of immediacy, making us feel that the opportunity is fleeting,” Jackson explains.
5
‘We have no competitors’
Mike Greene, CEO of Global Research Business, a business advisory firm, states that the absence of competition often signals a potential issue. It may indicate a lack of demand, failed past attempts at similar businesses, or an unfeasible price point. Greene, who has invested in roughly 30 businesses including Shazam and Chargemaster, points out that every business has alternatives.
“Investors are skeptical of founders who fail to recognize their competitive landscape,” he warns. Business leaders who dismiss competition undermine their credibility with investors, leading to doubts about their market strategy.
6
‘The product is everything’
Success isn’t solely determined by products or services. For an organization to thrive in any sector, it needs to make astute hires, create a persuasive marketing strategy, and implement its business plan effectively. “Frequently, exceptional products are supported by weak teams comprised of friends, family, or low-cost hires,” warns Greene.
Investors seek scalable procedures, robust teams, and clear market strategies – not merely intriguing products, he emphasizes. “Ultimately, CFOs and investors require financial readiness, strategic execution, and the right personnel to ensure sustainable growth.”
7
‘We’re using AI to automate workflows’
AI has become a term investors are growing weary of. Almost every executive claims to leverage AI, yet few can articulate how it enhances their offerings or drives revenue. If AI truly offers a competitive advantage, investors want clarity on what proprietary data it utilizes and how it will positively impact the bottom line long-term. CFOs should therefore avoid vague phrases like ‘AI-powered financial insights,’ states Tom Henriksson, general partner at OpenOcean, a venture capital firm.
“Everyone touches on AI; discussions involve using AI to automate processes, improve software development, and optimize daily operations. However, we are in search of outstanding teams achieving genuine breakthroughs in this realm. Products merely wrapped around pre-existing foundational models will not result in significant advancements.”
8
‘Hockey-stick growth’
The term hockey-stick growth refers to a rapid surge in growth following a brief period of stability. “This phrase was common in high-growth sectors,” notes Alysha Randall, founder and CEO of Fast Growth Consulting, which provides training for new and aspiring CFOs.
Unfortunately, such growth patterns are more frequently depicted in forecasts than observed in actual performance. Relying on overly optimistic growth projections is “naïve and potentially misleading” in the current challenging economic climate, Randall asserts. Nowadays, investors prioritize profitability over mere growth – emphasizing effective use of cash over aggressive expansion strategies. Furthermore, she adds: “Often, these growth projections lack strategic foresight or supporting data – they tend to represent little more than wishful thinking.”
CFOs are pivotal in securing funding for their organizations. A recent survey by OneStream, a finance platform, indicates that the competence of the CFO ranks as the second most important factor in investment decisions, following opportunities for market expansion.
To gain the trust of investors, it’s essential to craft an engaging narrative supported by clear and precise details that illuminate the company’s overarching vision. During intense investment presentations, where the chance to make a lasting impression is minimal, finance leaders might be drawn to clichéd statements or attempt to shape their vision around what they believe investors wish to hear. Such an approach can lead to significant setbacks.
Finance leaders aiming to refine their pitch decks should steer clear of these eight phrases that are likely to frustrate investors.
