How Startups Get Suckered: The Pitch Contest

When entrepreneurs become a sideshow

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In 20+ years of founding and selling companies, advising entrepreneurs and executives, and even back when I used to invest in startups, I’ve seen way too many entrepreneurs — both young and old, both fresh and experienced — fall for some of the same sketchy shit over and over again.

These people aren’t stupid. In fact, most of them are quite brilliant.

The reason why they get lured into these traps is because, for the most part, the traps are built on the foundations of actual opportunities. They look a lot like the real thing, with a twist.

The twist is where they get you.

Let’s talk about the twist that makes public investor pitch contests a thing, and some of the signs that maybe your startup isn’t going to win its next funding round.

An investor pitch is not a carnival sideshow

The concept of the public investor pitch contest started to gain steam about 10 years ago, for a number of reasons:

• Legitimate venture capital and investor conferences, following the lead of the tech startups they were investing in, realized they needed to become less stuffy and more attractive to a younger audience.
• Success stories from incubators like YCombinator, 500 Startups, and TechStars (Stripe, AirBnB, Twilio, SendGrid, etc.), bled into the incubation proceedings, generating huge interest in their demo days.
• TechCrunch Disrupt’s mostly public pitch side event (I won’t call it a sideshow), Startup Battlefield, became a legit springboard into multi-million dollar valuations (Mint, Yammer, etc.).
• Freaking Shark Tank.

Somewhere along the way, the American-Idol-esque appeal of possibly witnessing the next Facebook emerge from the corner of a convention center became a thing to sell tickets to. Soon after, almost every business conference reserved a couple hundred square feet for a lucky few startups who made the cut to pitch for a prize.

I’ll admit, I have judged a few of these things, most (but not all) for local Universities as an educational exercise. I’ve witnessed many…