A cold pitch is an email to an investor who doesn’t know you yet. Most founders only learn why theirs didn’t work when they get a pass, and often not even then.
In VC Teardowns, three investors who back NZ founders read six cold pitches line by line and wrote down what they thought at each step: Jo Wickham (Icehouse Ventures), James Palmer (Blackbird) and Ashwath Sundaresan (Long Arc Advisory). The companies are fictional. The investors’ reactions are real.
Three pitches got a meeting, two got a no, and one got a maybe. The same mistakes came up across all six. Here’s what they were, why they matter to an investor, and what to do instead.
1. Paying customers alone won’t get you a meeting
A venture capital (VC) fund makes most of its money from a few companies that grow very large. Most of its other investments return little or nothing. So every investment has to have a real chance of being one of the few big winners.
That means an investor is asking two questions at once:
- Is this working?
- Can this become big enough to return the whole fund?
Paying customers answer the first question. They don’t answer the second. Jo Wickham’s rule of thumb for “big enough” is $100m+ in yearly recurring revenue, or a company valued at $1bn+.
Don’t: assume customers and revenue will carry the pitch on their own.
Focus on: showing what your business becomes at a much larger size. How does revenue per customer grow, what will you sell next, and how many customers can you eventually reach?
Example: Shiftly, a rostering app for cafés, restaurants and bars, had 92 paying customers and $18.5k in monthly revenue. It still got a no. Its market is crowded with larger competitors, and hospitality software in NZ and Australia is too small for a VC fund to get its money back. Read the Shiftly teardown
2. The team gets you read, but investors want to see who can sell
At the earliest stage there is little proof the business works, so investors weigh the people heavily. In all three pitches that got a meeting, the team was one of the main reasons.
But a strong technical team isn’t enough. The concerns investors raised about teams weren’t about the science. They were about whether anyone could get the product to paying customers and grow the company.
Don’t: fill your team section with only technical credentials.
Focus on: showing who on the team can find, close and keep the first ten customers. If nobody can yet, say how you’ll fill that gap.
Example: GridForge, software for managing pressure on the electricity grid, had a grid systems engineer and an ex-DeepMind PhD. It got a meeting largely on the team, despite a weak pitch. Verdara, a climate biotech, had a strong science team but got a no, partly because the investor couldn’t see who on the team would win customers. GridForge · Verdara
3. Say who pays, and check that buying from you helps them
An investor wants to work out quickly whether the business can make money. To do that, they need four things:
- who the customer is
- what the problem costs that customer today
- what you’ll charge
- why paying you leaves the customer better off
Who you choose as your first customer also tells the investor how well you understand your market.
Don’t: describe your technology and leave the investor to guess who buys it.
Focus on: one specific type of customer and all four answers above. Then ask yourself whether buying from you could hurt that customer in any way.
Example: GridForge chose electricity networks as its first customer. These are usually regulated monopolies that earn more the more infrastructure they own, so software that delays building a new substation costs them money. Verdara’s pitch never said who would pay at all. GridForge · Verdara
4. Pick one market to win first
Every industry and every country has different buyers, sales processes and needs. Split a small team and a small raise across several of them and you end up with a few customers everywhere and a strong position nowhere.
Don’t: sell to several industries, or move into a second country, before one is working.
Focus on: the one market where the pain is clearest and customers buy fastest. Win it, write down how you did it, then expand.
Example: HoloMeet, a life-size video calling tool, planned to sell to architecture, automotive and software sales teams all at once, while also expanding into Asia-Pacific and Europe. Shiftly was expanding into Australia before its NZ growth was repeatable. Both were flagged. HoloMeet · Shiftly
5. Build your market size up from real customers
Five of the six pitches were criticised on market size. The common mistake was starting from a huge industry figure that had little to do with what the company actually sells.
Two pitches went further and claimed “we only need a small percentage of it.” James Palmer rejected this both times. If a market is that big and that easy, the obvious question is why nobody has already won it.
Don’t: quote a giant industry number and claim a small slice.
Focus on: counting up from your own customers.
The calculation is simple: the number of customers you can realistically reach × what each one pays you per year.
Illustration only: 2,000 cafés you can reach × $200 a month × 12 months = $4.8m a year. If that number is too small for a VC fund, you’ve learned something important before you start pitching.
Example: Verdara claimed 0.5% of the global carbon removal market. GridForge measured itself against $20 trillion of global grid investment. Both were called out. Shiftly gave honest figures for its market, and that showed the investor straight away that the business had a ceiling. Verdara · GridForge · Shiftly
6. Know your competition better than the investor does
Investors hear a lot of pitches. Many have already seen several companies in your space, and some may have invested in one. Assume the investor already knows most of your competitors.
So when your pitch leaves out a competitor the investor knows about, they draw one of two conclusions. Either you don’t know your own market, or you’re hiding something. Both damage your credibility more than a strong competitor would. James Palmer said he prefers an honest assessment of the competition, including what each competitor is getting wrong.
Don’t:
- leave the competition section blank or say “we have no competitors”
- list only big, slow, old companies and leave out other startups
- list your features instead of explaining why customers would choose you
- rely on “we’re easier to use” as your advantage. A bigger competitor can copy that quickly.
Focus on:
- Every option your customer has today, including doing nothing or using spreadsheets, WhatsApp and email.
- Every company already selling a solution, including startups. Search properly. If an investor can find them in five minutes, you should have found them first.
- What each one gets wrong, specifically: price, who it’s built for, what it can’t do.
- Why a bigger company can’t easily copy you. For example: data only you have, technology that’s hard to build or protected by patents, or a product that gets better the more customers use it.
Example: CryoSage, which keeps biological samples stable without refrigeration, didn’t mention the established companies already selling into its category. The investor named them himself. Lunacore, an energy storage company for space missions, left its competition section blank. HoloMeet listed its features but never explained why Zoom couldn’t build the same thing. Shiftly’s advantage was being simpler than larger rostering apps, and the investor said that wouldn’t last once they responded. CryoSage · Lunacore · HoloMeet · Shiftly
7. Every number needs to show where it came from
Investors see a lot of impressive-sounding numbers, so a figure without a source makes them more doubtful, not less. They want to know what you compared against, how many customers you measured, and over how long. They also need numbers in dollars, because dollars are how they decide whether the business is worth backing.
Don’t:
- use percentages without saying how they were measured
- report results only in technical units
Focus on: one real customer result, with the method shown and the outcome in dollars.
Illustration only: “Customer X cut onboarding from 10 days to 6, measured across 40 new hires over 3 months, saving roughly $Y.”
Example: HoloMeet claimed 40% faster onboarding without saying how it was measured. GridForge reported everything in megawatts, so the investor couldn’t tell whether the business made money. HoloMeet · GridForge
8. A paying customer beats a promise to buy
A letter of intent (LOI) is a document saying a company may buy from you in future. A memorandum of understanding (MoU) records an agreement to work together. Usually neither commits anyone to pay, so investors give them little weight on their own.
What investors want to see is someone paying, even a small amount, for a trial.
Don’t: present LOIs or MoUs as proof of demand.
Focus on: turning at least one conversation into paid work before you raise.
Example: Lunacore had three non-binding LOIs. The investor said one paid evaluation contract would be worth more than all three. HoloMeet and GridForge both had customers paying for trials, and the investors counted that in their favour. Lunacore
9. Say exactly what the product is
If an investor can’t picture what the customer receives, they can’t work out who the customer is, how you make money or how long it will take.
Don’t: describe what your technology can do and leave the product vague.
Focus on: one plain sentence saying what the customer receives and pays for.
Example: After reading Lunacore’s full pitch, the investor still couldn’t tell whether it sells a material, a single part, or a complete system. Each is a different business with a different customer and a different timeline to revenue. Lunacore
10. Tie the amount you raise to what it achieves
Investors want to know what will be true when the money runs out that isn’t true today. If the raise just pays for “more development,” they can’t tell whether the company will be any less risky at the end.
Don’t: present the raise as a budget for more work.
Focus on:
- how much you’re raising
- what it pays for
- the specific result you’ll reach when it runs out, for example a certain number of paying customers or a product passing a key test
- why it’s this amount and not more or less
Example: CryoSage and Lunacore were both told their raises risked paying for more lab work instead of reaching a clear next step. GridForge and HoloMeet were both asked for clearer milestones. Shiftly’s NZ$750k was described as sensible for where the business was. CryoSage · Lunacore · Shiftly
11. Check VC is the right money, and this is the right investor
Some passes have nothing to do with the pitch.
Sometimes the business is good but can’t get big enough for a VC fund. Other times the investor simply isn’t backing that market right now. Each investor has sectors they’re keen on and sectors they’re avoiding.
Don’t: send your pitch to every VC by default.
Focus on:
- Whether your business can realistically get big enough for VC (see section 1). If not, other kinds of funding may suit you better. These include revenue-based financing, where you repay from future revenue, angel investors, or funds that back smaller businesses.
- What each investor has actually backed recently. Say in your email why your company fits what they invest in.
Example: Shiftly was pointed towards other kinds of funding instead of VC. Verdara got a no partly because the investor wasn’t excited about climate investing. The same investor took the GridForge meeting partly because he’s interested in freeing up capacity on the grid. Shiftly · Verdara
Before you send your cold email
- Say who the customer is and what the problem costs them, in dollars
- Include one hard number and say where it came from
- Name your real competitors and what they get wrong
- State how much you’re raising and the result it gets you to
- Say why you’re writing to this investor in particular
- Name your own biggest risk before they find it
Every investor started with the email. Shiftly’s was praised for naming its customer, putting a number on the pain and making a sensible ask. CryoSage’s was praised for being upfront about its risks. Verdara’s opening line was too technical to follow.
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