A compelling pitch and a strong business are different things. Separate the story from the evidence, look for what is missing, and test claims before they shape your judgement.
10 min read · Level 3
I think the most valuable habit in early-stage evaluation is noticing the moment you have decided, and asking whether any evidence has actually been checked yet. A well-told story creates that moment early. Writing down a first impression and then deliberately testing it is a small discipline that protects against one of the most expensive mistakes in private investing.
A pitch is a persuasion document. A good one is clear, confident and memorable, and those qualities say more about the founder's communication than about the business.
A practical way to separate them is to sort every claim:
Category Examples What to do Evidence retention tables, signed contracts, bank data verify Estimate market size, projected revenue test assumptions Narrative vision, mission, comparisons to famous firms set aside for judgement later
Then look for what is absent. Common gaps:
Missing Often means Retention or churn figures retention is weak Gross margin costs are high or unclear Customer names or references few committed customers Competitors the founder has not studied them, or they are strong
Comparisons to famous companies deserve particular care. "We are the Uber of X" describes an aspiration and a business model shape, not evidence of success.
Because persuasive stories cause investors to reach conclusions before checking evidence, and then to interpret later evidence to fit the story.
Pitch quality also correlates with things other than business quality: prior fundraising experience, coaching, and networks. Strong businesses sometimes come with plain pitches and weak ones with polished pitches.
Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.
Sorting one pitch.
Claim Category Check "Customers love us" narrative ask for retention "120 paying customers" evidence ask for list and payment data "On track for 5,000,000 revenue next year" estimate current revenue 400,000; implies 12.5x growth "Like Stripe, but for healthcare" narrative set aside No competitor slide missing research competitors independently
On checking, 120 customers included 45 on free trials. Paying customers were 75. The projection required growth far beyond what current sales capacity could deliver. The founder was impressive; the evidence was thinner than the pitch.
Forming a view during the pitch and then using diligence to confirm it, rather than holding judgement until the evidence is checked.
Mark each statement and decide in advance that only evidence and tested estimates will drive the decision.
Write down important information not provided and ask for it directly.
Choose the most important evidence claim and check it through primary sources or customers.
Record your first impression separately so you can see later whether diligence changed it.
When reviewing any pitch, deck or founder presentation.
Do not become so sceptical of storytelling that you dismiss founders who communicate well. Communication matters for hiring, sales and fundraising; it is just not proof of the business.
Several widely reported startup failures, including Theranos, involved founders who raised large sums on compelling stories while key claims about technology or revenue were not independently verified by investors. Court proceedings and reporting later documented the gap between the pitch and reality.
The more compelling the story, the more important it is to verify the claims it depends on.
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