Pitch competitions are all the rage for startups. The pandemic has slowed them a bit with only some transitioning to being virtual, but they are still ongoing and likely to pick up speed again in person soon. I wish they wouldn’t, though.
I don’t think pitch competitions are good for startups. Here’s why:
- It’s a distraction — I have witnessed startups invest a significant amount of time and energy in applying to and preparing for pitch competitions in which the prize for the winning startup is $5k. Even if it is more than $5k, I question the exchange of time and energy for the money. The two most important factors to a startup are time and focus. Time and focus spent on the problem, with customers, and understanding how to get to customer product fit. Spending time and energy working on a pitch deck and presentation to chase what, in the grand scheme of things, is a small amount of money doesn’t get a startup any closer to understanding the problem and how to solve it in a valuable way for customers. Startups should stay focused on what really matters and avoid getting caught up in a beauty contest that means virtually nothing of consequence.
- It’s the easy way out — Participating in a pitch competition is much easier than spending time on the problem with customers, so startups hit the easy button and justify participating in pitch competitions. The justification usually sounds something like, “It will give us some visibility”, “It will help us perfect our pitch deck to raise more money later on”, “We will meet some potential advisors and mentors”, or “The money will help us to get to the next level.” Sure, in some way all of these statements could be true, but the likelihood of any of them actually being worth the time and energy is very low. If a startup needs a pitch competition to get good at anything then the startup has bigger problems to confront. Preparing for and doing a pitch competition is taking the easy way out, because it avoids the hard work that a startup should really be focused on.
- It can be a false positive — Even startups that win pitch competitions can be harmed by it beyond just the misuse of time and energy. Startups that win pitch competitions tend to lead with it in their next pitch deck, presentation, and conversations with customers, investors, and partners. None of these stakeholders cares about winning a pitch competition for a few thousand bucks, though. Potential customers, investors, and partners care what you know about the problem that you are attempting to solve and why you are capable of solving it, not how well you did in some random pitch competition. Winning a pitch competition can have negative effects on a startup because they now believe something of substance has been accomplished when it hasn’t. A winning startup can believe the product and company are further along than they actually are, or that winning a pitch competition is a major validation of what they are doing. It often isn’t, as pitch competitions are such small and insignificant events inside the larger landscape of what it takes to start and make a company viable.
- It’s the wrong validation — The distraction, ease, and false positives of pitch competitions can inflate the ego of startup founders. Being a startup founder can be a very lonely existence without a lot of validation, and pitch competitions can be a temporary home in which founders feel welcome, understood, and valued. Even being considered for a pitch competition can provide a modicum of validation to an insecure and lonely founder. It feels tangible inside of a whirlwind of fluidity and uncertainty. And that all makes sense, but founders have to be able to resist the urge for validation from things like pitch competitions and work to see it from people that really matter such as customers, investors, and partners. The admiration of people putting on and participating in a pitch competition, although well-intentioned, pales in comparison to the validation that it is really needed for a startup.
I encourage startup founders to look around and evaluate how many successful startups participated in and won pitch competitions. I believe they will find the number to be very low. Just as I write about accelerators not being able to turn mediocre companies into great ones in my book The Founders Manual, nor can a pitch competition pave a golden path for a startup. Pitch competitions can provide a feel-good moment and shot of adrenaline, but those quickly fade and then the real work of building something of value and sustainability sets back in. Startups should resist the allure of pitch competitions and stay focused on the real work that matters.