There are so many elements that have to be in place in order to make a successful pitch to investors. One of those keys is to use the right language.

A stray word or phrase here or there might derail a lot of hard work and otherwise excellent proposal. So says Ash Rust, an entrepreneur turned pre-seed investor as founder and managing partner of Sterling Road. Some terms he says to avoid:

  • Acquisition: Investors want an initial public offering, not a quick acquisition. If you highlight an acquisition as a positive in your pitch, you may hurt your chances. To appeal to investors, pitch your business as an investment opportunity with IPO potential, not a quick win.
  • Disruptive (and other similar buzzwords): Using buzzwords
    to explain your plan or product is off-putting to most investors. If you toss around words like “disruptive,” “visionary” and “innovative,” they’ll suspect you’re using them disingenuously. Many founders before you have used the same buzzwords in their pitches and failed to back them up with details. Most investors rely on pattern matching, so your buzzword use is a bad indicator.
  • Solo founder: Building a company is tough, but it’s 10 times harder if you try to do it alone. Not that it’s impossible, of course. Stitch Fix had a messy beginning, but CEO Katrina Lake has largely led the company to IPO by herself. Nevertheless, investors usually like to see a strong set of co-founders and team members who can support each other through all the ups and downs of business.
  • Channel sales: If somebody else controls the relationship with your customer, and thus the revenue, you should expect to pay a heavy tax. The Apple app store, for example, takes a whopping 30 percent cut of all in-app purchases. Even though channel partners can help with distribution, investors don’t like the chunk of revenue they take.

That’s not to say channel sales can’t be done. For example, Supercell built a nine-figure mobile game business through app stores, but this approach can scare off many investors. They would rather you build direct connections with your customers and own the relationships yourself.

  • Regulated markets: Investors want customers to be able to purchase your offerings rapidly and without legal constraints so that you can scale across your market. If your target customer has burdensome compliance requirements when choosing vendors (e.g., requests for proposals for local governments) or if your product itself must comply with challenging regulations (e.g., HIPAA in U.S. health care), then you should expect your sales to take months, not weeks, to close. This makes you less attractive to investors.

Yes, some companies make money in regulated markets, but it’s extremely challenging to win over investors with a business plan that involves navigating extensive regulation.

Adam H. Berry is vice president of economic development and technology at the Indiana Chamber of Commerce. He joined the organization in 2019.