Why Startup Founders Should Think Twice Before Blindly Sharing Their Pitch Decks: A Game Theoretic Perspective
First time founders (and sometimes repeat founders too) often feel pressured to share their pitch decks with venture capitalists (VCs) early in conversations. After all, without the pitch deck, how will investors understand the business? However, what many founders fail to realize is that sharing their decks too early can leave them vulnerable. This is where game theory, specifically the Hawk-Dove Game, can offer a fresh perspective on why founders should be cautious about how and when they share their business information.
Understanding the Hawk-Dove Game in the Context of Startups and VCs
The **Hawk-Dove Game** is a concept from game theory that models conflict over shared resources between two parties. In the game, each party can choose between two strategies: **Hawk** (an aggressive strategy) or **Dove** (a more cooperative or passive strategy). When a Hawk meets another Hawk, conflict ensues. When a Hawk meets a Dove, the Hawk wins without a fight. When two Doves meet, they share the resource peacefully.
Now, let’s apply this to startup founders and VCs. Imagine a founder as a Dove: they want to cooperate and secure funding, so they share their pitch deck with the VC. On the other hand, the VC often plays Hawk: they collect as much information as possible to evaluate trends, understand market dynamics, and sometimes even guide their portfolio companies. The problem is that the VC might not actually invest in the startup but still gain valuable insights from the founder’s pitch.
This creates a **power imbalance** where the founder (Dove) exposes sensitive information, while the VC (Hawk) gathers insights without a serious commitment. To make this dynamic more equitable, founders need to rethink their approach to sharing information.
Why Founders Should Be Wary of Sharing Their Decks Early
Here are several reasons why startup founders should be cautious about sharing their pitch decks too early:
1. Information Asymmetry: VCs Hold the Power
VCs typically hold the power in early conversations. They control access to capital, and they often request pitch decks as a first step. This creates an information asymmetry, where the founder gives away valuable insights while the VC gathers data without risking anything. By playing the Dove and sharing their deck, founders may inadvertently reveal trade secrets, market strategies, or competitive advantages that VCs could use elsewhere.
2. Freeriding: VCs Can Extract Information Without Investing
In the Hawk-Dove framework, a Hawk benefits by taking advantage of the Dove’s cooperative nature. Similarly, VCs can collect multiple decks from startups in the same space, compare them, and choose to invest in the one that best aligns with their portfolio—or worse, pass the insights to a competing portfolio company. Founders are left with no investment and the feeling that they’ve been used for market research.
3. Founders Risk Losing Without a Return
When founders share detailed pitch decks too early, they risk losing control over their strategic information without any guaranteed return. A VC may pass on the investment, but still walk away with a deeper understanding of the market, competitors, and opportunities. This is akin to a Dove losing to a Hawk in the game theory model—giving up value without getting anything in return.
4. The Power Imbalance Favors VCs
Founders often feel compelled to comply with a VC’s request for a deck, fearing that refusal might damage the relationship or cost them an investment opportunity. But by withholding detailed information and requiring more engagement from the VC first, founders can balance the power dynamic. In the Hawk-Dove Game, when two Hawks meet, they both lose by fighting. In this case, founders should take a stronger position and push for a more equitable negotiation.
5. Encouraging Thoughtful Engagement
By not sharing a pitch deck too early, founders encourage VCs to engage more thoughtfully. If VCs have to put in the effort before getting the full picture—through meetings, discussions, and more in-depth conversations—it filters out those who are simply “window shopping.” This shifts the dynamic to a more collaborative and mutually beneficial relationship.
Making the Founder-VC Dynamic More Equitable
To build a more balanced relationship between founders and VCs, both sides need to adjust their behaviors. Here’s some advice for both founders and investors to foster a more equitable dynamic:
Advice for Founders
1. Delay Sharing Your Deck
Founders should avoid sharing their pitch decks too early in the conversation. Use high-level overviews, executive summaries, or teaser decks that give VCs just enough information to pique their interest but not enough to reveal proprietary information.
2. Ask for Engagement Beforehand
Before handing over your deck, ask the VC to engage first. This could mean having a meeting with the full team, discussing investment criteria.
3. Qualify the Investor
Are they someone you’ve worked with before? Were they introduced warmly from a trusted source? Have you back channeled them with other founders? Don’t just hand out your deck to anyone.
4. Use the Deck as a Conversation Tool
Instead of emailing a deck and waiting for a response, present it in a live conversation. This way, you maintain control of the narrative, answer questions in real-time, and prevent misunderstandings.
Advice for VCs
1. Demonstrate Serious Intent First
VCs should avoid asking for a full deck too early in the process. Show genuine interest first by engaging in discussions, learning about the startup’s challenges, and offering value in return.
2. Be Transparent About Your Process
Explain your evaluation process to founders. Let them know what stage they’re in and what the next steps are, rather than just asking for a deck and disappearing.
3. Offer Value Early On
Share some of your expertise with founders before asking for their deck. Providing insights or feedback shows that you’re interested in more than just collecting data—you’re looking to form a real partnership.
4. Build a Reputation for Ethical Dealings
VCs who build a reputation for treating founders fairly and protecting their confidential information will find it easier to build trust. Founders will be more willing to engage when they know they won’t be exploited.
5. Be Transparent About Your Portfolio
Just as founders are expected to share their strategies, VCs should be open about how new companies fit into their overall portfolio strategy. This helps build a sense of mutual trust and collaboration.
Conclusion
The relationship between startup founders and venture capitalists doesn’t have to be an imbalanced Hawk-Dove dynamic. By being more strategic about sharing information and fostering mutual trust and transparency, founders can level the playing field. Similarly, VCs who take the time to engage deeply with founders before requesting sensitive information will build stronger, more lasting partnerships.
In the end, both sides should strive for a Dove-Dove relationship—one where collaboration and mutual benefit take precedence over power plays and one-sided gains.
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