Every week, I sit down with early-stage startup  founders. They share their story in an effort to get me to invest. I have heard more than 20,000 startup investor pitches over the last two decades, and I pride myself on giving everyone a fair shake, but truth be told, I can get to "no" fairly quickly. In my experience, venture capitalists say "no" to founders nine times out of 10. 

I deploy a three-strike rule when listening to pitches. After hearing any three of the "red herring" statements below, I throw in the towel and wrap up the meeting. (A "red herring," in investor parlance, refers to something that distracts investors from the key message). While most investors I know do the same, they don't necessary wait for three. Here are six examples of statements that automatically put me on my guard.

1. "Our financials are conservative."

Pro formas are future-oriented financial statements made based on a series of assumptions. By definition, they aren't conservative, and in most cases are actually overly optimistic. Investors want founders to be reasonable, not necessarily right, when it comes to future projections. I look at pro forma financial statements as test of a business acumen helping me understand just how well the founder knows her business. 

2. "Key team members will join post-funding."

It speaks volumes to funders if a top executive chooses to leave their highly-paid post to work for equity as a co-founder. So, the opposite--a lack of early commitment by co-founders--can undermine investor confidence. While I understand that people have bills to pay and kids to feed, I don't want to back a team that isn't all in from day one. 

3. "We have no skin in the game."

This is the same as saying, "I want you to invest in my company, but I haven't invested in it myself." Being an entrepreneur is hard, and investors want to ensure you aren't going to bolt when the going gets tough. If you have mortgaged your house, sold the kids to science and invested it all into your startup, then you have much to lose. (How much "skin" is needed is very subjective; investors want you to be prepared to succeed at all costs, but there is a limit to what is possible.)

4. "We outsource our code," "We can't build our product in-house," or "We paid others to create our MVP."

In the 21st century, startup founders launch early and iterate often. Rapid iteration based on customer feedback is at the heart of the Lean Startup method, and the Lean Startup method is a proven track to success. If you need to pay consultants or others every time you iterate, it will undermine your ability to iterate quickly--making you less able to pivot your way toward success. 

5. "We have no competition."

This means either you don't know how to Google or your idea is so wacky no one else is trying it. Remember, you are trying to address an unmet market need in an exponentially better way. Notwithstanding, your customers have lots of choices, including the "do nothing" option, which in my opinion kills more startups than all other forms of competition.

6. "We have no intellectual property." 

If there is nothing proprietary about your solution, how will you keep market share once others see how successful you are? Being first to market can sometimes overcome this challenge, replacing the barrier to entry of intellectual property with network effects. But being first to market is also difficult, expensive, time-consuming, and risky. It's best to find what VCs call a "moat," which protects your company from attack by competing interests. Patents and trade secrets are the most often leveraged moats, but other moats include an established user base, brand loyalty, key persons, and exclusive access to key resources.

No entrepreneur knows how many times they'll get up to the plate, so you have to make the most of each swing. Do so smartly by removing any trace of these red herrings in your pitch.