Here’s a list of some of the most common mistakes done by first-time entrepreneurs (at times, even by those who already have experience in capital raising). Though you can never really count a definite number of mistakes as every investor is different in his/her preferences, you can still avoid the following mistakes to be on a safer side.
Asking More Or Less Than What You Need
Determining how much capital you need is nothing less than a fiery trail. You have to remember that raising a seed stage startup requires huge capital and your demand for the capital should be so balanced that neither you ask for too much money nor you go broke during a crisis situation by raising too less. Make sure you raise an amount that is required to meet your milestones and timelines. If you ask something unrealistically low, you will simply welcome a disaster for you by proving to the VCs that you do not have a proper understanding of what it takes to grow a business. So be realistic in your demand even if the amount is too high.
Making Unrealistic Promises
Investors would love to invest in a startup with set goals and timelines. But to demonstrate unrealistic milestones just for the sake of convincing the investors is again not a good idea. They will definitely like to see that you are able to deliver what others think is impossible but better try to ensure that it something that you will really be able to accomplish. No need to put on a superman’s mask as it will be embarrassing if it is pulled off.
Showing Unrealistic Demand For Your Deal
Tips for Raising capital from an investor is also the initiation of a long-term association with the investor who is going to be with you throughout the journey, which should be purely based on trust. There is no place for any dishonesty and if you show that, it is only you who is going to suffer later. Like many other entrepreneurs, if you too have a tendency to show that there are many other investors who are dying to invest in your deal, make sure it is genuine. Otherwise, it can be humiliating on your part to cling to the investors’ door waiting for their call even after a month.
Hiring An Agent To Present The Pitch
Being an entrepreneur looking to raise capital, each and every move of yours will be brought under the scanner. If you hire an agent to present your first pitch, it indicates that you do not have the skill and efficiency to present it on your own. It can be an instant turn off for any investor so better ignore the idea and do it on your own.
Keeping Member In The Team Who Do Not Add Any Value
It is very essential for a startup to have a team where each and every member is playing a significant contribution in their respective fields. It is quite common among entrepreneurs to present a team comprising of their friends and family members which is absolutely fine provided the members are highly qualified and have proper business sense to help you grow the business. Otherwise, it doesn’t make any sense investing in a member who has least contribution to make.
There are many such mistakes that can simply ruin all your efforts and encourage the investors to invest in some other venture. Try to ensure that you do not disappoint your potential financers at any cost and consider it as the most important tip whenever you approach your next investor.
For more tips on capital raising, feel free to visit Merger Alpha http://mergeralpha.com/.