5 Fundraising Mistakes Made by Start-up Founders

While a lot of preparations are done at the fundraising stage, the founders are still prone to make mistakes. And these mistakes can often be fatal. Therefore when pitching before investors, some small things need to be kept in mind so that they can be avoided.

1. Overcomplicating the fundraising process

Founders often try to get too fancy at the initial stages and try to use tricks that they think will aid them to raise money. In order to raise money, it is important to have an idea and an execution strategy. If the fundraising process itself is complicated, the investors may see through the facade and know that all the fancy words and expensive hotels are a mere cover up for lack of a good idea, execution or team.

To get investors interested in your venture, set up multiple meetings and simply pitch your business plan to them. Create a competitive environment such that more than one investor is vying to have a share of your business. And be transparent with the investor, it helps build confidence.

Related: Why Raising Too Much Money Can Harm Your Startup?

2. Keep the terms reasonable

At the fundraising stage, the most important thing is to get good investors on board. Spending too much time fundraising would mean that you are not spending time executing, which is not a good thing. The biggest problem comes when founders seek valuations that are not justified. If investors find value, they will invest. But if they find valuation logical, they will not look any further at your pitch. Having a reasonable valuation and keeping the fundraising period short and precise is crucial.

Related:Business Plan: Failing to Prepare is Preparing to Fail

3. See value in criticism

More often than not an investor will say no. Instead, they will offer you advice and criticise your business plan, your idea or your execution strategy.  It is important to be able to  take criticism in your stride and incorporate necessary changes before going to the next investor.

Related: Avoid These 7 Pitch Deck Mistakes When You’re Seeking Funding

4. Lacking vision

If you don’t seem to have a clear and focused idea about your venture, and you agree with every small suggestion the investor makes, you’ll risk coming across as lacking a vision for your business. Founders with a proper vision can usually showcase what they’re doing and why. They also have a clear business plan which is succinct and precise to present to the investors. A clear vision also includes one big new idea, even if it’s a familiar one. It just has to be presented in an innovative way.

While you may not have all the answers, as a founder you must have a clear theme for your business from the get go.

Related: 9 Essentials of a Founders’ Agreement [With Free Template]

5. Presenting a poor pitch

A lot of founders get caught up in trying to have the perfect template for their business plan. They go on and on about the market, the technology, their competitors etc. Such a pitch is of no interest to an investor who probably sees thousands of such pitches every year.  

The best (and maybe only) way to pitch well is to focus on the parts of the venture that actually excite you as the founder. That will help get the investors excited about it as well. Being able to convey your passion about your venture is crucial to attracting investors.

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