Fundraising Mistakes Startup Founders Make

You may have bootstrapped your startup to get things in motion, but at a certain point, most startup founders need to find investors in order to take the next step. For the inexperienced founder, the prospect of a blank cheque launching your dream to the next level can sometimes lead to clouded judgement and rash decisions.

More than a few startups have crumbled under the weight of poor financial decisions. Mistakes while fundraising are common. And while they may not be the end of the world, avoiding them will help keep things on the right track.

Be Original In your Pitch

First and foremost, separate yourself from the pack when searching for funding and investors. Tell your own unique and truthful story and don’t follow the standard, cookie cutter mould of how every other company searches for money. Avoid getting grouped into a category that the investors couldn’t care less about. Stand out and catch their attention.

During your meeting, remember that ultimately you’re not only selling your idea, you’re selling yourself and your team as well. Not only do you have to convince your potential investors that your idea or business is solid, but that you’ve got the right people running things as well.

But Also Be Thorough

A touchingly honest story of how your startup came to be might inspire some investors to take a look at you. However, the serious startup founder also knows that describing their vision is only one part of a successful pitch deck.

In order to be successful, your pitch deck must be clear, succinct, and complete with financial models, marketing and growth strategies and more. Investors don’t fund a startup based on vision. They are looking for a good return on their investment. At the end of the day, that’s really all that matters.

Don’t Force the Fit

Certain investors may also not fit the mould of what your startup is looking to accomplish. Don’t just ask any and every investor for a chance to invest in your company. Make sure you find the right one that will mesh well with your startup.

It might take some trial and error, but take time and be diligent to send your deck to the right potential investor. Have a strategy and use it. Even if a particular investor doesn’t bite, they still may send your deck on to someone who will.

Know Where the Money is Going

Investors want to know where their money is going, so be prepared to tell them specifically. In fact, be prepared to answer a number of questions on your accounting and your cash flow. Sure, startups need money for a lot of things, however “a lot of things” is not an answer.

Have funding objectives, and clearly articulate where the funds will be directed, what the financial strategy entails and what your plans are. The last thing you need is to be left stammering when someone you want to get money from asks what their money is for. If you can’t answer that question, you’ve already lost the investor.

Preparation is Key

Being prepared is perhaps the best thing a startup founder can do when approaching venture capitalists or angel investors for funding. Have clear fundraising objectives in mind and be prepared to answer a lot of questions about your business.

Not every pitch will be a winner, but no one said fundraising was easy.

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