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| Tips for Capital Raising |
Very often, entrepreneurs scroll through the web in search
of tips for raising capital for their startup. No doubt, there are a lot of
things you can learn about an early stage capital raising campaign and but what
is more important is to learn from mistakes made by others. Often, despite
having all other things in proper places, an entrepreneur may fail to raise the
Dollars just because of a single mistake.
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/.
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