For nearly every founder or would-be entrepreneur, startup mistakes are an area of concern. People like rooting for the underdog, but when it comes to investing in startups, everyone wants to bet on a winner. That’s what years of human experience makes immediately apparent to all. In the same vein, investors also want to bet on a sure thing, if such a thing exists. Of course, most of the time it’s not obvious who the bluechip startups are going to be.
If you are a startup, you must know how to present yourself like a winner and avoid startup mistakes that have killed countless launches. As a founder, you also want to be sure you do the right thing and complete your requirements and be transparent. Ask a funder to invest in your startup by all means. But here is how not to ask a funder to invest in your startup.
Here are some common startup mistakes that show How NOT to ask a funder to invest in your startup:
- Incomplete elevator pitch. You’re in trouble if you can’t boil down your product or service in a few compelling sentences. Among startup mistakes, this is one of the most common. You need to develop your Unique Selling Proposition and be ready to showcase whatever minimum viable product you may have now. Unprepared pitches will get rejected in a heartbeat, so always be ready. Your elevator pitch needs to address three key points: 1) why this; 2) why now; and 3) why you.
- Asking for more than they can afford. Before you approach a potential investor, you should know how much it is that you need. That’s a basic rule to live by if you are a startup. What amateurs overlook though is the fact that funders don’t have infinite money to give. So approach a funder you know can give you the money you need. For example, if a funder can afford only to give $25,000, it’s only appropriate not to approach them with 1-million-dollar request.
- Ask an investor to fund you even if your business has No synergy with the funder. It doesn’t matter if a founder is a superstar, if the business has no synergy with the prospective funder, it’s not going to fly. For example, if the funder favors social entrepreneurs and you are not one, it will take a lot of convincing to get funding from this person.
- Rushing your prospect. This is self-explanatory but bears repeating. You are the one asking for funding, the last thing you need to do is rush your funder to answer yes or no. You’ll probably get a no at this rate. Even if the funder is excited about your business, patience is still a virtue. Think of your business as a marathon rather than a 40-yard dash sprint.
- Not being transparent. Funders are taking a big risk on your business. One thing that can alleviate their fear is to be open to them, especially when it comes to money matters. It’s going top be an uphill climb when you start to have a reputation of hiding things from people.
Startup mistakes are inevitable. Read through funding sites such as AngelList, Gust and others, and you’ll see some very interesting discussions about startup mistakes that have killed funding efforts. There are times when you can ask funders but it should be at the right place, the right time, and the right mood. You can rest assured that funders are willing to help your business as long as it’s in the position to be profitable. There are many correct ways you can ask for funding, but the 5 above are the most blatant way you can get rejected. Avoid these startup mistakes when seeking funding and you’ll have a leg up on other startups.
Want to learn more about how I can help you avoid these and other common startup mistakes? Contact me today and let’s talk!