Starting a startup might seem all exciting and there could be times that everything falls into its respective place. You think about starting a business and the customers come knocking at your door since day one.
You raise funds easily and your first pitch to your investors is a rip-roaring success. Everything goes according to the script, even if you didn’t think too much about it. But what happens when you couldn’t able to generate investment for the second round? What happens when things go wrong?
Watch everything that you need to know about Fundraising in this video:
The problem with effortless success is that it does not prepare you for the worst. Some so many entrepreneurs tasted early success in their entrepreneurial journey, but things got a little tricky when additional capital was required. Their numbers were bad and their business looked like a nightmare which put the investors off-board.
So what are those BIGGEST mistakes of fundraising that every entrepreneur must avoid? Here is a list:
1. Catastrophic Mistakes
There are plenty of crucial decisions to be made over the first few raises. Entrepreneurs must decide how to pick the right investor for their business, whether they should try crowdfunding, and how to evaluate their business. The important steps can help to take the business to successful heights. But these are the areas where people can make catastrophic mistakes.
How to avoid it?
The starting point is the exit! What many people don`t realize is that taking investments puts you on a path to exit. Every investor wants to get off in 6-10 years with a return. So looking at the stages to exit is the place from where entrepreneurs should think further than expected. Also, one can take professional help from the best business coach in India.
2. The Correct Numbers
Focusing on numbers is one of the most essential things if you want to ensure that your business sustains in the long run. Many start-up businesses fail to thrive ahead because the founders couldn’t raise a second tranche of money. Numbers are critical even at the pre-revenue stage and therefore it is vital to work on the financial plan. Most founders overestimate the cost and the period it will take to hit targets.
How to practice it in the real world?
So understanding the biggest gap that exists in the business models is between what is being projected and the actual cost bases is very important. Investors typically look for businesses that can understand their cohort financial analysis, customer acquisition drivers, and churn rates. Hence, an in-depth understanding of unit economics and how it can be improved can help any business to sustain itself for a longer time. However, hiring a business coach too can help you navigate the challenges of fundraising.
3. Unpicking Experience
To err is human. And one of the best qualities that humans are bestowed with is their ability to learn from them. But is the fact that someone has made mistakes and learned a valuable lesson from them is necessarily a reason to trust their judgment? Well, certainly not!
Unless humans make mistakes, their learning will never start. However, it is not advisable to carry the burden of past mistakes over their shoulders. Many entrepreneurs carry the weight of their past business mistakes to their present and future. But dwelling on past mistakes results in nothing more than unhelpful introspection.
How to avoid it?
Learning from past mistakes is something that every successful business leader must do. Also, if you take help from a business coach he or she can probably help you to learn from their professional mistakes which is probably every essential.
Fundraising is certainly not easy! Even if you find investors in the first round easily that does not guarantee for the next investment rounds to be that smooth. Hence, only by understanding both the thinking of investors and the pitfalls that may lie ahead, businesses can be better equipped to obtain the funding they need. And taking the professional expertise of a business coach can demystify the investment landscape for entrepreneurs.
To know more about fundraising and investment strategies, take our ‘Entrepreneurship Course’ which is a specialized online business course tailor-made for those who want to pursue their entrepreneurial goals!