With pitch decks and startups, there are many things founders don’t know. Fundraising never is a simple or straightforward process to anyone, especially in the case of startups. If the founder and his team never made a pitch deck before then raising funds can be difficult.
Many will teach you what to do, only some will tell you what not to do. Another way to avoid making mistakes is to learn from others’ examples of fundraising mistakes.
In the world of pitch decks investors, angel investors, entrepreneurs, founders and consultants all have different opinions on what’s correct and what’s less correct.
NethanelSztrum- enterprise investor claims that only 1 out of 100 companies succeed in fundraising.
Bharat Anant- Startup finance expert and Dunrobin Ventures founder confirms that the average founder faces approx. 86% failure rate in the seed round alone.
So start thinking about basics yet big mistakes should founders watch out for?
Some investors have different opinions while others have different experiences, so they have some other stories. Here, we collected a bunch of different stories and related opinions, after analysis and gleaned data- drive, which common fundraising mistakes that founders should avoid are mentioned below.
- No investor outreach strategy
To raise funds, startups need to reach out to the right investors means targeting investors who invest in the same stage and industry of the businesses. Outreach strategy must be well defined by the investors. Approx. 58% of founders do mistakes in this category and end up wasting the time of investors as well as themselves.
- Not knowing what a pitch deck needs
Founders don’t know exactly what’s expected from a good pitch deck by the investors. In this category, investors highlighted pitch deck-related mistakes from format to content. Such type of mistakes occurs due to a lack of research, knowledge and experience of pitch decks that can hurt a startup’s chance of getting funded. Founders are unable to meet investors’ level of expectation, therefore approx. 39% of investors mentioned mistakes under this category especially to meet the minimum level of expectations.
- Attitude and behavioral issues
We all know it’s difficult to work with someone with a bad attitude. The third most mentioned fundraising mistake was the attitude and behavioral issues. Investors believe that the right attitude of founders reflects their mindset and ultimately gives a huge impact on the decision. After experiencing many instances investors found that founders become too arrogant and even too eager only a few are in the confident mode. Another mistake is founders take rejection too seriously instead of working on negative points and again coming back with a bang! According to data approx. 32% of investors have mentioned mistakes under this category.
- Inappropriate or far-fetched claims
Many investors mentioned in their experience with founders who were more inclined to say what they want to hear instead of telling the truth. The base of any healthy working relationship is trust. Therefore, instead of maintaining transparency, they do wrong data interpretations or false claims to appease investors which set founders up for failure. According to data approx. 29% of investors have mentioned mistakes under this category.
- Business model issues
Investing is a risky business; therefore, a startup’s business model scalability is of high importance. According to investors even if they want to say yes but sometimes the business model isn’t as promising as hoped. Ultimately, both parties are in the money-making business thus commercialization is crucial for investors.
Fundraising is a difficult and time-consuming task that needs extraordinary preparations. Even if you plan and do everything perfectly, the odds of any VC or angel investing in your startup are low. But, if you take care of these unforced errors, the odds quickly drop to zero. As an entrepreneur, you are taking a huge risk so ensure you give yourself the best possible chance of success.