Raising capital is one of the most significant business challenges faced by entrepreneurs. The fundraising process for technology startups is typically a slow and painful one, especially for those raising a business from infancy. In many cases, fundraising efforts detract from the time that could or should be spent growing the business. Unfortunately, many entrepreneurs fail to raise capital because of easily avoidable mistakes made when approaching and meeting with potential investors.
The three most common mistakes include:
Not ready for prime-time. Some entrepreneurs might have a great idea for a business, but then try to pitch investors before the concept is fully developed. Before attempting to gain investment capital, the entrepreneur should create a mockup and develop a model of the screen interfaces. They should then talk to potential customers to validate the concept and ensure that product solves a problem. Entrepreneurs also need to develop the right business model for their company. By choosing and adapting the appropriate model, they can forecast product consumption and have the capability to scale the business during the growth phase.
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