1. Trying to raise money too late
Raising money is time consuming. Count with an absolute minimum of 3 months, with a more likely scenario being 5 – 7 months.
2. Trying to raise money too early
There should be a logical relationship between the perceived value of the company in need of cash and the amount of cash to be raised. Trying to raise significant sums simply based on an idea usually fails, which leads us to point 3 below:
3. Lacking a realistic assessment of the companys’ value
Some entrepreneurs seem unaware of what drives value and ignore the importance of building some form of substance before approaching investors.
4. Not building enough substance before approaching investors
Investors tend to look at the following factors when determining the value of a venture:
• Team, advisory board and board of directors
• Strategic partnerships
• Customers and customer value
• Prototype/proof of concept
• Immaterial rights/protection
• Scaleability and market potential