“Mentorship is the key to successful entrepreneurship” - Richard Branson

Featured Author: Ernest Papadoyianis

Raising capital for your company is one of the most important, if not THE most important thing you will do. Whether you're launching or expanding, raising capital is a necessity for most business owners. However, as most entrepreneurs will find out and tell you - raising capital can expensive, time consuming, and filled with emotional highs and lows.

Competition for capital is FIERCE as more and more people, particularly millennials, look to start their own companies. Therefore, avoiding common mistakes is how you evaluate your business credibility and validity because how you present to investors is critical.

With that said, here are 5 common mistakes I see on a daily basis when evaluating companies and how YOU can flip these to your advantage! 👊

1. Lack of Preparation. The "Build It and They Will Come" syndrome.

Ever heard the saying, "build it and they will come?" It was made popular by Kevin Costner in a 1985 movie Field of Dreams. Others say it was originally a quote in the Bible where Gold told Noah that if he built the ark, the animals would come. Either way, it doesn't work in business! Today it seems to create an unrealistic expectation that all you have to do is build something and people will just show up begging to buy it.

Unfortunately that's not how the real world works. Build it and they will come is bull. Many entrepreneurs fall in love with their business and fail to objectively evaluate its validity and potential. Why is YOUR business necessary, and why now? Who is your target market and what is your serviceable obtainable market? Who is your competition and why are you better? Can you produce your products or services better, cheaper, faster and/or closer to the market? All of these questions and more need to be researched and answered objectively.

2. Technical Overload

Many entrepreneurs are so passionate about their products/services and operations so much so that when I open up to read their documents, instead of a story it's reading like a thesis. Technical language and trying to make your document "sound sophisticated" is a recipe for failure.

Firstly, investors are smart. However, they likely don't understand the same technical information that you do and if they can't clearly and easily understand what your business does and how it makes money...they're going to walk away.

👉BONUS: overload on the technical information is typically going to reduce other critical information that investors want and need to see.

3. No Team Diversity

Just as real estate value is based on location, location, location; investment is based on people, people, people. The best business model's in the world fail if the right people aren't there to execute it.

Having a diversified management team with expertise in business, finance, marketing, sales, and legal is essential to attracting investors and providing them the comfort level that your team has the expertise and diversity it needs to be successful.

4. Lack of Relationship

Asking someone to make an investment in a young company requires a high degree of trust. It's not just a sales transaction. Investors need to trust in the Founder's (YOUR) ability, honesty, and transparency before they write a check.

Entrepreneurs need to spend time in developing a relationship with the investor, requesting feedback, and demonstrating a commitment to collaboration and mutual success.

5. Ignoring the Investment

Many entrepreneurs focus almost entirely on the business and its technicalities in their capital stack and investment pitch. Of course that's necessary but my friends, you are asking an investor to make an INVESTMENT.

So tell them when, why, what, how, how many, and how do they exit? Believe me - I get it! This is your vision and entrepreneurs love their businesses, but investors love making money.

Tell them all the juicy, pertinent details of the investment!

Flip these to YOUR advantage

Every entrepreneur should consider engaging the assistance of a mentor to help steer the capital raising process in the right direction.

Now you know the most common mistakes. Perhaps you've identified some of these you may have even done yourself. Except now consider yourself armed with the knowledge that by knowing these common mistakes allows you to possess a unique opportunity to flip these challenges to your advantage.

By recognizing these pitfalls, you can proactively address them, turning what were one potential setbacks into strategies. Embrace each misstep as a chance to learn and grow, refining your approach and strengthening your deck and documents. Remember this isn't just about hoping this will come to fruition. It's about preparing...using the system of preparation to leverage opportunity and maximize your success when raising

Other resources to help you get started with raising capital

Business Business specializes in investment readiness and capital introductions. We prepare our clients with impactful, detailed and investment grade collateral to maximize investor interest and opportunity. we pride ourselves on having a solid understanding of the investment preferences of our capital sources, and make targeted introductions for maximum success.

If you are looking for Pre-Seed, Seed, or Series A funding, contact Business Booster today.

Female Founders Raising Capital? Raising capital is difficult (I know..) and ..aren't you tired of navigating this complex, convoluted and noisy world of fundraising alone?

Time wasted, countless headaches, rejection, spinning in circles if not being able to connect with the right resources. And Check it out - most businesses fail not only because of lack of capital. But lack of PREPARATION! Well that's over because I'm thrilled to extend an invitation for you to join Rise to Capital, dedicated to helping founders like you properly raise capital without the unnecessary fluff. Save time, increase your success rate, gain confidence and get started by signing up for Rise to Capital. Join Today and Click Here.