Common mistakes startups make when applying for funding

Common mistakes
startups make
when applying
for funding.

@Abhishekshah


There is a perception
among entrepreneurs
that a revolutionary
idea is enough to secure
the venture capital
needed to kick-start
their businesses.


This is
simply
not true


Here are five of the
most common mistakes
made by entrepreneurs
when applying for VC
funding.


1. No WOW! Factor

The first rule in the VC
game is that your
business proposition
must have an
exceptional
differentiating factor.


You need to know what
your sustainable
competitive advantage
will be.


If you’re trying to raise
funding for a
conventional business or
idea like a franchise or
service business . . .


VC is probably not the right place to start looking.


For the best chance of success

for

1. No WOW! Factor

1

Be sure your business has that x-factor


2

Do your Research

a

understand what
industries or types of
businesses VCs are willing
to fund


2

Do your Research
b

Call them first to
clarify before
applying and
wasting both your
time and theirs.

2. Expecting a 24-hour turnaround


A large number of
applicants turn to VC
funding at the eleventh
hour as a last-ditch
effort before running
out of capital.


Securing VC funding is
not for the impatient:
Business analysis, building
the investment case,
approval, due diligence,
and legal and financial
structuring are
undertaken with
meticulous care and
attention to detail.


Plan for a longer process
than you imagined as it
could take a number of
months depending on
the deal size and stage
of the business.

For the best chance of success

for

2. Expecting a 24-hour turnaround


1

Don’t leave it to the last minute -- VC
funding is more difficult to secure if it’s
seen as a last-gasp effort.


2

Plan for the long run -- get to know
the VC funds and managers. The vast
majority of deals are done through
referrals and existing relationships.


3. Touting an untested idea


VC analysts and fund
managers are unlikely to
be swayed on the

strength of a business
plan alone.


For the best chance of
success, develop a
working prototype or
some basic software.


VC funds respect
entrepreneurs who have
risked their own funds
and resources to get
their big idea off the
ground.


For the best chance of success

for

3. Touting an untested idea