Starting a company can be daunting, especially if it’s your first time. Thus, being an amateur in the industry is somewhat expected. To help you with this shortfall, here’s what not to do when seeking funding for your business.
You make up a new valuation based on how much the venture capitalist wants to invest
Don’t change the price, at least not explicitly, based on a VC saying they’d invest X amount. “If you want to invest $2 million, then the price is $20 million. For $3 million, it’s $30 million.” Don’t do that.
You don’t know the competitive landscape
It’s okay to say, “I should know more about [competitor] but I’m not sure of the answer”. Not great but it’s better than pretending.
You don’t know much about the VC firm
If you are unable to see the immediate issue here, you may have a bigger problem on your hands.
You badmouth the competition too much
A tiny bit isn’t the end of the world but great founders respect the competition.
You’re too arrogant
Don’t be too nervous but don’t go too far the other way. This can sort of work for later stage investments but usually doesn’t work well for earlier stages.
You ask for money to help you build a “sales process”
Rather, ask for money to help you sell faster and better — not to figure out how to sell. You need to do that yourself.
You don’t know your core metrics fluently
You have to know your MRR (revenue), average deal size, latest customers you closed and burn rate. If the CEO has to turn to their co-founder for an answer, you’ve already lost.
You show up late
Don’t waste people’s time – especially those who could potentially be funding your idea.
Article originally appeared in Fast Company SA’s June/July issue.