How Do You Build Trust with Potential Investors?

Do you know the single most important reason for a startup to fail?

Is it the product being poor?

No!

What about having inexperienced management?

Umm… not really!

According to Forbes, lack of funding is the biggest reason why startups fail.

You might already know that, but do you know why most startups fail to raise funding despite being well positioned?

Let me share the FIVE biggest reasons why most startups struggle to secure funding and how to overcome them:

1. Massive Valuation

Chances are you’re valuing your company based on future cashflows without de-risking your assumptions and showing adequate value against the valuation. Remember, valuation follows value. If you fail to demonstrate the value created so far, you’ll find it difficult to justify your valuation. Ensure you de-risk your assumptions and present a clear, value-backed rationale for your valuation.

2. Lack of Validated Expectations

Most startups pitch "assumptions" and "expectations" instead of sharing validated facts. To gain investor confidence, you need to communicate validated assumptions. It’s easy to say, "Customers will LOVE our product." Really? Has someone used it? Have you tested it? Conduct a small target survey and then say, "90% of our survey respondents loved our product." This approach communicates authority, inspires investor confidence, and positions you better for fundraising.

3. Unprofessional Pitch Deck

Believe me when I say this – your pitch deck speaks volumes about you and your company. Many startups hire a $50 copywriter and a $50 designer, then ask for $1 million in funding. That’s not going to happen because you get what you pay for. A pitch deck is crucial and must not be compromised. Even if you’ve prepared the deck yourself, get it validated by someone experienced. Their expertise can elevate your pitch deck and increase your chances of success.

4. Limited Investor Relationship

Wouldn't it be great if you pitched to your next investor and they immediately wrote you a cheque for $500,000? I’d love that! But honestly, it doesn’t happen that way. Startup founders need to invest time and energy in maturing their investor relationships. Attend networking events, study their LinkedIn profiles, and interact with them outside the boardroom to establish solid relationships that improve your chances of success.

5. Unorganized Data for Investor Due Diligence

No one – not even your father – will invest their hard-earned money in your business without doing their due diligence. Most deals fall apart during this stage. Investors will want more information, and failing to provide it in a timely manner will reduce your chances of securing the desired funding. Ensure your data is well-organized and readily available for due diligence.

Solving These Challenges

At SAZ Square, we work with startup founders to prepare investor-grade pitch decks and improve investor readiness. This time-intensive process involves diving deep into your business, creating a compelling storyline, and helping you navigate investor questions and challenges.

If you believe your startup deserves funding and want a professional team by your side, feel free to leave me a message. I’d be happy to help you achieve your funding goals.

What has been your biggest challenge in building trust with potential investors? Share your experiences in the comments below!

#StartupFunding #InvestorRelations #PitchDeck #Entrepreneurship #BusinessGrowth

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