TOP MISTAKES START-UPS NEED TO AVOID WHEN SEEKING INVESTMENT

Introduction

As an entrepreneur, you know it’s important to seek investment for your business. That said, there are some things that can make or break your chance at getting funding. In this post we’ll look at some of the biggest mistakes entrepreneurs make when seeking investment and how to avoid them.

Not Understanding the Investor

●???You should understand the investor’s goals. Knowing why they invested in your company and what they hope to get out of it is important.

●???You should understand the investor’s experience and expertise (or lack thereof). If an investor has a background in your industry or field, that's great! But if they don't, make sure you do enough research on them before signing anything. This way you can be sure that their investment will actually help your business grow rather than hurt it.

●???You should also pay attention to any connections a potential investor may have within your market—and make sure those connections could be beneficial for both parties involved with this project.

Accepting / Seeking Too Much / Too Little Capital

●???Accepting / Seeking Too Much / Too Little Capital

This is a common mistake that many startups make. It’s important to understand the amount of money you need to get started, grow and exit. When seeking funding, it’s critical for entrepreneurs and investors to know how much capital they will require in each stage of their growth. They should also be aware of how much equity they are willing to give up in return for additional capital at each stage. Additionally, investors should assess whether or not a company has enough cash reserves for its needs based on monthly burn rates (i.e., monthly expenses) versus projected revenue streams from customers or other sources over time

Not Doing Your Homework

The first step to securing investment is to check the investor's track record. Do they have a history of investing in your area, or similar fields? Is their portfolio diverse enough that they've done their homework and know what they're doing?

Secondly, investors are looking for companies that can grow quickly. They want businesses with big growth potential. So make sure that you're ready for an investment when you're approaching people about it—and don't be afraid of sharing your dreams!

Thirdly, investors look for companies with good management teams behind them. That means being willing to admit when mistakes have been made (and how) and learning from them so as not to repeat them down the line. It also means knowing who you can rely on throughout any challenges that arise along this journey—your friends might not always be there for support when needed most; but someone who invested in your start-up will always be there through thick-and-thin because their money's at stake too!

Not Having a High Calibre Management Team in Place

If you are seeking investment for your start-up, one of the biggest mistakes you can make is not having a high calibre management team in place. Investors will be looking for credible people who have the experience and drive to see the company through the early stages of its development. They need to be able to align themselves with these individuals and feel that they will work well together as a team, rather than just being another pair of hands for your business.

A management team needs to include members who have been involved right from day one with their projects as this gives them an understanding of what makes each element tick and how they fit together; they also provide credibility both within their own industry as well as outside it because they have been there before!

Not Having a Credible Exit Strategy for the Investor

Having an exit strategy for your investors is one of the most important things you can do to ensure you are getting a good return on their investment. It will also help you avoid losing control of your company, and make sure that you have enough capital to grow.

Here are some questions to ask yourself:

●???How will I be able to exit in 6-12 months? Or a year and a half? Or two years?

●???What's my expected P/E ratio? Is it higher than others in my market space?

●???How much additional growth do I need before we can sell our company or IPO?

Having Unrealistic Expectations about the Amount of Equity You Keep

It is important to understand the motivations behind an investor’s decision to invest in your company. Investors have a monetary stake in your business and, therefore, need to be able to make a profit from it. They will also want to sell their stake at some point in the future. To do this successfully, there needs to be enough capital left for them or their heirs after they have sold their shares of your business.

The best way for investors (and you) to ensure that this happens is by keeping your equity as low as possible while still remaining profitable and growing quickly enough so that you can secure further investment when needed.

early stage companies looking for investment need to be conscious of these things to avoid mistakes and make their chance of getting investment more likely.

There are a number of mistakes that early stage companies looking for investment need to be conscious of, in order to avoid them and make their chance of getting investment more likely. These include:

●???Understanding the investor’s goals and motivations

●???Having a good management team in place who can work together effectively and move the business forward

●???Having a credible exit strategy for the investor

●???Not having unrealistic expectations about the amount of equity you keep (i.e., don’t get greedy).

Conclusion

Early stage companies looking for investment need to be conscious of these things to avoid mistakes and make their chance of getting investment more likely.

RUCHI RATHOR Founder & CEO

Payomatix Technologies Pvt. Ltd.

FOUNDER AND INVESTOR | PAYMENTS PROCESSING EXPERT | MERCHANT ACCOUNT SOLUTIONS | WHITE LABELLED PAYMENT GATEWAY | Dreamer, Creator, Achiever, Constantly Evolving

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