There is no doubt that all companies in the world have been affected by the pandemic, unfortunately, most of them have been affected negatively … Startups and entrepreneurs among the most affected businesses, but sometimes great adversity provides great opportunities.
The fundraising process has always been a challenge for entrepreneurs and we have seen many common pitfalls that entrepreneurs make during this process which may cause lost investment opportunities in their promising projects.
It’s so essential now more than ever to tell our startup friends to take care of these common pitfalls in order to get the right investors on board in these special hard days.
Following are the most common pitfalls made in the fundraising process and how to avoid them;
1.Lack of Preparation for Sale
- Consider carefully whether now is the right time to start an investment process before you react.
- Make sure the team is fully prepared, bought in and on message.
2.Misaligned Value Expectations
- Whatever valuation you are targeting, be reasonable and ensure that the valuation in your mind is backed by credible financial forecasts that can stand up to diligence.
3. Target Your Investor Approaches
- Ensure that you are approaching investors with relevant sector experience and a genuine interest.
Remember: the longer you are on the market selling to the wrong people, the less interest you will get when you finally find the right investors.
4. Poorly Time Processes
- Get the timing to market right:
- Where is your business and the market at the time of seeking investment?
- Be honest about where you are and realistic about partnerships in the pipeline.
5. Poorly Defined Objectives
- It will be hard to negotiate terms and compare offers if you aren’t clear in your own mind of your objectives and investment preferences.
6. Pay Attention to The Regulatory Factors
- Get early input from legal and regulatory advisors.
- What you might consider to have been small regulatory and compliance issues for the business can quickly turn into deal breakers for investors!
So in summary, be prepared, start the process early, and learn from these mistakes so that you can get it right the first time.