Scary But Common Fundraising Mistakes
Fundraising can be daunting, and as an entrepreneur, it’s easy to make mistakes that could cost you valuable time, resources, and relationships with potential investors. Here are some of the most common mistakes to avoid when raising funds for your startup.
1. Thinking Ideas Are Worth Everything
You might be wondering… "What?!"
How can ideas be worthless? New ideas and the right innovations are what everyone admires in a new business, and without them, you wouldn't be an entrepreneur! Right?
Well, sort of. But it's very far from the whole picture.
Your ideas are necessary - but they are 1% of the work.
And not even necessarily the first 1% of the work.
There is so much more work that goes into being an entrepreneur. Research, building the product, getting traction, creating business systems, investment, marketing, teams, managing and leading... The list goes on!
Well, yes, but only to a certain extent. Ideas are just 1% of the work needed to build a successful business. The real challenge lies in execution—everything from research, building, business systems, and investment to marketing, team management, and beyond.
The Reality Check:
Simply having an idea isn’t enough. In fact, many people who say they are “working on an idea” are often not doing much beyond thinking about it. They might be hesitant to share their idea because they fear it will be stolen, but more often than not, this signals a lack of confidence in their ability to bring the idea to life.
Key Takeaway:
To turn your idea into a business with actual value, you need to be confident and develop the necessary business practices. Focus on execution and building a solid foundation.
2. Recognizing Your Earliest Investors Are Your Customers
Your earliest investors might not be traditional VCs or angel investors—they are your customers.
Why Early Customers Are Vital:
When someone chooses to spend money on your brand early on, they are effectively “investing” in you. It’s a vote of confidence in your product or service. Additionally, mentors, advisors, or anyone who supports you with their time or expertise is also investing in your future.
How to Treat Early Supporters:
Keep them updated: Share progress, wins, and challenges.
Make them feel valued: Include them in your journey and ask for feedback.
Foster loyalty: Treat them well, and they’ll likely become long-term brand advocates.
Key Takeaway:
Value your early customers and supporters as investors. Their feedback and support can be invaluable to your growth.
3. Don’t Accept Inaction
Avoid wasting time on people who don’t commit.
We all know that person who keeps booking meetings, telling you how great your idea is, and then booking more meetings without ever actually doing anything.
Stop talking to them.
As a new business, you can’t afford to wait for other people to let you down gently.
How to Handle This:
Be Direct and Set Clear Deadlines: Communicate your timeline from the start. If they’re genuinely interested, they will adhere to your schedule.
Avoid Prolonged "Maybes": If someone isn’t giving a clear yes or no, it’s often a no. Don’t let a “protracted no” drag out and waste your time.
Key Takeaway:
Respect your time and focus on those who are ready to take action. Your time is precious; don’t spend it waiting for others to let you down gently.
4. Mastering the Art of Networking
Networking is often a polarizing activity—you either love it or hate it. However, it’s crucial for securing the funding you need.
Why Networking Matters:
To raise capital, you will need to spend a significant amount of time finding pitch events and seeking introductions to potential investors. Even if done virtually, cold outreach rarely works. Building genuine relationships through networking is essential.
Networking Tips:
Attend Events: Look for relevant pitch events and networking opportunities.
Ask for Introductions: Leverage your existing network to get introductions to potential investors.
Be Persistent: Raising capital takes time and effort, and often requires several attempts before success.
Key Takeaway:
Networking is not a “nice-to-have”—it’s a necessity. The connections you make today can open doors for future funding opportunities.
5. Understanding That Funding Isn’t a Fix-All
Many startups think that securing funding will solve all their problems. In reality, it brings new challenges and difficult choices.
The Truth About Funding:
While investment can provide the resources you need to grow, it also comes with expectations and pressures. You must still put your business first and make decisions that align with your long-term vision.
Key Takeaway:
Funding is a tool, not a solution. Use it wisely, and be prepared for the new challenges that come with it. Focus on building a sustainable business, and the investors will come when you’re ready.
Conclusion: Focus on Execution, Value Relationships, and Keep Networking
Raising funds for your startup is challenging, but by avoiding these common mistakes, you can increase your chances of success. Focus on turning your ideas into reality, value your early supporters, and build meaningful relationships with potential investors.
Instead, it is one with new challenges and difficult choices. But if you put your business first, the investors will come when you’re ready. I can’t tell you how many founders I know that, more than anything else, wish they knew that when they got started.
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About Seven
Hey friends! I’m Seven - I write about challenges and opportunities affecting leaders across business. I release a weekly newsletter and a podcast, helping folks understand the leadership journeys and challenges out there, so we can better understand our purpose, place, and potential. The goal: to learn about what it means to be a leader, to support leaders, to find leaders, and to discover the leader within.
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