Although thousands of early stage businesses and ideas receive VC funds each year, there are several common mistakes entrepreneurs must avoid. Here are a few examples:
Being Underprepared
Many entrepreneurs make the mistake of thinking that all they need to do is show up and pitch venture capitalists in order to get funding. However, this isn’t the case. Business leaders must inspire confidence among their potential investors by demonstrating their understanding of their companies. This includes seeing where a company needs help and being honest about uncomfortable numbers.
Failing to Understand the VC Industry
The process of getting venture capital funds can take several years, yet many entrepreneurs make the mistake of thinking they can get VC funding in just a couple of months. Part of why the process takes so long is due to the many stages of investment that is required for VC funding. In addition to this, some funds have minimum investment amounts that dictate how much they give to a company.
Waiting to Monetize
Before pitching to venture capitalists, entrepreneurs must determine how much money they realistically need to raise during the process. This ensures they are not overfunded or underfunded. In situations when companies are overfunded, they have a habit of delaying monetization. This affects consumer perception of value and is detrimental to future business success.
