Who usually finances startups? The three Fs, as they say - family, friends or other fools. But what to do when there are no such people or the sources of investment have already been exhausted? There are various accelerators, business incubators and venture funds that can help startups. Still, not every project can receive the necessary funds for development and become partners with a good investor.
We have gathered some of the main mistakes you need to avoid if you want to successfully make deals with investors.
The local market is not always the best option
In the initial stage, many projects focus on the development of the internal market, but do not pay much attention to the strategy of abroad expansion. It is necessary to firstly understand which market you would want to enter and then apply for funds. This greatly increases the chances that your startup will get the help of a large company and get investments.
You got the wrong address
Before addressing accelerators, incubators or venture capital funds, examine all available information about them, in order to then come up with a relevant idea. Such organizations have their own characteristics and focus on a particular industry. Many lost the chance to receive investments, because they did not study the specialization of the fund beforehand and produced a very bad first impression.
Everyone has to sell
If the investment commission sees that there are 10 developers in the team, who work on the ideal product and only one person who sells - you lose. This is a mistake in structuring the team. All team members must sell the idea or product.
You come with an idea instead of a business plan
Startups often come without a business plan, having just a description of their great idea. The fund's representatives themselves would have to think how to sell it, what channels to use, who the target audience would be, they must estimate the ROI, etc. Do you think this would be an interesting task to deal with, as an investor?
On the other hand, someone might come up with such a large business plan, that it would take a few days just to read it.
In fact, it’s enough to make a brief diagram that describes all the business details: the supply, it’s infrastructure, consumers, finance and so on.
The wrong time
It is important to use funds in the development stage. Some companies start making connections too early, at the idea stage. Not all potential investors take a project seriously at such stages.
Other startups call too late. It may happen that they took money from their parents and did not manage to develop a business in time. Usually, the creators of such projects are already exhausted when they reach out to funds. Investors see this and have no desire to finance them.
Just try more
Even if you got a no once, don't give up. Try elsewhere. Reach out to different investment centers in different countries. In addition, get your idea testd and "sold" at all types of investor meetings. Try, by any means, to get feedback from your target audience.
Don't limit yourself and don't be afraid, because there are no bad ideas. There is too little effort to make them come true.
