One of the most crucial steps in starting a business can be identifying and seeking the funding that is often necessary for startups. Whether a person is reaching out to angel investors or venture capital firms, the goal should be on closing business transactions and securing the financing that can be vital to the initial success of a business.
Many people try and fail a number of times when it comes to securing capital funding. They may have issues with a business plan or they may not be presenting themselves in a way that is attractive to investors looking to give money to a high-risk business venture. A recent survey of investors highlights some other downfalls that may be making investors hesitant to invest. In general, Colorado entrepreneurs may want to avoid these common pitfalls in trying to appeal to investors.
Entrepreneurs who are not well-informed on their product, the industry and other competitors may face some serious obstacles in getting investors to sign up. By not having a realistic and educated view of their business, entrepreneurs may be setting themselves up to fail in the eyes of investors. This is why it can be crucial to develop and understand a strong business model, stay educated on the competition and have a realistic view of what goals are achievable.
Entrepreneurs who let their emotions drive a pitch to investors can also find themselves struggling to secure finances. Defensive or melodramatic approaches can be unappealing to venture capitalists who want to focus on facts and numbers, not on the egos or emotions of the entrepreneur.
Finally, if a person’s presentation skills are lacking, investors can be quickly turned off of a proposal. It is said in the article that the most important part of a pitch happens in the first 20 seconds of a presentation. Without good communication or a connection with the investors right off the bat, an entrepreneur can end up losing a captive audience and their funding.
Many business owners can take steps to avoid making these and other mistakes simply by being aware of them. However, it can also be quite helpful to work with an attorney who can help an entrepreneur develop a solid business proposal and identify appropriate investors.
Source: The Huffington Post, “Top 8 Things That Make Investors Cringe,” Lili Balfour, July 8, 2013