If you seek investors for your next business venture, it’s important to avoid making any mistakes—especially if it’s your first time raising money. Below is a list of some of the most common mistakes to avoid.
Avoid Appearing Desperate For Funds
You must make the investors feel that they need you to reap profits from putting their money into your venture. Do not appear too keen on grabbing funds from them. Let them realize who the boss is in the venture, and allow your importance in the project to be felt by them. You should be confident in your project and its potential success. On the other hand, you must also not appear too over confident about the business venture. The investors may grow suspicious for all of the wrong reasons.
Do Not Forget To Hire An Experienced Lawyer
No matter how much awareness you have of your business venture, you still need an efficient lawyer to draw up the agreements with the investors. You may not be able to foresee all of the possible situations that may arise 20 years in the future. However, an experienced lawyer can foresee most situations since they are specially trained for that. Hire your lawyer at the very beginning. A reliable and trustworthy lawyer is definitely worth the cost.
Do Not Enhance your Valuation Every Time You Go For Fund-Raising
As soon as you finalize on starting your business enterprise, start looking for money, even if that means a lower valuation of yourself. Your money will take the least time to make it big if the investment is done in the right quarters. Raise your valuation after you have been rated as a successful entrepreneur. This will develop a goodwill for your company that will make the investors deal comfortably with you.
Do Not Waste Too Much Time Collecting Funds
Fundraising is just the initial step in starting your business venture. This has to be done fast so that you can attend to more important aspects of building the enterprise. If you take too long with fundraising, you may lose your direction and will then have difficulty with other aspects of the business.
Don’t Allow Investors To Cling To Their Money After The Commitment Is Made and Paperwork Completed
Often the investors have this peculiar inclination to release the money as late as possible, even after the agreement has been signed. Don’t allow this to occur. It’s especially important to access the funds when you’re beginning the business since there are so many costs associated with getting a business off the ground.