Funded

Chapter 13. The Top 10 Fundraising Mistakes

We’ve spent a lot of time throughout this book making sure you know what to do when raising money, but now it’s time to cover the top 10 fundraising mistakes that founders make when raising a round.

1. Waiting Too Long to Raise

When you set out to fundraise, leave yourself at least six months of runway. Avoid waiting for the next milestone, or the perfect time to raise, while running out of time and money. It could leave you without the necessary time to raise and result in premature death for your company.

2. Raising with Nothing More Than an Idea

There are very few people in the world who can raise money with nothing more than an idea. Generally, the only people who can do this are entrepreneurs with very strong past relationships, and a track record for building incredible products and making money for investors. Prototypes are easier to make than ever. Make sure you have at least a basic working prototype (also know as a minimum viable product, or MVP) when you start raising.

3. Putting All Your Eggs in One Basket

Many entrepreneurs raise in sequence rather than in parallel, putting all of their hope in a single investor issuing the right term sheet at any given time. You can’t bank on a single investor to give you the best terms. Without a competitive environment, they have no incentive to give you better terms or commit. Take your meetings in parallel and create a competitive environment.

4. Overemphasizing the ...