The Builder's Guide to the Tech Galaxy

11Six Questions Every Growth Stage Investor Asks

With Vanessa Pinter

Key pitfalls to avoid for scale-up builders:

• Selecting VC partners based on brand only, not on added value.

  A typical pitfall when it comes to selecting venture capital firms is to have a bias toward the glamorous option. While having several top VCs investing in the company helps to attract talent and other investors, it also pays to have venture capital partners on board who are operationally effective in areas like executive recruiting, sales introductions and strategic advising based on a relevant network.

• Failing to rally around investors for the next funding round early enough.

  Some entrepreneurs start fundraising too late, which results in them being pressured to close a funding round – and being at a disadvantage during negotiations. Establishing an inbound investor relationship process to build up a pool of potential investors and start raising funds at least six months before the money runs out is often helpful here (see Practice 93).

• Lacking clarity of thought when pitching to investors.

  Long-winded and ill-structured pitch decks are a recipe for failure when it comes to funding goals. When pitching for growth capital, clarity of thought on the serviceable available market, category leadership and the path of becoming profitable in the long term are all key (see Practice 92).

• Agreeing to term ...