The document outlines 5 common mistakes that startups make when applying for venture capital (VC) funding. They are: 1) Having no "wow factor" or unique selling proposition for the business. 2) Expecting a quick turnaround for funding decisions, which often take months. 3) Touting an untested business idea that is only in the planning stages. 4) Neglecting to include real market data and financial projections backed by research. 5) Lacking a clear development plan for how funding will be used and what milestones it will help the business achieve. The document provides tips to avoid each mistake and improve chances of securing VC funding.
15. A large number of
applicants turn to VC
funding at the eleventh
hour as a last-ditch
effort before running
out of capital.
16. Securing VC funding is
not for the impatient:
Business analysis, building
the investment case,
approval, due diligence,
and legal and financial
structuring are
undertaken with
meticulous care and
attention to detail.
17. Plan for a longer process
than you imagined as it
could take a number of
months depending on
the deal size and stage
of the business.
18. For the best chance of success
for
2. Expecting a 24-hour turnaround
19. 1
Don’t leave it to the last minute -- VC
funding is more difficult to secure if it’s
seen as a last-gasp effort.
20. 2
Plan for the long run -- get to know
the VC funds and managers. The vast
majority of deals are done through
referrals and existing relationships.
34. For the best chance of success
for
4. Neglecting the real numbers
35. 1
Do your own research -- this gives you
better direct insight. There is plethora
,
of online tools that enable you to
gather data quickly and affordably.
36. 2
Be sure to do a detailed competitor
analysis, where you compare your
solution to others on a feature-by-
feature basis. Also consider future
territories and include relevant data
and sources.
38. T few entrepreneurs
oo
have a clear
understanding of how
much funding they
actually require for the
next stage of their
business.
39. And sometimes are even
unclear about what the
critical goal is that the
funding is to help
achieve.
40. You lose credibility if you
return to the market for
more funding without
having made significant
progress.
41. For the best chance of success
for
5. Lacking a clear development path
42. 1
Be clear about why the funding is
needed and what it will help you
achieve.
43. 2
You need to determine how much
actually need and not how much you
think you should raise based on ‘norms’
— the more you raise in the early stage
of your business, the more equity you
will have to give up.
44. 3
At the same time, make sure you raise
enough to get you to the next phase,
and work on the funding carrying you
for 18-24 months.