For the past 4 years, we have been working with various startups and helping them raise funds.
I won’t say that all of them are success stories – that will be something far from the truth. But even “not so successful” experiences have taught me some valuable lessons.
Based on my experience, there are few MAJOR red flags which can potentially make your investors run-away from your business
Incorrect Founding Team Composition – Onboard co-founders and save salaries & consultancy expense. Investors are turned off seeing that your team is incomplete! (You may also subtly convey that you lack leadership skills! Opps)
Having Excessive Baggage – Having complicated Cap structure, founders agreement, debt may put off the deal. Come clean and win clean!
Raising money to survive not thrive – Are you raising money just to survive for next few months – If so, your investors can easily tell! No way around it!!
Crazy founder salaries – If your investor sees that more than 10-15% (varies) is going towards payment of founder salaries – they are OUT
Lack of Founder Focus – Investors need to be certain that you’d be fully committed and focused on the business for which you’re taking their money! If anything else – they might pull out the plug!
Hopefully, this will provide you with some value and be well ready the to face your investors next time!!