Tuesday, April 23

7 Mistakes That You Need to Avoid for Safely Raising Business Funds

In today’s era of an ever-evolving market, a new startup business comes across a variety of challenges and securing funds remains at the top of it. Investor sentiment is typical and financing new ventures are not that easy, owing to the fierce competition in the market with the relentless growth of new startup businesses. You might have a great product idea that is filled with exceptional creativity and innovation, but there are many such great concepts and all of them are waiting for a good share of the funding jackpot.

Although there is nothing for you to feel disheartened or crippled after facing a no from one or two investors, you can still stand out in the sea of fierce market competition and do things differently. 

According to, a great business concept that an entrepreneur pursues with great passion can make way for bringing a great deal of funding. Prior to approach the investors, here are some of the common faux that you need to avoid in order securing the much-needed fund for your startup:

Letting Go Too Much Equity Early On

Fundraising is itself a tricky business and giving too much equity early in the game can make your start on the wrong foot. This kind of activity during such an early phase can end up forcing you to relinquish the control of the business and crossing off the chances of securing additional money later.

There is no point of being a minority shareholder in your business venture, as it will result in a situation where you will not be able to take or execute a business decision on your own without the approval of the board of investors.

Hence, think twice before letting go of too much equity right in the beginning as the decision might hurt you later. 

Avoiding Financial Planning

During the onset of your entrepreneurial career, you are equipped with a lot of decision-making and business planning process. From making your product idea and services come into force and working out on the innovative promotional ideas, it is often typical for you to forget the most vital part of your business venture.

Focusing on everything that has to do with the success of your business is okay, but not giving time to financial planning will make you end up nowhere and all your other effort will go in vain. Never lose focus on the bigger picture that will determine the long-term success of your business. Do not let other external factors impact financial planning or else it will result in your business running dry. 

Unable to Cite a Compelling Story

Working out on diverse equations for your pitching and business presentation is all good; however, never underestimate the impact of creating emotions for convincing the room of investors that you are the right candidate they should trust in the sea of numerous startups.

After all, the investors are also human and they act when they see a staunch passion in the room that is trying its level best to make the business venture a great success.

Hence, do not comprise your entire presentation with the monotonous slideshow and start telling a story about your business foundation. Mention from where you came and how all this happened, as well as, where you are trying to go and achieve in the coming time.c

Seeking Funding Without Any Objective

Honestly speaking, a great number of startup founders and small business owners make a poor judgment call when it comes to managing and handling their business while they stalk the market for financing their venture.

They begin looking for investors and seek capital without having a clear picture of the exact number of capital they require and the ways of utilizing the money or where to use it. Stay away from taking hasty decisions and emphasize planning things prior to moving to the next level of execution. A day spent in planning can save you months of extra efforts and hassle. 

Stalking for Investors, Not Clients or Customers

Perhaps the biggest mistake that most of the newly founded business owners commit is to seek funding and not being aware of the market conditions. This also covers not having the correct idea of where to utilize the money and when to seek funds again in the future.

Even though you think that your idea is unique in the market and investors will welcome you with open arms, it is important to sketch out the marketing campaign to find potential customers and clients. Over-worrying about investors will take you nowhere especially when you are wasting your time without targeting a resourceful user community. After all, it is your target audience that will help you in generating the higher return on investment, something that the investors will definitely take in concern. 

Not Considering Overall Expenditures

Undervaluing or neglecting your variable overheads can throw you in a situation of complete misery if you do not address the situation within the right time. Typically, fixed expenses are constant and you have an idea about how much you have in your hand for the required payment. However, variable overheads, on the other hand, start accumulating with the level of your day-to-day operations and create frustration while running the business.

If you are a fresh startup owner, it is important for you to put overheads into the consideration so you can cover them without turning your finance into miseries. 

Over Speculating High Returns

Needless to say, if you are a beginner and going through sleepless nights thinking and planning your venture in the head, it is obvious for you to set some high returns standard. Although there is no harm in speculating positive results when it comes to ROI, in case you are doing it without any analysis, which includes the market research, it can result in facing sheer disappointment. Set realistic goals and expectations and try to estimate decent returns with premium spending. 


Finally, it is never too late to work out on your mistakes and take your former errors as lessons when it comes to raising funds for your business. Stay committed and be clear of your goals while adhering to the aforementioned tips. 

Author Bio:

 John Bell has been writing articles on Social Media, skilled business consultant and Financial Adviser for the last few years. In this post, he has written about the benefits of Social Media Marketing, Business, Finance as well as the features related to the same.

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