There are a lot of startups these days. With the explosion of accelerators, more and more companies secure seed funding, which helps them build out their products and business models. After that initial small investment is done, though, it’s time to raise the real money.
We all know this song and dance: raising capital is hard. It’s hard no matter who you are or what your company is doing. (Well, okay. If Mark Zuckerberg ever wanted to start another company, he probably wouldn’t hurt for investors.)
For most of us, though, raising funds is hard work. So, it’s probably a good idea for founders not to make rookie mistakes that will hurt their chances even more. How does the rookie founder avoid rookie mistakes, you ask?
The Founder Institute, an early stage accelerator, developed this infographic to outline some of those mistakes. The number 10 mistake is failing to use charts and graphs in your presentation. While this seems like such an unimportant detail, the rise of–well–infographics shows us that visually displaying data is important. In the case of investors, who may be unfamiliar with your industry, these charts and graphs can help them easily grasp your points.
Another mistake is not connecting the financials to your story. This happens a lot in demo day presentations. A founder is humming right along, drawing the audience in with a compelling story. Then, boom, out of nowhere they’re talking money. Weaving that information into your story is crucial to keeping everyone engaged.
The number one rookie fundraising mistake? Projecting $1 billion in revenue for year 5. Founders throw out big numbers like this because they think investors like to hear it. Investors do like big numbers, but they also prefer projections to be somewhat realistic. To put it in perspective, eight years after founding Twitter has yet to reach $1 billion in revenue. Facebook did it in 6 years. Google did it in 5 years, but if you’re the next Google, fundraising shouldn’t be too difficult anyway.
Check out the infographic for the whole top 10 fundraising fails: