2 min read Investors see many deals and can spot glaring holes immediately. Here are ten main reasons an investor will pass on your deal:
No Traction.
You need to show some evidence of market validation. Even without a sales team and a marketing budget, there should be some demand for your product.
No Social Proof.
There needs to be some evidence the product works.
The Team Doesn’t Fit.
If there are major holes in the team or you’ve filled the secondary roles and left the primary ones empty, then it’s going to be a problem.
Criteria Don’t Fit.
Many funds are clear about what they invest in (SaaS, Healthcare IT, etc). Your deal needs to fit into one or more of those criteria.
You Don’t Know Your Market.
Those with a vague or fuzzy knowledge of the market or customer will have difficulty raising funding. The ability to site numbers (market size, growth rates, customer spend, etc) helps demonstrate your knowledge.
Financial Projections Don’t Add Up.
Some startups use the excuse that they can’t predict the future and therefore they have no financial projections.
Most investors see this as a lack of knowledge about the business and the market.
Fuzzy Business Plan
Some plans are filled with future possibilities and great opportunities but fail to define the core product and how it will be built and sold. Investors can spot a lack of focus on the business plan a mile away.
No “Use of Funds”.
The phrase “I’m raising $1M” often triggers the bull meter because the fundraiser rarely knows how they’ll apply the funds.
No Validated Business Model.
There’s no evidence of a business either in product or customer activity.
Lack of Follow-Up.
Surprisingly, an investor will express interest and then never hear from the entrepreneur again. It can take several follow-ups to close an investor.
TEN Capital has created a series of calculators to help you see how your startup compares to industry standards.
You can discover if you are ready for funding, see how your deal will be seen by investors, learn how to set the price for your next raise or exit, or calculate how much TEN Capital can save you on your fundraising campaign.
Feel free to try out our calculators and contact us if you would like to discuss your fundraise: https://www.startupfundingespresso.com/calculators/
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group
