Even with the best teams and rock-solid pitches, most entrepreneurs get less capital than they want. This is especially true for women entrepreneurs, who on average receive 45 percent less capital than companies founded by men.
While that gender gap is out of founders’ control, there are several surprisingly common mistakes founders can control and avoid when it comes to funding. To maximize investments and grow your startup into a successful company, watch out for these pitfalls:
The mistake: Elevating idea over strategy
When it comes to the pitch, investors want more than, “We have this great idea!”
The fix: To give yourself the best possible chance of getting funded, demonstrate concrete strategies for reaching your growth goals and growing the value of your company.
The example: A company had a new manufacturing component that slashed electricity use. The value proposition was clear: Its product cost the same as the one it sought to replace but was more efficient. The founders also had a target list of prospects that had pledged to reduce electricity consumption, which it had further segmented to companies eligible for subsidies. The value proposition and detailed growth plan were compelling.
The mistake: Focusing on run rate
There’s another thing investors hear all too often in pitch meetings: “This investment will keep us in business for X months before we have to raise the next round.”
The fix: Focus on milestones this investment will help you achieve. You’re not getting this money to stay in business for a year; you’re getting it to improve your company in specific ways and grow the value of your, and the investors’, stock.
