Is your startup struggling to get investment, but desperate for help with your cash flow? If so, you are in good company. Investors are notoriously hard to please. However, there are a few things that can end their interest in a matter of seconds. Also, it’s fair to say that many new startups are guilty of making these common – and needless – mistakes. We’re going to take a look at the five big reasons why investors are showing no interest in your startup. Clear these issues up, and you will have a better chance of getting the funding you need.
Your idea is weak
Many people have fantastic ideas for new businesses. But the truth is that although these ideas seem brilliant to the person thinking of them, there is no interest in them in a wider market. They don’t solve a genuine problem – or they don’t address it well enough. Investors want a business that can catch fire, and get right to the heart of people’s problems. Anything less and you will struggle to find funding.
Your management team lacks experience
Experience counts a lot when it comes to getting investment. Don’t forget, when an investor hands over cash, they expect you to be able to handle it – and turn it into a larger amount. This isn’t to say that you need to be as experienced as Bill Gates – everyone needs to start somewhere, after all. But if you lack experience, you need to make up for it when you are forming your team. If you can ensure that you have strong leadership in finances, marketing, and management, you’ll have a better chance.
You don’t have a business lawyer
Investors want to limit their risks. And, as there are so many legal complications of running a business, it’s no surprise it is one of their major concerns. According to Twiford Law Firm, investors will consider all kinds of legal ramifications before giving you anytime. The legal structure of your business, your patent filing, your liability issues – they are all taken into account. Having a lawyer on board at an early stage can ensure you are ticking every legal box. And it will make your startup a lot more appealing to potential investors.
You aren’t getting your message across
Everything you say as a business, from your marketing to your investment pitch, needs to be perfect. Without a strong message that is concise, polished and clear, you won’t raise a cent from an investor. There are a few things investors want to know. What will be the return on their investment? What will you do with the money? And why should they put money in the industry you reside? If you can answer these critical questions – on top of inspiring them with your story – you might just have a chance of securing funding.
Your math is all over the place
Lots of startups get far into the process of securing investment but fail at the last hurdle. Why? It’s because their figures just don’t add up. Overshoot your numbers and an investor will just walk away. Undercook them, however, and they won’t be attracted to your business. There’s a sweet spot to hit that is realistic but still tempting – and you have to back up your claims with facts.