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Search for Funds for Startups: The 5 Mistakes Not To Be Made With an Investor

Today we will talk about research funds for startups. This time faced like no one you've ever done until now, or making you understand what are the attitudes to avoid when you meet a potential investor. Are you ready? Then start immediately with our focus today on research funds for startups.

We return with our weekly meeting to talk about hot topics for us startuppers and, given the discreet interest aroused by the topic we will give you useful advice on finding the right funds, or on the search for funds for start-ups.

Previously we talked about startup funds to who to ask and how to proceed, and this time we talk about the mistakes to avoid absolutely, when you want to present yourself before investors and, of course, know them. So we indicate what are the solutions not to be adopted in these contexts?

Search for funds for startups: here's what you need to know

Here we are! Get ready with me and together let's start with the 5 mistakes to avoid during the fund raising phase or research for startup funds:

1. Present yourself with an incomplete team:

The first mistake to avoid for the search for funds for startups is definitely that linked to the team. As we often remember, in fact, one of the fundamental elements of a startup, fundamental, if not the most important, is having the right team. Whether in terms of lack of skills, complementarity among the members, or for reasons more related to the character and the lack of affinity between the parties, having a non-performing team that does not meet the expectations of an investor is certainly an extremely important factor impeded the closure of a financing deal.

For this reason, when you start your entrepreneurial journey, always remember to include in your project people you can trust, professional, with skills complementary to yours and those of other members, if you are part of a team of more than two people.

2. Present yourself without pitch

The second mistake to avoid is, of course, to present you in front of investors without an impact elevator pitch, even worse if the pitch is not there.

The elevator pitch takes its name from the English term "elevator" which means elevator, precisely because the ultimate goal of this strategy is to present your idea (usually in front of investors, but can also be customers or partners) between 30 and 120 seconds. It is therefore actually the duration of a ride of an elevator.

The speech must always be accompanied by a graphical presentation, whether with power point or any other graphic tool is not important, the important thing is that it is impact, direct and that consistently accompanies the thread of your speech. The graphic pitch is a help element for the startupper that interfaces with an investor, since the interlocutor in understanding the project presented.

So having a well done and immediately understandable pitch is essential for research funds for startups.

3. Having a Financial Plan and / or a Business Plan not suitable for the growth phase (and therefore of financing) of the startup.

Another error in the search for funds for start-ups is linked to the consistency of documents presented to investors during due diligence. In this regard, we have written a focus on how to create an investor-proof business plan for your fundraising.

If you are in the pre seed phase, in fact, it will be important to have a business plan that shows your path, the investments you intend to make, together with the team, and where you intend to allocate the money received, how do you want to validate the model, if you have already an MVP, etc.
This must be focused especially on the first year. The same applies to the financial plan which, especially for start-ups that are still embryonic, cannot have an evaluation up to 5 years because, almost certainly, it will not be the real one.

As far as startups in a more advanced stage are concerned, it will be important to include in the business plan tractions and metrics and have a financial plan with 3 or 5 year forecasts.

4. Have a pre-money evaluation not consistent with your growth phase

To date, different methods are used to calculate the pre-money value (ie the valuation of the startup before an investment) of startups, even if, fundamentally, the best known are certainly the Discounted Cash Flow for startups in pre-seed phases and the multiples method for startups already in advanced stages.

However, these methods are not always the most correct and present flaws.

To avoid that the pre money is wrong, given that both methods have criticalities, especially given the random nature of startups like Reinstated Pros, you can also look at the evaluations of startups similar to your market and, through ad hoc portals, produce one for your project.

Therefore, this too is a fundamental aspect for the search for funds for startups.

5. Do not go in front of an investor without an advisor, because if you suddenly risk losing the deal

This is an extremely important element that few keep in mind. The negotiation with a small or large investor that should never be underestimated, indeed, it would be a useful strategy to use a professional in the field that can support you and direct you in the best way to the most suitable interlocutors, developing the best strategies for your case.

If you want to present yourself in the right way to investors and define together, one of the most important startup coaches, the right strategy for your fund research.

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