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The 8 Common Mistakes to Avoid When Raising Capital: Learn from Others’ Missteps
- Published April 06, 2023 1:39AM UTC
- Publisher Jade Miguel
- Categories Capital Raising Tips
Raising capital can be a challenging process, and it’s not uncommon for founders to make mistakes. This article highlights the top eight blunders to avoid so that you can have a more successful capital-raising experience. Learn from others’ missteps and ensure your efforts are more effective.
DELEGATING INVESTOR FOLLOW-UPS: Avoid having your assistant follow up on investor inquiries; instead, make sure you’re personally handling these interactions to establish trust and credibility.
MASS EMAILING POTENTIAL INVESTORS: Don’t send a single email to your entire list of potential investors with everyone cc’d. Keep your communication personalized and professional by sending individual messages.
USING A MASS NDA EMAIL: Refrain from sending a mass email with a non-disclosure agreement (NDA) attached to numerous investor inquiries. Focus on building relationships first and introducing the NDA at an appropriate time.
INCONSISTENT COMMUNICATION: Ensure that a single point of contact, preferably the founder, communicates with investors to maintain consistency and avoid confusion.
DELAYED RESPONSES: Responding to investor inquiries months after they were sent gives a poor impression. Be prompt and professional in your communication.
CHANGING SHARE PRICES: Avoid changing the share price multiple times during discussions with an investor based on emotions. Stay consistent and rational in your valuation and negotiations.
OVERWHELMING FIRST CONTACT: When emailing an investor for the first time, keep the message concise and avoid attaching a lengthy information memorandum. Provide a brief introduction to your venture and offer additional information upon request.
IGNORING INVESTOR INQUIRIES: Not following up on investor inquiries can seriously hinder your capital-raising efforts. Be diligent in your follow-ups and keep track of your interactions to ensure no opportunity is missed.
By avoiding these common mistakes, you can improve your chances of raising capital and fostering strong relationships with investors. Remember that professionalism, consistency, and clear communication are key to a successful capital raise.