Forgive me, founder, for I have sinned!
While I raised 10m EUR as a first-time entrepreneur, I made every mistake in the b̶i̶b̶l̶e̶ book. I didn’t talk to enough investors. I let rounds drag on. I took rejections personally. One unclear legal clause cost us millions when we sold the company years later! You name it.
Now, as an investor, I witness the same sins again and again.
Raising money is a biblical task and mistakes can be deadly. But thou shalt not lose hope! By sharing my Seven Deadly Sins of Fundraising, I hope to bring you one step closer to prosperity in the holy start-up land.
Don’t be lazy.
No one likes half-baked pizza. The same is true with venture capital. Only a sinner would raise money without undivided attention. “Side-project fundraises” litter the cemeteries of start-up land. If you’re fundraising, that’s your first, second, and third priority. Yoda even said, “Do or do not; there is no try.”
Don’t just “talk to a few VCs and see where it leads.” Good fundraises are focused and have a clear timeline. At least one founder should be committed full-time to the project. Don’t be a sloth and do it on the side. Be committed.
Don’t pick the wrong reasons.
“Why do you want to raise now?” I asked.
The founder replied: “It seems like an interesting process to experience.”
That’s absurd. Don’t raise money for the fun of it (it’s not). Don’t raise because everyone else is (it doesn’t matter). Don’t raise because you want to “test the market.” Don’t raise and expect money to solve your missing product-market-fit or any other of your operational problems.
Think of your start-up in terms of bottlenecks. If you have proven everything else, cash might become the only scarce resource keeping you from scaling. That’s a good time to raise. Money alone will not solve your problems. It will accelerate everything — the good and the bad. Pick the right time and the right reasons to raise.