Top 3 Most Common Fundraising Mistakes

An article we liked from Thought Leader Ash Rust:

Stop Making these Common Fundraising Mistakes

Fundraising has few guidelines and you won’t get feedback from most investors who pass.

You will have more success and spend less time fundraising if you avoid the familiar pitfalls. Here are 3 of the most common mistakes and how to avoid them:

Raising without Customers

Fundraising without customers is asking an investor to believe in two untested hypotheses: 1) you’re solving a real problem and 2) you can build something people use. However, an investor will rightly question ‘why is nobody willing to use it?’. Here’s how you handle the common cases:

No customers closed — Continue customer development until someone is engaged with your product. If you have cash flow issues, offer consulting work to attract a customer and pay your bills. Ideally, this would be upfront development fees for custom work but you may need to settle for more general contract work.

Almost closed a customer — Discuss their pricing expectations and ask them to sign a “Letter of Intent” (LOI). The LOI should include details on what is being deployed and its rough cost. A few LOIs may convince an early stage investor.

No paying customers — Make sure your live customers are overjoyed with your product and support. Try to get positive references from them ASAP. If they’re on a free trial or pilot, make sure the agreement has a clear timeline for payment.

Highlighting the Average

If you don’t clearly explain why your company is…

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