The 5 most common mistakes made in raising capital.
Venture capitalists are professional investors that provide risk capital to start-up enterprises or to companies that are seeking funding to develop and expand their businesses.
Venture capitalists invest becausre they expect to earn a reasonable retun onn their funds when they balance risk and return.
For the start-up there are the right and wrong ways to present your business opportunity.
Converserly, for the venture capitalist discerning how to go about finding the right opportunity to invest your funds is no simple task.
Michael Pratt, an experienced venture capitalist and faculty member of University of Maryland’s Master of Technology Entrepreneurship, outlines the five commomn mistakes made when looking for venture capital.
You don’t want to be inadequately prepared for a meeting with venture capitalists. Everything needs to be tight and focused so that you can prove that your business enterprise will be successful and profitable.
Paralysis by analysis
You need to hone your story and present it succently so it addresses the major topics tha a venture capitalist is interested in. Focus and succint are critical.
Ignorant of investors needs
Investors have specific needs and information requirements. You must identify, understand and address these needs. Put yourself in the position of a prospective investor.
Randomly sending out your start-up proposal to many venture capitalists, does not generate success or the results. You need to spend time and effort to research the venture capitalists who may be interested in your proposal.
Poor or ineffective management team
The management team that you have to drive the new start-up is critical and most important factor to any venture capitalist. The right idea without the right tem will not succeed. The investor wants to be assured that you have the team to execute the business plan.
Michael Pratt Faculty Member – Master of Technology Entrepreneurship
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