Raising capital for your business as a start-up founder is not the easiest, trying to convince investors that your business is worth their money is hard work, true! But neither is investing huge sums of money into a business, hence, everyone on either side of the table has to be prepared.
In fact, as a start-up trying to raise money, be comfortable with hearing no from investors, take note of corrections, do the work, and keep trying until you get the YES that changes everything. Nevertheless, you should always be prepared. Below are some reasons investors say no;
1.Inadequate Research; Startup founders over time have gone to pitch for capital without having carried out the right research. No investor is the same, which means, for every investor, carry out a different kind of research. Find the why, how, if possible, look at companies they have invested in over time, note their similarities and work on it. You would be setting yourself up for a no, by going to an investor interested in investing at the seed/pre-seed stage of a start up when your business is not at that stage.
2. Lack of expertise or experience in the industry; Many investors are looking to invest in those who have experience or expertise in the market they seek to concur. If you as an entrepreneur do not have the necessary experience, get a partner or hire someone who does. This shows investors that you have the best team to carry the job.
3. No growth potential; every investor wants to invest in a business that has potential to grow. Which means pitching to an investor without clear cut ways of how the business would grow over time is a fast way to get a no. Hence, you need your business plan in check, have numbers showing growth and more.
4. Product Market Fit; Investors need to see that there is a market for your products and services. So having loyal customers in your records would impress an investor. In short, a growing number of loyal customers shows the Investor that your product/service is likely to be a winner in the market.
Work on these to help you get the YES you need!
