Are You Missing Out on Capital?

Hey Founders,

Raising capital is one of the most important and challenging tasks for any early-stage startup. Whether you're just starting out or trying to scale, securing the right funding can be the key to success. But many founders unknowingly make mistakes that cost them time, money, and investor interest.

In this edition of Fundraising Fast Track, we’re going to highlight some of the most common mistakes founders overlook during the fundraising process—and more importantly, how to avoid them.

1. Failing to Build Relationships Before You Need Them

Dig your well before your thirsty (Harvey Mackey) is one of my all-time favorite books. This thesis applies to early-stage founders who at times tend to wait until they’re ready to raise capital before engaging with investors. The truth is, fundraising is all about relationships with investors which take TIME to develop, nurture and gain confidence in your team over time. Start building those connections early and often. When it's time to ask for capital, you'll already have trust and rapport.

2. Not Being Clear About the Market Opportunity

Investors don’t just invest in great products; they invest in great markets. One of the biggest mistakes founders make is not clearly articulating the size and potential of their market. Are you targeting a niche or solving a widespread problem? Can your product scale? Investors want to know your solution can serve a growing market.

3. Traction, Traction & Yes Traction

You might have a brilliant idea, but investors need proof that people want it. Revenue solves everything and showing traction—whether through customer sign-ups, partnerships, or revenue—makes your company much more attractive. Without clear signs of traction, even the most innovative startups can struggle to secure funding, especially in today’s funding climate.

4. Know Your Numbers

Another common mistake is not knowing your numbers inside and out. Investors will ask about your burn rate, runway, customer acquisition costs, and lifetime value. If you don’t have a clear understanding of your financials, it raises red flags. Make sure you’re prepared to speak confidently about your company’s financial health.

5. Pitching Too Soon

Excitement to raise capital can lead founders to pitch too early. If your product isn’t fully developed, or you don’t have a clear business plan, it’s better to wait. Investors want to see that you have a solid foundation and a clear vision for the future. Pitching too soon can close doors that might have been open if you’d waited until the right time.

6. Finding your ICP Investor

Not all investors are the same, and pitching to the wrong ones can waste your time. Make sure you’re targeting investors who are aligned with your industry, stage, and vision. Research potential investors before you approach them, and ensure they’ve backed similar ventures in the past. There is a ton of data to be found in places like LinkedIn, Signal & Crunchbase.

7. Ignoring Feedback

Investors will often give you feedback after a pitch. One mistake founders make is dismissing that feedback too quickly. Investors have seen countless pitches and know what works. Take their feedback seriously, and use it to refine your pitch, strategy, and business model.

8. Undervaluing the Power of Storytelling

Facts and figures are important, but investors also need to believe in your vision. Your ability to tell a compelling story about why your startup matters can be the difference between securing funding and walking away empty-handed. Don’t forget to touch on why YOU win. Why this team, solving this problem at this time in a way that nobody else is.

9. Not Having a Clear Ask

You’ve impressed investors with your vision, market opportunity, and team, but now it’s time to make the ask. Many founders aren’t specific enough about what they need and how they’ll use it. Touch on how much runway it gets you along with the different parts of the business that will be impacted by this capital.

10. Underestimating the Time Commitment

Fundraising isn’t a one-off task—it’s a marathon. Many founders underestimate how long it takes to build relationships, pitch, and secure funding. It usually takes twice as long as you think not just for time but for the number of conversations you need to have to get the round done.

Take Action Avoid these common mistakes, and you’ll set your startup up for fundraising success. Stay focused, be strategic, and always be prepared. If you need more strategies or support, don't forget to check out my course, The Funding Accelerator, designed to help founders fast-track their fundraising journey.

Until next time—building!

Cheers,

Steve Walsh
Founder, Hands On Angel