Name: 新手創業者融資時的錯誤 (Rookie startup mistakes when raising money)
Uploaded: 2021-01-14T11:18:41.000Z
Duration: 5 min 49 s
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基礎被動語態

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We deal with thousands of companies in the process of fundraising. Last year, I spoke

to over 1,000 founders, and I've set a personal goal to beat that this year.

These companies mostly come to me for office hours, and most of the time, their questions

revolve around fundraising. One thousand people are enough to detect some patterns: the mistakes

these companies are making when approaching their fundraising.

First, fundraising to hire the essential team

This is probably the most common question I get: a solo founder is looking to raise

money to find a CTO, or a CMO/growth hacker.

My theory on where this issue comes from is that typically, the personality of an entrepreneur/founder/CEO/hustler

is not the kind of individual that will choose software engineering as a career path.

A lot of the founders I come across have a ton of ideas for product, and a ton of ideas

on how to sell them, but can't build the products themselves: we end up with CEOs looking for

their CTO and not being able to find them.

That is just the reality of the world, and there's little we can do about it. I've said

it before: finding that product co-founder is probably one of your first tests as an

An alternative is... you know, learning to code: the problem is you'll soon find yourself

swamped and unable to split your time between building the product and selling it.

Investors expect you to have a team by the time you get to meet with them. Few investors

will fund a company where a team isn't built, because nobody wants that essential personnel

to come for the money/salary that you'll offer them. The first 2-3 team members need to come

on board because they believe in the product and are willing to take a WAY BELOW market

Investors don't sign NDAs to see your pitch deck. No matter how groundbreaking the product

is, no matter how many patents you can get.

A Pitch Deck is supposed to be an introduction to the business. It shouldn't dive deeply

into sensitive economics or technology aspects: that comes later.

If you are concerned, somebody can steal your idea and beat you to market by just looking

at your pitch deck, then that risk will continue to exist when you launch. Companies don't

succeed because of ideas: they succeed because of execution: building great products and

Most investors look at hundreds of deals every month, and it's a terrible liability to have

Not all companies can (or should) approach venture capital investors. We talked about

this in our Startups vs Small Businesses video.

If you want to raise money from Silicon Valley-type investors, you need to have a business that

can scale to, say, $100MM/yr in revenue- it needs to have a tech variable/aspect and small

That excludes most consulting businesses as well as companies without a tech advantage.

Silicon Valley investors putting money on a seed-stage round company will generally

invest in the range of $500K to $1MM in exchange for 15-25% of the business (usually done through

a Convertible Note, check out our video on that).

They expect the business to increase its value in 10X within five years: which requires exponential

growth. That's the only way to get to 10X that fast.

Companies that don't fit this profile can access other types of financing, like loans.

They can also raise capital from an investor willing to come in as a 50/50 partner and

to be directly involved in the business. There's also stuff like Kickstarter, which is ideal

It's about understanding the kind of business you have in your hands, what it is, and what

I've seen entrepreneurs with no team, no product, no revenue, pitching a round of $5MM, which

for most industries and most founders, will also be, a rookie move.

Raising money is diluting your company ownership: you always want to raise the least amount

of money possible, and that's why a good Financial Model is important.

We're doing a webinar on how to build a Financial Model. Check the links below to subscribe.

Investors like healthy, fast-growing companies. They are drawn to the promise of great returns!

Few investors will want to join to save a business from bankruptcy, because that's usually

just bad business. The least you need them, the better position you have, not only to

pitch the company but to have the leverage to negotiate better terms.

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Thanks a lot for watching. See you next week.