Everybody wants funding. I am sure you do too. All the accelerators, incubators, facilitators teach you the ‘things to do’ when looking for investment. But what are the ‘things you need to not do’ under any circumstance?
Ajeet Khurana, Angel Investor, Mumbai Angels, shared a very funny take on what startups do wrong that turns off investors. Khurana was speaking to a group of budding entrepreneurs at PitchHack, a workshop on ‘Mastering the Art of pitching to investors’, organised by NASSCOM 10,000 Startups, in association with Zone Startups India.
This is something he said that was perhaps the highlight of his address: “The coffee shops in Powai (an area fast becoming a startup hub in Mumbai, in India) are frequented by entrepreneurs looking for funding. In fact, the way it goes is – Gloria Jeans is for seed funding, Starbucks is for Series A and Aromas is for Series B!”
I hope I have done justice to his hilarious, but extremely relevant talk that cracked up the audience.
Here are six things that startups do to turn off investors. Narrated in first person, in Khurana’s inimitable style:
1. Have a sense of entitlement
Startups go to accelerator programmes wherein they are given free stuff – free advice, free mentorship, free software, etc. After this, they feel they are entitled. When they approach me, they demand a lot of things, along with money!
2. Focus too much on the pitch
Accelerators and facilitators teach startups how to pitch to investors, making them feel that all they need to do is pitch. I find that startups are so much in love with their PowerPoint presentations! Additionally, they pitch and practice so often that they keep getting better at their pitch, whereas the focus should be on getting better at their business.
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3. Think that getting funding is the end
As an investor, I run away from entrepreneurs who think that raising funds is the end goal of business. It is the starting point. So many businesses after getting money, end up not doing much and losing investor’s money. Once they raise investment, they achieve the nirvana they were seeking, but the investor’s problems have just started!
4. Do not do enough research
I like people who work hard. Just because I am found in various coffee shops in Powai and people have met me previously at events, find the opportunity to pitch to me, not bothering to think that I may have something else to do in life as well! This is also fine if they are more or less ready. Just because they happened to see me, they will approach me unprepared. It is really impressive when startups do their homework.
5. Still hold on to a day job
Several people are working decent jobs and aspire to become entrepreneurs. So far, so good. Except, these people are seeking a soft landing in entrepreneurship. This means they want all the upside of entrepreneurship and none of the potential downside. They are still doing their jobs while planning their business. They are not convinced enough and do not want to go through the grind. After someone invests in them, they will serve their notice period!
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6. Delay interaction
Engaging with prospective investors is a long-drawn process. One week also seems long-drawn to few investors; sometimes it takes months or even years. This means there are multiple points of contact – meeting, phone calls, emails. I would probably choose to connect with one startup out of the 20 that wrote to me. And when this chosen entrepreneur does not follow up or connect when he/she promised to, and this happens more often than you would like to believe, is a big big turn off.