Five More Reasons an Investor Will Pass on your Deal

Investors see many deals and can spot glaring holes immediately.  Here are five more reasons an investor will take a pass on your deal:

1.     Lack of plausible financial projections—some startups use the excuse that they can’t predict the future and therefore they have no financial projections.  Most investors see this as a lack of knowledge about the business and the market.

2.      Lack of focus in the business plan—some plans are filled with future possibilities and great opportunities but fail to define the core product and how it will be built and sold.

3.      Not knowing the use the funds raised—the phrase “I’m raising $1M often triggers the bull meter because the fundraiser rarely knows how they’ll apply  the funds.

4.     No validated business model—there’s no evidence of a business either in product or customer activity.

5.     Lack of followup – an investor will express interest and then never hear from the entrepreneur again.

Best regards,

Hall T. 

5 Reasons an Investor Will Pass on your Deal

Investors see many deals and can spot glaring holes immediately.  Here are five reasons an investor will take a pass on your deal:

1.     There’s no traction—there needs to be some evidence of market validation.  Even without a sales team and a marketing budget there should be some demand for your product. 

2.     There’s no social proof—there needs to be some evidence the product works.  

3.     The team doesn’t fit your company—if there are major holes in the team or you’ve filled the secondary roles and left the primary ones empty, then it’s going to be a problem. 

4.     Your company doesn’t fit their criteria—many funds are clear about what they invest in (SaaS, Healthcare IT, etc). Your deal needs to fit into one of those criteria. 

5.     You don’t know your market/customer well enough—those with a vague or fuzzy knowledge of the market or customer will have difficulty raising funding.   Ability to site numbers (market size, growth rates, customer spend, etc) helps demonstrate your knowledge.

Best regards,

Hall T. 

5 Signs you Invested in the Right Startup

There are several signs indicating the investor invested in the right startup.  Here are my top five. The startup is:

 1.     Focused on core products and processes—you see a strong focus on the core       product/service and everyone is pushing in the same direction.

2.     Revenue and results—you see the team focused on revenue and hard results and not secondary metrics such as likes on Facebook or user downloads.

3.     Customer focused – you see the team more worried about what their customers think than what their competitors think.

4.     Numbers – the leadership knows their numbers well including sales, cash spend, and runway.

5.     Updates and information—you receive updates and news that includes bad news as well as good news.

Best regards,

Hall T.