What investors wont tell you about startup funding? Get insights from the investors perspective on startup funding. Understand how investors invest in a startup.
To get an in depth understanding of startup funding check out:
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Links for the startup funding series:
Part 1 – Pre-Requisites for Funding –
Part 2 – Sources of Funding –
Part 3 – Process of Funding –
If you need any help with your business planning and funding exercise feel free to contact the team at Bplan Experts ( .
It’s is also very important that you understand the investor psychology.
First is the investablity of your business. Entrepreneurs are passionate as they want to change the world or solve a problem but don’t expect the investors to be as passionate as you are about your business. The investors would invest in your startup primarily to make money.
Investors usually carry a portfolio of startups. So, it is natural for them to fund companies which are complementary to the startups already in their portfolio.
Investors tend to invest in a hot trend.
Investors look for a balance, a sweet spot on the competition scale.
One of the things the investors hate to hear is the “market share syndrome”. Often entrepreneurs pitch from the viewpoint of market shares.
Once you understand the psyche of the investors, you can optimize your pitch accordingly.
Now here are some of the things that investors won’t tell you.
Point number 1: You must understand that funding is a business transaction between the investors and the startup founders. Just like a startup would need funds from the investors, the investors are also eager to invest in lucrative startups. It is a symbiotic relationship.
Point number 2: Do not raise funding more than what you require.
Point number 3: Never raise money with an increased valuation.
Point number 4: When you raise funds, you are literally married to the investor.
Point number 5: It’s not just about the money. You must understand that you as a founder must gel with the investor. Your vision and goals must be aligned.
Which brings me to the next point. You must understand the responsibilities that come up with funding.
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