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What Will NOT Get You Funding

What Will NOT Get You Funding
Image credit: Shutterstock
Guest Writer
3 min read
Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Some call it the necessary evil and some, the best way to vindicate your business model and grow fast. Funding, as we know it, makes an entrepreneur’s world go round. After all, bootstrapping and borrowing from friends, family, and fools, will only take you so far when you are itching to grow and anxious to diversify.

So what is it that angel investors and venture capitalists are looking for in a company? Apart from a great business plan; proper financial reports and records; and no legal loopholes, that is. Says Hari Balasubramanian, angel investor, advisor and mentor, “I want people who are not looking for a safety net and are ready to stand up and fight every time they fall.”

Here are five more no-nos from investors:

#1. Where’s the pain?

A number of times, entrepreneurs go after a certain idea only because they passionately believe in it, and have a hazy idea about whether there really is a problem it is offering a solution for. It’s like trying to make someone cross the road when he doesn’t want to. The investor should be able to see clearly that you have addressed a pain point, and have clarity on how to scale the business model.

#2. Traction treatment

“No one wants to entertain a business idea that is only in someone’s head or, at the most, on paper,” says Raghav Kanoria, co-founder, Calcutta Angels, adding,” At the same time, most investors don’t expect you to show profits.” They aren’t looking for big revenues, either. What they are looking for is proof that you have been able to implement what you have envisaged and are committed to make it work.

#3. The money story

So how do you plan to spend the millions you get? Remember the now-dreaded term “burn rate”, which was used interchangeably for a company increasing its customer base – read “eyeballs”? Well, the investor has wizened up. He will put in money only and only if he is convinced he will get returns – big ones. For this, you need to have a clear idea about how you will make use of the money – grow, scale-up, diversify and so on.

#4. Who’s on your side

No, your product or service won’t sell itself. For that you need a great team made up of professionals who are risk-takers, innovators, clever, and dedicated. Remember, the investor will not put his money on you or your product, but on the entire package, and your team is an integral part of it. Make sure it’s world-class. As Dr Suryanil Ghosh, serial entrepreneur and investor, puts it, “We prefer a team with a strong fire in the belly.”

#5. Bidding adieu

So you want the investor to see your product from your point of view and get all excited about it, but you haven’t spent enough time looking at a possible exit strategy for him? You just can’t do that. Put yourself in the investor’s shoes and consider some great options of revenues and profitability for him. Make him your partner, not the hen that lays golden eggs. 

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