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Common mistakes made by startups that are seeking funding

On Behalf of | Sep 7, 2018 | Business Law |

For Ohio startup companies, finding venture capital may be important so that the businesses can grow. A common issue that many startups have is trying to figure out how to attract investors. There are a few common reasons that venture capitalists and angel investors frequently pass on pitches that they receive.

A common mistake that startups make is sending cold pitches that are impersonal. If people send emails that are impersonal, they are unlikely to attract the attention or interest of a venture capitalist. People should take the time that they need to personalize their pitches. For example, they might want to get to know another founder that was funded by the investor to try to secure an introduction.

Another error that founders make is making inaccurate claims during their fundraising pitches. People should never state something to try to engender interest unless it is true. Some venture capital firms also pass on companies because they dislike the proposed terms. People who are told that their startups are being passed over for this reason should ask for specifics and use those as a basis for negotiating.

The founder of a startup company may find the fundraising process to be complex and confusing. When founders are getting ready to engage in their fundraising rounds, they might benefit from consulting with experienced business law attorneys who can assist their clients with creating their pitches and identifying investors that might be good matches for their companies. They may negotiate the terms of a potential investment to try to make them favorable for their clients. The attorneys may also help their clients with a variety of legal issues such as regulatory compliance and entity formation so that their clients might have strong liability protection while also avoiding potential pitfalls that could be costly.