The Most Common Mistakes Founders Make When Raising Capital
The Most Common Mistakes Founders Make When Raising Capital
Raising capital is part pitch, part process, and part psychology.
Unfortunately, many founders sabotage themselves — not because they lack a great product or vision, but because they fall into avoidable traps.
Here are the top fundraising mistakes we see founders make, and how to avoid them to increase your chances of getting funded.
1. Pitching Too Early (or Too Late)
Too early? You haven’t validated demand, don’t know your metrics, and haven’t built relationships.
Too late? You’re out of cash and desperate.
✅ What to do instead:
Time your raise when you have:
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A compelling milestone hit (e.g. beta launched, $10K MRR)
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At least 3–6 months of runway
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Warm intros or traction to leverage
2. Sending Cold Decks with No Context
VCs receive hundreds of decks per month. Blindly sending yours with no warm intro, no framing, and no credibility rarely works.
✅ What to do instead:
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Get an intro from a founder they’ve funded or someone in their network
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Include a short note with traction, vision, and why now
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Use DocSend or a shareable viewer with tracking
3. Making the Pitch All About the Product
Your product matters — but investors invest in businesses, not just tech.
✅ What to do instead:
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Lead with the problem, market, and traction
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Highlight the team’s ability to execute
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Use the product as proof, not the centerpiece
4. Not Knowing Your Numbers
Nothing kills a pitch faster than guessing on:
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CAC / LTV
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MRR or burn rate
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TAM or conversion rates
✅ What to do instead:
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Have a metrics cheat sheet on hand
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Be honest about what you know vs what you’re still testing
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Practice financial questions with a mentor or CFO advisor
5. Overpromising and Under-Explaining
Saying “we’ll be at $100M in 18 months” with no roadmap raises eyebrows. So does calling yourself “the Uber of healthcare” without explaining the business model.
✅ What to do instead:
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Use grounded, data-backed forecasts
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Explain your go-to-market with clarity
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Be confident but humble — show you’re learning, not just selling
6. Raising Without a Process
Many founders chase random intros and investor meetings without a plan.
✅ What to do instead:
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Build a pipeline of 50–100 targeted investors
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Track outreach in a CRM or Airtable (GCN template available)
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Run a focused campaign over 4–6 weeks
7. Ignoring Investor Signals
If a VC says “we’re not investing in pre-revenue,” don’t try to convince them otherwise. If they ghost after your second email, move on.
✅ What to do instead:
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Focus on aligned investors
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Ask for quick yes/no signals
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Keep momentum by avoiding dead ends
8. Forgetting to Follow Up (or Following Up Poorly)
Founders often lose warm leads by going silent — or by bombarding investors without value.
✅ What to do instead:
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Send concise updates every 2–3 weeks
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Share real traction or progress
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Make your momentum visible and valuable
9. Not Understanding Term Sheets
Founders who skip legal review or misunderstand clauses risk giving away too much.
✅ What to do instead:
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Learn the basics (e.g., liquidation preferences, dilution, control)
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Use resources like YC’s Safe guide or Cooley GO
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Get a lawyer or experienced advisor involved before signing
10. Taking the Wrong Money
Desperation can lead to taking checks from investors who don’t align on vision, timeline, or role.
✅ What to do instead:
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Screen investors as much as they screen you
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Ask for references from other founders
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Prioritize value-add over check size