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Common Mistakes Entrepreneurs Make When Seeking Venture Capital

New research released in 2018 revealed that the UK still remains as Europe’s leading country for global technology investors, with technology businesses in the UK seeing to raise 32.99bn worth of VC investment in 2017. This is found to have been double the figure raised in 2016.

The very delicate procedure behind seeking venture capital is vastly undermined by entrepreneurs. Sadly, many fail to perfect the knowledge they gain during the process. Aaron Levie, cofounder and CEO of Box, an online content-sharing company, stated that from his experience the pitch was the most important stage of investment. He further called the process of delivering a successful pitch "fine art". Through Aaron Livie, BOX has gone on to raise $162 million in funding over a five round process, with the pitch organisation being core to the businesses success.

Resulting from this evidence, we thought it most important to tackle the pitch aspect of the journey first considering the various elements that can be overlooked or repeatedly drummed on which may be detrimental to the business endeavour. Find some points outlined below:

  1. Firstly, it is not seen as helpful for businesses seeking investment to blindly contact every venture capital firm you can find with the same generalised pitch. This will not necessarily increase a businesses chances of funding as not all VC firms tend to have very specific interests in terms of investable markets. Therefore, it would be seen as most suitable to refine the search to business investors interested in your line of business.

  1. Furthermore, VC firms will not be willing to waste their time on your idea if it is not presented in a precise and clear manner. As a result the investors would be significantly more willing to aid you in your venture if the opportunities, plans, financials, idea are very clear.

  1.  Do not over do the presentation. Providing an investor with a very lengthy, dragged out pitch then all this will simply do is bore them. For a one hour meeting it is therefore advised that no more than 15 slides should be included in a pitch deck. The slide presentation should only require half the duration of the meeting, leaving the following half of the meeting open for any questions the investor/s may have.

  1. A very common fault on behalf of entrepreneurs is the rushing of trying to outline the value of the business as well as being unrealistic with your financial estimations. It is therefore advised that instead of including the value of your business within the presentation, you should leave this out entirely and allow the topic to simply arise naturally within conversation. If pushed forwards to early there is a chance of putting off potential investors. The estimations should also not be exaggerated. Although investors are obviously seeking the next high growth firms, unrealistic estimations would do no favours as these would need to be backed up.

As seen by some of these listed mistakes above, these can been very easy to avoid. The most common mistakes can be avoided by careful planning, editing, and a detailed business plan that lays out your opportunity for the venture capital firm of which you are trying to capture the attention. 

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