Melinda Wittstock gave a terrific peek behind the venture capital (VC) curtain recently. Speaking at the New Media Women Entrepreneurs Summit, the serial entrepreneur and Verifeed founder highlighted 10 mistakes that entrepreneurs make when seeking funding:
1. Avoiding Mistakes. Instead, embrace the opportunity to learn from yours.
2. Assuming the Goal Posts Won’t Shift. From listening to Wittstock, it certainly sounds like you could get whiplash trying to satisfied shifting demands. You need to recognize this going in (and bang head on table accordingly).
3. Assuming You Can Raise Money When You Need It. Instead, raise money continuously (i.e., it’s not a to-do-only-when-you-need-to endeavor).
4. Assuming You Can Control Everything. Wittstock talked about asking a lot of questions and qualifying your investors in much the same way that they are checking you out. “Make sure it’s not dumb money,” she said. (Even Zappos CEO Tony Hsieh got pressure from his investors to make them more and more money now, leading him to negotiate a sale to Amazon.)
5. Hiring Employees. Instead, hire people who are passionate about and truly believe in your business.
6. Putting Fundraising Ahead of Sales. You need to be making money to get investors to pay attention.
7. Assuming Investors Will Believe Your Numbers. I’ve talked before about how important it is to know your numbers; it’s also important to acknowledge what you don’t know. Wittstock stressed that your projections are projections–so at the end of the day be honest about that.
9. Talking Only About How Cool Your Product Is. Investors don’t care about your bells and whistles. They just -want to know that your product or service will make them money–and how fast.
10. Knowing It All. Wittstock said that VCs want to be a part of your team, and they like entrepreneurs who are teachable.
And, yes, Wittstock said she’s made most of these mistakes herself.
While Wittstock’s remarks were investor-focused, much of her advice is equally valuable to anyone starting up a business. My personal favorites: #1, #2, and #4, because I believe smart businesses (and smart entrepreneurs) have to embrace lessons learned and know how to pivot. What Wittstock wisdom resonates most with you?
Photo by DeptFordJon (Flickr).