This afternoon, the Daniels College of Business at DU invited me to speak to an Executive MBA entrepreneurial class about my experiences. I graduated from the EMBA program this spring, had spoken to a class this past summer, enjoyed it and (hopefully) provided value to the students, so I happily accepted the invitation again.
I spoke on our experience with FullContact, TechStars, our path to funding, what I’d do differently, and what I’ve learned. I also provided the class a list of 15 mistakes to avoid when raising capital.
Raising capital isn’t easy. It takes persistence, extraordinary effort and unreasonable belief in yourself and your co-founders. But, you can make it easier by not making silly mistakes along the way. Trust me, I’ve made a ton of them, and witnessed other entrepreneurs make them too.
Here are 15 mistakes I’ve learned to avoid when raising capital:
- Don’t SPAM VCs. Get warm intros through your network.
- Don’t waste time on business plan. Focus on your investor deck. Your business plan is for you, not investors.
- Don’t forget IP Assignment agreements.
- Don’t form anything but a Delaware C-Corp. Ignore tax accountants.
- Don’t make your corporate structure complex. You’ll just have to undo it.
- Don’t forget vesting agreements with co-founders.
- Don’t go too high on valuation (& ignore your finance professor’s lessons on DCF when it comes to pricing your company)
- Don’t ask for NDAs.
- Don’t forget – investors talk.
- Don’t try to be someone you’re not. Be authentic. Be yourself.
- Don’t pretend you have all the answers.
- Don’t optimize on price / valuation.
- Don’t waste too much time when you’ve got a deal on the table. Time kills deals.
- Don’t forget to study up on the option pool shuffle.
- Don’t forget to perform due diligence on your investors. Do you want to have beers with them?
Got more tips for entrepreneurs? Feel free to post them below!