many people teach you how to finance, but rarely teach you to avoid financing errors. This is the ten experience from the United States YC, you have to look at the early financing.
1 over optimization of the entire financing process
many entrepreneurs are too superstitious all kinds of skills, that can help themselves into the money. In fact, the financing is simple – as long as you have a good company, you are likely to raise funds. You’d better spend more time doing your own business, rather than wasting time on the game. The financing process is simple: (1) ask others to introduce you to the investors you want to see and meet them. This kind of meeting is best to parallel, not divided.
(2) explain to them why your company can make money. This usually includes the company’s business, products, current development situation, the vision of the future, the market environment, competition situation and reason you will win the long-term competitive advantage, including what, how you and your team of profit. (3) creating a competitive atmosphere. You won’t be surprised (at all) to gain the most benefit from the mutual competition among many investors. This is one of the most important rules in this game, and I’ll explain it in detail later. Some entrepreneurs will try some tricks, such as the arrangement of PR draft carefully release time, or pretending to casually mention to an investor, they will eat and another investor, or claimed to have a tight schedule, only a specific hour is free, so. But if you run the company well, you don’t have to use it. Some little things don’t need special care. An early investor, for example, showed signs of not participating in a new round of financing. If the company is running smoothly, then these things do not have to care about, if you do not develop well, then you will have difficulty financing. Unless you do flawless, otherwise the manipulation will lose most of the good investors. In any case, you should be honest and trustworthy. If you can not trust, investors will not invest.
2 "over optimal" investment terms
excessive optimization of the entire financing process entrepreneurship usually only two results, either success or failure. If you fail, then you may also be acquired, this situation is not so common, but better than you only in the acquisition of a company to do a good job. The key is to find good investors, sign clear terms and don’t spend too much time on financing. The biggest problem often comes from high valuations. Contrary to what many people think, we encourage companies to make a reasonable valuation at YC. For entrepreneurs, is the valuation of their own value quantification, a large number of investors willing to give a higher price, so they do not always listen to your price. But I want to emphasize is: to get a high price tag is a bad idea. If there is a chip in your hand, then you put the price up also don’t fool investors but no ground for blame. Give your condition directly