The 7 Biggest Mistakes People Make When Seeking Funding For Their Business Ventures

Adam Shaw picBy Adam Shaw

“And on that basis, I’m out.” Is probably one of the most well known and used phrases on Dragon’s Den, indeed in real life when people rock up to a prospective investor without seeking advise, gaining sufficient traction with their idea or being properly prepared.

Having spent the past 18 months listening to various entrepreneurs come to me looking for funding and introducing them to investors, there are certain things which are recurrent which can block funding opportunities.

Mistake 1: Asking for too much

So many people come to me saying they need a couple of million for their venture, when the truth is that any business should be able to prove its concept with £200k or less.

On top of this the UK government’s fabulous tax incentives via the Seed Enterprise Investment Scheme (SEIS) offers investors a 50% tax break on the first £150k of investment. In other words, even if the company invested in goes under, they only lose half of their investment. Yet, if it is successful they stand to make a lot of money. It is effectively money for nothing!

There are funds set up to invest millions of pounds in SEIS, which most entrepreneurs do not know about or how to access. This is tragic and also why business owners who ask for any more than this before their business has traction are already doomed to failure, barring a miracle.

What you can do: Always start asking for £150k or less to prove your business model if you are a start-up business.


Mistake 2: Not proving the concept

If you are asking for more than £150k investors will want to know that you have proved it will work. Looking to fund 10,000 units of your new product when you have not sold any is a recipe for disaster.

What you can do: Pre-sell your idea to your target audience before you seek investment and test whether you have a market. Pick up the phone, get on Linkedin and start asking your network for introductions to the right people to make this happen.


Mistake 3: Selling the product and not the business model or the management team

You could have the best product in the world but if you have no clients, track record in sales or business management you are wasting your breath. Add no team or experience in the field and your pitch has died before it has even begun.

So many people approach me looking to sell a great product or service. When asked, it often turns out that the entrepreneur presenting it has no idea how they will achieve the often unrealistic sales they project. Worse still, when asked whether they are prepared to hand over more equity pending reaching their proposed sales targets they often break into a cold sweat as the ridiculousness of their projections becomes a reality.

Investors like strong teams with proven track records.

What you can do: Get someone with a proven track record in the field as part of your team or on your board as a non-executive director and ensure you are mentored properly. There are mentoring networks available.


Mistake 4: Talking too much

This one is a personal bug-bear for me. I like simplicity. As Albert Einstein says: “If you can’t explain it simply, you don’t understand it well enough.”

So many people when pitching to investors keep talking and talking……and talking. I often have to jump in and stop people as I feel their pitch die. Less is always more and if you haven’t said enough the investor will ask you for what they want to hear next, not what you think you need to tell them.

As a rule, if you need more than 30 seconds to answer a question then you are unprepared for the pitch.

What you can do: Run your business idea by anyone you know in the investment world and find out what tough questions they ask you. Consider your answers to these questions and be ready for the live pitch with punchy answers.


Mistake 5: Not preparing your pitch properly

Presenting is a separate skill to anything else in the business world. A good entrepreneur does not necessarily make a good presenter. I see many good business ideas with strong teams fail to gain funding due to terrible presenting skills.

What you can do: Train in presenting. Your local Toastmasters is a good, cost-effective way to start. If you can afford it invest in a course. Presenting is crucial.


Mistake 6: Not understanding investor’s motives for investing

A friend of mine who runs an angel investment network of over 6000 business angels once asked them why they invested, thinking the money was the main reason. It turned out that money was the 3rd reason why the business angels on his books invested. 2nd was contribution, or giving back. The number one reason people invest was for fun!

What you can do: Lighten up and realise that people invest in people. Even if you don’t have the business, the skill or the head for figures, which are important in business, as long as you have some idea, present with charisma and appear a little bit fun, you may well get an investor. Think Levi Roots.


Mistake 7: Not asking for help

So many people I meet have almost given up whilst not asking for help until it was almost too late. With social media sites these days there is unlimited potential to ask for help.

What you can do: Ask! You will be surprised how many successful business owners are prepared to give their time free of charge to start up entrepreneurs as it makes them feel good.



Adam Shaw started his career in 1989 working in a Merchant Bank. He lasted 2 years before almost losing the will to live, leaving his post and going off backpacking to North America. He then started a career as a nurse and became an independent Wellbeing Consultant, known as The Heart Guy.

After several years lost in the business world he one day serendipitously ran into an entrepreneur who invested in him after drinking lots of alcohol. This led to a chain of events which led to his current career as a high-level introducer at ACE Funding. These days he spends most of his time matching businesses looking for funding with the right investors.

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