Could raising ‘too much’ investment harm your start-up?
Most entrepreneurs have a long to-do list whenever they start a new business — and ‘secure funding’ is usually added towards the top.
But what are the most important things to consider once you’ve actually secured the investment, and is it possible to raise “too much?”
While speaking at Startup Portugal’s SIM Conference in Porto, investor at Remote First Capital Andreas Klinger said one of the most common mistakes a founder can make is assuming that investment can accelerate an already-established timeline too quickly.
If you add too much on your plate, he said, before you know it your main three projects turn into 10 unmanageable ones.
With more money comes more pressure to do more work.
“All of a sudden, your leadership team that has been hired two months ago is having multiple projects they have no idea about, all these new people coming in… you lose your focus, you lose your control, and the whole company goes a-wall very quickly,” Klinger said.
Marcelo Lebre, founder of HR management platform Remote, said it’s one of the hardest lessons to be learnt — success doesn’t happen over night.
“It’s a marathon, it’s not a sprint,” he added, explaining that— realistically — marathons aren’t going to be easy.
For someone who likes things to happen as fast as they can, he said, if a founder tries to use their investment to “buy” time that isn’t there, the much-needed focus for short and long-term goals could be lost.
His advice to an audience full of investors and start-ups alike?
Choose the three “most important” things your business should be focusing on, and then “rinse and repeat” until they’re done.
Advisor Mike Sigal said start-ups and investors must follow a framework that works for both parties — and there’s many to choose from, as long as there is the right complementary ‘thesis.’
His top tips in securing the right investment?
- Eliminate your risk
- Focus on your story-telling techniques as a “world-class salesperson”
- Research — at least —100 venture capitalists
- Establish your narrative
- Pitch with purpose
“How do you do that? How do you engineer that? What leverage do you have? By running a super tight fundraising process, where you are controlling as many variables as you can about getting the deal over the line,” Sigal said.