Last week, we had the chance to sit down with Joshua King and Daniel Conti from CommonRoom Ventures - a London-based investment and management consultancy firm. It's not every day that you get to grill specialists on what they look for in an investment-ready startup, so we're making the most of CommonRoom's valuable comments by taking a look at the flipside of investment.
We asked the guys what they thought were the biggest mistakes startups make when pitching for funding and without further ado, here are their top 6...
1. Insufficient market research
This is the big one. If you're going to show that your product can actually make a profit you need to prove that there's a space for it in the market. That means extensive market research focussing on product-market fit and live feedback. There's no other way to legitimately demonstrate your product's viability.
2. Thinking too big, too soon
It's great to be ambitious, but the reality is that success takes time - a lot of it. Moreover, pushing for rapid market expansion can stunt your growth. Setting smaller internal goals and achievable milestones will not only help you keep on track and provide invaluable motivation, but will ultimately increase your chances of hitting the big time.
3. Limited knowledge of the competition
This should factor into your market research but its worth reiterating here; you need to know what you're up against if you're going to take the market by storm.
Make sure you think carefully about what should be considered a competitor. Even when there are no comparable products on the market it’s possible.
4. Poor budgeting
Or even a total lack of it. Money is the lifeblood of your business - you'll need to make sure that you're getting the most out of every penny (and that you know where it's going!). Cashflow problems are the number one reason that new businesses fail, so plan your future financial requirements carefully, make reasonable revenue projections, and always factor in a financial safety net in case there are any surprises around the corner.
5. Committing to costs too early
Here's one we hadn't figured would be on the list. Joshua and Daniel tell us that one of the main reasons they decline to work with some founders is that they've already committed to unnecessary expenses that will burden the business further down the line. Make sure that everything you plan to spend is necessary for growth, and critical to your core mission.
6. A lack of marketing strategy
We find this a lot too - startups constantly make the mistake of forgetting how important marketing (and retroactive analysis) really is. Make sure you have a quality marketeer on board to plan your channels and spending effectively from the outset.
We hope that's given you some food for thought. If you'd like to find out how we can use our expertise to help you avoid these costly mistakes here at the Studio, get in touch by email today. Through our partnership with CommonRoom Ventures, Studio Graphene may be able to provide you with a platform to engage with possible investors. Not only will you end up with a great product, but also put you in the best position for investment success.