MJ Gottlieb from N2ITIV Solutions Discusses 5 Ways to Raise Money for a Business the Wrong Way
New York, NY (PRWEB) July 25, 2013 -- MJ Gottlieb from the fast growing entrepreneur blog N2ITIV Solutions knows a thing or two about how to raise money for a business the wrong way as he has been on both sides of the table and seen the many mistakes entrepreneurs make when in the pursuit of capital.
Gottlieb and his partner Gary O’Neil have had five businesses over the last 21 years and have made countless mistakes during their pursuit of investment. This is one of the main reasons why Gottlieb and O’Neil started their blog as they wanted to provide advice for entrepreneurs who may not know where to go or what to do. Though they eventually were able to secure the investments they were looking for, it was not without some very hard lessons learned along the way. This is the most recent post in Gottlieb’s series on ways to raise capital and secure a deal.
The following are five prevalent mistakes entrepreneurs make when in the pursuit of capital.
1. Ideas Don’t Cut It: The most important thing to understand is that investors do not fund ideas. Many entrepreneurs make the mistake of thinking that they will get their company funded on their idea alone. This is one of the biggest misconceptions entrepreneurs have when raising money for a business. Funding startups on Ideas alone are very rarely funded without various other factors taking place that makes the company attractive for investment.
2. No Revenue: Trying to get a company funded with no revenue is extremely difficult. One reason is that if an entrepreneur’s idea is worth their salt, the investor wants to see them gather revenue to show proof of concept and market viability. They also want to see that the entrepreneur is not looking for them to do all the work.
3. Valuation Too High: Many entrepreneurs don’t understand the concept that 20% of something is worth a heck of a lot more than 100% of nothing. Often times, offering higher equity to a potential investor or strategic partner is better, as it creates more of a vested interest in the company succeeding when the investor has more equity.
4. Focusing Too Much On The Cash: Another one of the common mistakes in business that many entrepreneurs make when trying to raise money for a business is not taking the many other things that are relevant in order to make a business succeed. Entrepreneurs will look at the cash alone when the real secret to the success of most businesses lie in the value of strategic partnerships. Money alone quite often is not enough. In a strategic partnership, the entrepreneur uses the resources and expertise of their strategic partner that benefits the relationship far greater than any amount of cash can cover.
5. Looking for an investment too early: Many investors and VC’s will tell entrepreneurs that the product or service is too early in development for them. One example is a technology company that doesn’t have the technology prototype ready and is looking for the investor to fund the prototype. The problem is there is far too much risk involved. Another example is trying to sell a fashion brand without making samples. These two examples are great places for pursuing startup capital or seed funding. Seed funding will allow an entrepreneur to get the necessary things done in order to put themselves in a position suitable for investment.
N2ITIV Solutions, founded by MJ Gottlieb and Gary O'Neil, is a strategic consulting firm specializing in the implementation of creative business strategies to help aspiring entrepreneurs and small businesses increase their brand awareness and monetize their businesses. The N2ITIV website is an entrepreneur and start-up blog offering advice learned through Gottlieb and O’Neil’s experience owning and operating five companies over the last 21 years.
MJ GOTTLIEB, N2ITIV GROUP, INC., http://www.n2itivsolutions.com, 917-951-5300, [email protected]
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