Misconception #4

“Pitching your idea to a lot of investors guarantees financial support.”

 

If you pitch enough, odds are you’ll get funded, right?

 

When it comes to funding your business, the question always on top of everyone’s mind is, “Where am I going to get the money?” This is a problem that EVERY company faces - and not just at one point. The problem is, most funding opportunities are very CENTRALIZED. As in, there is very secular movement of funds and these opportunities don’t breach outside of the sections often. 

So, the theory would be more pitches = more opportunities, right?

Unfortunately, no. This is a common misconception that many startups face. The fact is, you can waste a lot of time seeking funding. This is an opportunity cost. The truth is, most startups don’t get funding. So, the probability that you’ll end up wasting more time pitching to more investors increases far more exponentially then the probability of actually getting funded does. 

Just because you go to every networking opportunity to pitch your idea to investors, doesn’t mean that your business will be financially set. One of the top misconceptions to ensuring your business’s financial stability is that having enough investors guarantees your financial success.

That’s not to say pitching to investors is a waste of time. You may have a variety of investors who are sincerely interested in your idea, which is absolutely great. However, it doesn’t guarantee your business’s success. There are plenty of issues that could arise outside of your control - and now you have quite a few people to explain to. Examples of this include market demand changes, an environmental disaster, law regulation changes, and even personal emergencies where your investors cut funding. 

A knowledgeable founder knows that solely relying on investors for financial support can cripple a business. While having investors’ support is beneficial, do not allow that to be the only factor in your business’s growth. As an entrepreneur you should not limit yourself to funding options that are set by others. Instead, focus on stability and realistic benchmarks for the business. Stability, is not defined just by financial funding raised, but also strategic operational execution. Focus your decision making based on your strategy, rather than financial support - or lack thereof. Having investor support is beneficial, but it doesn’t guarantee that your business will grow and thrive. 

Lastly, a word of advice, please do not go into a pitch with the expectation that an investment is owed to you. Yearly small business polls to those in the investment space provide heavy support for this. They show that founders not being able to check their attitudes or privilege at the door is among the top three reasons why investors will refuse to fund even the most promising of startups. It takes more than an amazing idea to run successful investment campaign. Investors not only invest in your business, but they do in you, the entrepreneur, as well.

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