Bad days will follow you when your investor knows more about your competition than you do or identifies competitors that you have not considered. Even worse is saying that you do not have competitors because you are in a new market or nobody has a product or service like yours. Your potential investor will conclude that you have not done much research and not considered the various alternatives that your potential buyer has to solve the problem that your product or service solves. After all, your primary competitor is the status quo; which is however your buyer solves the problem today. If you show that you don’t know your competition, your potential investor will have little regard for your understanding of how to win in your marketplace.

3. Overstating Business Progress

The investor relationship will be terminated if you claim to have made certain progress in product or service readiness, customer traction, strategic partner\investor interest and it is later discovered not to be true. You will have shown a lack of integrity and precision in your communications which will be extrapolated to everything you have previously said. This is a breach in trust which can be impossible to recover from. Avoid this mistake by being truthful to the status of your business; doing it as objectively as possible using straight forward facts.

4. Being Resistant to Additional Management
As Dirty Harry once said, “A man has to know his limitations.” Well, so do entrepreneurs and or executives within large organizations. Investors are going to make sure that the right management team is in place. Sometimes that means bringing additional people into the company to fill necessary roles, including the CEO. If you resist this by unrealistically insisting that you can play a role that you are not really qualified for and you are not acting in the best interests of the company, investors will not work with you. You will be showing a level of immaturity that indicates that the investor’s money is not going to be managed well, so they will not take the risk.

5. Insisting That You Are Right
Chances are that your potential investors know more about starting and running businesses than you do. Their accumulated wealth is proof that they are good business people. If you come across as arrogant and not willing to listen and be coached, your potential investor will conclude you will not be a good business partner. This is common sense, but sometimes entrepreneurs and corporate executives get totally wrapped up in their perspective of the business and are not able see other points of view. If your mind is closed to other perspectives, the door to investor money will be closed as well.

6. Being Disrespectful and Pushy
Most of the time the process of obtaining needed capital funding is an exercise in patience. Investors don’t know as much about your business as you do so they ask a lot of questions that may seem obvious to you. Investors have certain perspectives of how business models work that will have to be reconciled. They have a lot to do and often don’t get the due diligence done in a very timely manner. Some investor organizations have rather bureaucratic procedures that take a lot of time. Complaining about the process and trying to push it faster than it will go will only frustrate you and more importantly anger the investors. If you complain too much and push too hard, you will lose them.

7. Not Knowing What You Will Do with the Funds
Not knowing exactly how much money you will need is usually not a problem, especially if the amount has been determined by a cooperative discussion with other investor counsel. The Big mistake is not knowing what you need the money for.  This indicates that you have not thought about what you have to do next to launch your business or project and that you do not have a clue what your next few milestones are. The investor has to feel comfortable that money is going to be spent wisely and on the right things. If you do not show that you know where the money needs to be spent, you will not get funded.

8. Unrealistically Insisting on Control
Too many entrepreneurs and corporate executives underestimate the importance of the investor’s role. In order to be successful, an entrepreneur needs a good business proposition and the money to finance it. Both are equally important in every respect. Some entrepreneurs think that the investor’s role is much less significant than the entrepreneur’s. After all, the entrepreneur had the idea and is doing all the heavy lifting. The investor is only writing a check. This attitude is both insulting and demeaning to an investor. The entrepreneur or corporate executive is forgetting that the investor has already done a lot of heavy lifting to gain the money with which an investment can be made. If the entrepreneur does not show fairness in sharing ownership and or revenue of the company commensurate with the risk that the investor is taking, then the deal will not happen.

9. Misrepresenting Financial Status
 A sure setback to an investor opportunity is to falsify your current financial status. If you misrepresent the following; how much money has gone into the company\ project, your debt position, financial obligations, promises made to others concerning their financial interest in the company, revenue, payables, and much more, your potential investor will conclude, you do not know how to manage money!  Therefore, they will not let you manage theirs.

10. Not Disclosing Material Facts
 The intent of the due diligence process is to discover all the material facts about the company. Upon entering this process, the entrepreneur or corporate executive team must disclose all information that represents a material risk to the business. If you hid these facts and the investor finds them without your help, the deal is blown. This is another breach of trust that is nearly unrecoverable. Make sure you are accurately disclosing intellectual property status, all business obligations, contractual arrangements, customer relationships, alliance negotiations, personnel commitments, and all material facts about your business. Good business judgment coupled with straightforward integrity will avoid all these mistakes and many more. Your investor is your partner and has to be treated as such. Bringing your potential investor into the business for equity and or debt, full disclosure and in the spirit of creating a long term respectful relationship, will keep you on the track of getting the financing you need.

11.  Will it Cost me Money to Obtain Capital - It already has and will continue to cost you!

At the end of the day, raising money for a company without spending money is only possible in theory, but, not in real-life practice. A Company that is growing can never get enough capital either created internally or in the external market place.  Several 'cost items' typically apply during the preparation of a transaction whether it is a sale of a business, capital raise, recapitalization or acquisition such as the origination of documents. Origination of Documents will include the following: a well-written business plan, financial audits, company valuations due-diligence, applications, supporting due diligence materials, an Executive Summary, PowerPoint marketing materials for investors, financial analysis marketing business models, other resources, etc. Typical expenses incurred include travel, lodging, investor meetings, road shows, business strategy sessions, financial audits, improvements in websites and legal fees - all of which are always 100% the responsibility of "You" the company asking for the capital facility.  Expect your hard "out of pocket" cost to be from .125% to .5% of the total gross capital facility you are applying for from private capital sources with a minimum of a application cost, site visit, and financial audit to cost from $12,500 to $250,000.00 or more depending on the complexity of the project and its owners, along with if you are a domestic or international company.  If your company does not have these funds available, I suggest you team up with an "Early Stage Investment Group" and "do not quit your day job"  until your company has enough funding to cover your capital needs, plus an additional 12 months of G&A reserve.  

It is in hopes that the above information will help you on your search for the best possible business and capital expansion partner in support of your future.