This article will consider dud advices, which should not be taken into account if you want to scale your startup. All points are gathered from real life cases, so, let's try not to do the same mistakes.
1. Send out letters to hundreds of investors and, furthermore, put all of them in the blind-copy. There is nothing to hide, these are investments!
It is one of the most common and most dumb mistakes that will cost you a reputation. In this case you have immediately broken 2 rules.
Let's find out what it means?
It is highly essential to create an offer, which is fitted to investor's needs. Looking for investors at a particular stage with particular focus will help you to shortcut the searching time and craft an image which is going to be interesting for them. By doing this you save investor's time as well. For example, if you are trying to find seed money, it means that you need to connect exactly the seed funds or business angels.
2. Visit all possible events and meetings every day! Don't conduct the project, go to events, every time with a new idea!
Earlier it was mine strategy too. When I dived into startup world from the corporate one, it was so challenging for me. I visited hackathons, workshops, events with startup related movies and so on… It was really extremely productive, especially the first 15 meetings. It allowed me to construct an overwhelming network and plunge deepper into this industry. Afterwards I and my teammates had started to work extremely hard on the project.
In opposition to Vasiliy (my acquaintance, with whom we came to the hackathon 2 years ago) who still continues to visit events every time with a new idea. In my opinion, Vasiliy can already earn money on hackathons conduction, because he knows the timing, every second of these occasions. But it gives him no benefit.
To sum up, if you want to know how to fund startup rather than carry out the hackathon, you need to remember this rule and avoid making these mistakes.
3. You must always ask to sign NDA before you say anything about the project and, moreover, before signing any documents. Be careful, people may copy your idea, because it is genius and crossed only your mind. Remember that your idea costs billions and Mark Zuckerberg can buy it at any time!
Phrase "NDA is the first!" allows investors to estimate the startup level. Experienced entrepreneur will never do this, because he knows that has a competitive advantage (you have already done something that makes you safe; and in case of immediate replication by investors it would be hard for the latter one to compete with you). Moreover, a founder should think over on how to protect his or her intellectual property beforehand.
4. Use the most complicated words that you can construct for your product or technology description. For example, adrenocorticotrophic adsorbent is a good choice.
Your presentation (or teaser, or executive summary, or other documents) must be clear for all investors or partner. Investors should not have 4 diplomas of higher education in the field of biotechnology. They should be good at projects scaling and in money generating. That is the reason why you should create presentations using words as simple as possible. In case of misunderstandings don't think that investors are stupid, just say it in other words. Try to state your messages the way your grandmother can understand (unless she is not a PhD in biotechnology).
5. Throw the project as soon as it has difficulties and start a new one. Remember, that only the win-win project will be interesting for investors. The more projects you throw, the cooler you are.
Never ever give up! Of course, within reasonable limits. Be persistent and goal-oriented. The high and mightiest had a million attempts, not one mistake and the n-th number of failures.
6. Don't try to give less than 50% of the company during the first stage of investments. The more is better!
If you are taking the risk, set it apart investors, don't be greedy. Another good point is to give an option (or company's share) to anyone who has agreed to help you whether it is a designer or a programmer. Don't skimp on the company's share, give away the percentages to an office cleaner lady or a person who gave you a place in the tram!
The ideal scenario is that when you own the company from top to bottom. The other key personnel own options. The reason is that these legal instruments are linked to those future projects characteristics and parameters, which depend on this particular person. The division of company by two co-founders (50 by 50) is also not a good idea. It rife with the following consequences: in the future you can make no decisions in the company without your partner, because you don't have an advantage.
7. Create only the kind of products, prototypes, which will generate billions of revenue. Launch your own social network, for instance, or invent "Uber for Uber". These projects are successful, so, you also will be a gold boy with your smarts.
Venture capital industry is all about innovations. Don't forget the blue ocean strategy: let's find a new market (and even better — create them yourself) rather than trying to survive in a highly competitive red blood oceans. You won't receive investments for the copied product such as Uber because you ought to dump prices and spend a lot of money in order to compete with others, which will lead you to bankruptcy.
I hope it was useful and fun for you.