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What are some of the biggest obstacles to raising capital for a startup?

The biggest obstacle? Not engaging with the investor.

This is a broad statement, and it’s intended to be. How you effectively “engage” with a potential investor can vary (and usually does) from investor to investor. There’s all types of folks in the business world and the hardest thing you’ll ever have to do is learn how you can get and keep their attention long enough to invest in your business. There’s a human element to this that seems to be overlooked by all the noise associated with starting a business. 

Here’s some tips:

  • Know a little something about the investor. Look into their history and figure out what they are passionate about and then tailor your pitch to them. If you use one single pitch that’s supposed to attract a diverse investor pool—you won’t have that thing that really captures their attention.
  • Be clear. The investor wants to know why your business matters. Be specific about what your company solves and how you plan to do it.
  • Be realistic. For the love of all that is holy, don’t pretend like your business is without challenge. That’s such a newbie approach. Investors know that you are a risk and they want to know that you know it, too. Think about the challenges and be prepared to talk about them. Come with a plan for how you hope to tackles those issues and come out on the other side. Everybody loves a problem solver.
  • Be prepared. You are going to get asked some hard questions—think about what some of those may be. Have some numbers ready and some research to back it up. If you don’t know the answer to their question (which hopefully that doesn’t happen…) promise a follow-up and then actually follow up.

It’s not easy raising capital for a startups—-if it was then competition would be obsolete. Where’s the fun in that? A great resource, if you’re interested in some legal info is to check out LawTrades to connect you with a seasoned startup attorney. No matter where you are at one of our lawyers can help you wade through the murky waters.

In the meantime, check out my free eBook How to Start a Business: An Entrepreneurs Legal Guide for some insight about all things startup. Hopefully this can help break down some of the more complex parts of startup law.


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