"Raja, we are going bankrupt"

We are currently doing our due diligence on a company to invest up to 200K EUR. What’s particular about this company?

It hurts when a founder who has been doing their best, reaches out desperate for help.

Typical startup pitfalls they are experiencing - so you don´t do the same.

❌ Believing blindly in their product

→ Thinking that adding more features will attract new customers.

→ That the product will sell itself.

→ That raising money to further develop the product is the solution for more growth and sales.

Big no.

More features do not equal more attractiveness. Often, it’s the opposite—too many features make a product more complex, harder for customers to understand. If they don´t understand it, if it´s too complicated to communicate, customers won´t buy it.

Less is more.

❌❌ Believing that fundraising is the solution to grow

Another big no.

→ This company has been fundraising from multiple small investors, they have a messy cap table that makes them less attractive to future investors.

→ They end up highly diluted, with not enough equity left to keep them motivated. Investors fear a demotivated founder(s) who has less than 50% equity in the company.

→ Investors don’t want to invest in companies that have been fundraising over and over again with little results translated into sales.

The solution and focus for any founder: product market fit, traction and sales.

Investors will follow.

❌ ❌❌ Looking for investors when it’s too late

Reach out when you’re in a strong, confident position.

I like to compare fundraising to dating.

Would you date someone who is desperate and needy?

Same thing applies to investors. They won’t commit unless you are “attractive” business opportunity. Needy and desperate is not attractive.. It´s a red flag ⚠️

If you’re building a business that may require investors at some point, be strategic. Build your network of investors WAY BEFORE YOU NEED THEM.

BEFORE becoming DESPERATE for investor money…

It takes time to build trust with investors, and investor due diligence can take 6 to 18 months.

Don´t wait until the last minute.

✅ What to do instead

• Join events and networks for investors and board members (who often invest to join your board and/or can help with fundraising via their network).

  8 years ago, I joined a network of investors. The fee was 5,000 EUR. It’s still a network I leverage today. The investment was worth it.

  So few founders do it—so when you do it, it’s easier to stand out and leverage it.

• Reach out to potential investors and explore ways to get them as advisors so they get to know you, evaluate and build with you.

• Build your personal brand on LinkedIn (or wherever your customers and investors are) to show commitment to your mission, traction by building a solid online community, get sales and engagement, so investors get to trust, evaluate and know you through your content.

  Again, so few founders do this. So, when you do, you stand out and attract investors and customers — instead of chasing them.

💬 My answer to the founder going bankrupt: