Entrepreneurs are constantly refining their pitch in hopes that an investor will fund their startup, spending hours honing and crafting their idea into a great story. But what use is a great story if you don’t ask for what you need?
According to IBM SmartCamp mentor Doug Farrington the biggest mistake entrepreneurs make in an investor pitch is underestimating their funding needs. Farrington, a CPA and Partner in Charge of the Boston Office of Marcum LLP, says it’s important for entrepreneurs to conduct a thorough analysis of their short-term and long-term funding needs before asking an investor for money.
Often, he says, entrepreneurs are so concerned about getting any funding at all that they don’t dare ask for more than what they absolutely need. Inevitably, they underestimate that number, and as Farrington remarks, “There are only so many times you want to go back to the well.”
His advice? Entrepreneurs need to “do a fair analysis of the funding needed to accomplish what they’re trying to accomplish.” Otherwise, he says plainly, “you won’t succeed.”
Check out this IBM Infomentary for some tips and advice on how to ask your funding source not to just show you the money but to show you the right amount of money needed to transform a concept into a sustainable, profitable and successful business.