5 stupid mistakes entrepreneurs make

Entrepreneurs do the same stupid things over and over again. So says Jeanne Sullivan, venture capitalist, New Yorker, and cheerleader of women in business at Oslo Innovation Week.

Jeanne knows what she’s talking about when it comes to startups.  With over 25 years of experience as a VC, she has seen “1000 times 1000 companies”. As a cofounder of Starvest Partners, she grew the company from 400 million to 400 billion by being an early investor in SaaS and cloud technologies.

Although she has been based in New York City for over 35 years, Jeanne sees a huge amount of potential in the Norwegian startup scene, especially regarding the change in the numbers of early stage tech companies in the 90’s compared to now.

“There’s a real parallel between Norway and New York – we had no companies to invest in, and now look what’s happened,” she says.

Unlike New York in the 90’s, however, the Norwegian startup scene is highly supportive of women, which is an asset when trying to reach new markets and customers.

“Women do have a different lense. No one on Sand Hill Road wanted to invest in Larry Ellison . We said, 3 women [at Starvest Parners] sitting in New York, why not? Then we invested in 30-35 cloud and SaaS based companies after that, so we were ahead of the wave on those kinds of concepts, which was thrilling.”

However, entrepreneurs need to be able to attract the right investments to grow successful companies.  As Jean says, “You have to know what to do and how to do it, to get the wallet out…You cannot come to me with a “project” and say, ‘will you fund me?’ You have to be a business.”

Without further ado, here are the top 5 stupid mistakes entrepreneurs make when looking to get investments.

1. Get the meeting

The first step to getting an investment is to get a meeting with the right person.  Still, entrepreneurs struggle with reaching out and making connections,

“I still get emails addressed ‘Dear sir or madame’. You couldn’t look up my name? Don’t go in cold.”

Jeanne advises that you use your network to get an introduction. “It’s very hard to go in cold, so find somebody who knows somebody”.

2. Get the story out of your mouth

Entrepreneurs can be so invested in the story and meaning of their products and services, they waste precious time during their pitch.

“People cannot package. Would you tell me what you’re building? If you don’t tell me in the first minute, the brain naturally keeps thinking, ‘What is this, what is this, how does it work?’ Tell me! Give me a use case, and an example of how a customer uses it.”

3. Tell me about the business of the business

Of course, investors are interested in your product or service.  But entrepreneurs often forget that the primary goal of an investor is to make more money – they want to hear how you plan to do that for them.

“I don’t want to see a demo in the first minute. Tell me about the business of the business. How are you going to scale? How are you going to market? Are you going to build a direct or indirect sales force? What’s your product? What’s your business model? A lot of times, CEO’s leave that out of their plan. WHAT? That’s not what’s going to get the wallet out of investors. They care about the product, but not as much as they care about ‘can you scale it’? What matters is, can you execute? Can you get the ball in the endzone?”

4. Know your financials (cold)

“And I mean cold!”

“Ladies, sorry, you suck at this. You are so bad. Now some guys are bad, but when the women suck at this, it is so glaring, it’s horrible. Please get somebody at your side who can teach you. Let them teach you how to understand the numbers and bring them to your side to be with you at the meeting. So when the snarky angel or VC says ‘What are the gross margins? And you have a blank look on your face, guess what? You got the first meeting, but you won’t get the second.”

“Investors want you to be stewards of their money.”

Jeanne says to not be intimidated by the financials, if you are not a “numbers person”,

“The math behind investing, it’s not calculus! It’s addition, multiplication, and percentages. You can learn this, and it’s important.”

5. Follow up – and negotiate- appropriately

Following up with investors to keep them in the loop with how your company is doing will help to keep them engaged.  This step is something that many people forget, and can make all the difference when it comes to getting an investment.  Jeanne suggests sending notes periodically, to keep them posted about what’s going on.

 

On a final note, Jeanne says that getting lots of investors onboard isn’t always a route for success.

“If you can bootstrap your company, do it. There’s no cash like revenue cash.”