Dear Professor investor, What is the biggest avoidable pitfall that founders make in raising capital from investors?
Kate from Seattle.
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That is a question with many answers, Kate. But I think the most avoidable pitfall is also the one that is easiest to address. I know of very few professional investors who would write a check to a founder that was not coachable. Founders who have myopic vision and believe that only their vision matters is a non-starter for me, and for most investors.
If you, as a founder, cannot take direction, especially direction from your potential investors, you shouldn't be founding a company. The same can be said for product development and customer involvement. If a founder thinks they know better than their any of their customers, they are not easily coachable.
This goes hand in hand with drinking your own Kool Aid and thinking that you and your product are perfect the way it is. Worse yet is the Founder who will only listen to people who see things In the same way you do. This is a sure way to kill a business. Entrepreneurs must leave ego aside. Yes entrepreneurs have to have some degree of blind faith. Believing they can change the world. But this belief needs to be mitigated by being open to feedback. If you are not able to listen to feedback you won't survive. Investors invest in people and you need to be willing and able to take your idea, listen to what you need to do to make it better, and change it all over again. If you are too busy drinking your own kool aid you will not likely get any capital and it's unlikely your company will survive.
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