It is pretty simple, when looking for funding don’t:
- Say you are going after the ENTIRE quadrillion market
- Plan to pay you and your co-founders $100k / year
- Forecast that 150% of the capital raised will be spent on salaries (investors don’t like to pay salaries – they want to see something built with their money!)
- Related – Don’t hire unless you absolutely have to
- Come no idea of a business model (obviously, it will change, but you have to at least be thinking about how to make money)
- Expectations for a 100X exit in 6 months
- Plan to spend money unless you absolutely HAVE to
Did I miss any? What other silly mistakes do you see entrepreneurs making? Can you guess what you SHOULD do?
About nathan kaiser
While being frugal is always wise to an extent, there comes a point where you need to focus on being capital-efficient, not just as cheap as possible.
Having management/investors/advisors who are experienced is a good place to start in defining SHOULD SPEND versus HAVE/NEED TO SPEND.
Also, curious as to what you think is an appropriate salary for founders (serving as manangement) post-funding.