What are the specific mistakes in financing?

Financing is a relatively professional term. For ordinary people, they may not be exposed to financing for a lifetime, and at the same time, they will have many misunderstandings about financing. Do you know the common mistakes about financing? Nomogram The editor has collected relevant information and will introduce you the knowledge of financing mistakes in detail below.

1. Founders' equity distribution is average and the equity is too dispersed

Many entrepreneurs believe that the average distribution of equity among several founders can enable everyone to work together, and there will be no debate on interests. In fact, one of the biggest advantages of start-ups is efficient execution and flexibility, and the founders are often in a central position in this process. Looking back at all successful enterprises, we will find that almost all of them have a very special founder, such as Microsoft, Apple, Amazon, etc. In the early stage, they represent the company and drive the company forward. This driving force comes not only from their own responsibilities, but also from the decision-making power of "I decide everything". If the average equity of several founders is too dispersed, it will inevitably affect their decision-making efficiency. At this time, the biggest advantage of start-ups: "executive power and flexibility" has been lost.

2. Focusing on money and ignoring the investors behind it

When it comes to financing, of course, we need to pay attention to money. However, as we have previously analyzed, the connection between entrepreneurs and investors is like marriage. Marrying with unsuitable investors is likely to destroy entrepreneurial projects. Therefore, pay attention to the investors behind the funds, their industry background, their resources and the projects they invest in, and see if they can bring real value to themselves. When investors look at a project, they often need to do a very detailed due diligence on the project and its team members; Similarly, as entrepreneurs, when looking for investment, they also need to do a similar due diligence on the investors behind the funds.

3. Part time entrepreneurship hopes to finance before full-time

Entrepreneurship is not only a full-time job, but also a career. Part time entrepreneurship means that you have no confidence in your project or in yourself, because you put it in the second place. At the same time, part-time entrepreneurship leads to lack of focus and depth. Investors are not fools. If they have no confidence in themselves (projects), how can they invest!

4. The team raised funds without running in

As we said above, investors often need to conduct comprehensive due diligence on projects and teams when looking at a project. Many investors even only look at the team. The team is reliable and the selected project is not too bad. Therefore, it is a necessary prerequisite to run in the team before financing.

5. Start financing without measuring their own costs

For entrepreneurs, it is financing, but for investors, it is investment. Investment requires a return on investment, so it is important to understand the cost of the invested project. At the same time, the detailed calculation of the cost of their own projects is not only necessary for their own internal management, but also the basis for financing. When summarizing the reasons for the delay of modernization in China, the famous historian Huang Renyu believed that the most important reason was the precise management that could not be based on numbers, which was also applicable to micro enterprise management.

6. Start financing when the capital flow is about to run out

If capital is the blood of social and economic development, capital flow is the premise for an enterprise to continue to operate. The investment of investors is often the only source of funds for start-ups at the initial stage, so they should always pay attention to their own capital flow. Preparing for financing in advance not only gives you more options and greater bargaining power, but also gives investors enough time. Wang Xiao believes that financing should be planned when the funds are sufficient.

7. At the same time, financing to all known investors

This idea is the same as that of the students just out of school looking for jobs. They believe that spreading nets can catch more fish. However, in fact, spreading the net means that you are not clear about your real needs and do not understand the needs of investors. No matter how fast a ship moves, no matter how aimless and directionless, others will never know where it will arrive. Therefore, looking for suitable investment talents is the real king's way.

8. External shareholder holding

Investors will only invest in projects that meet their own rate of return on investment. If external shareholders control a project, the prospect of the project will undoubtedly be greatly reduced. Investors will think whether the project will move in the direction of the founding team or the controlling shareholder.

9. Blindly optimistic valuation is too high

As an entrepreneurial team looking for investment, getting a higher valuation is not only an affirmation of their own value, but also one of the driving forces for their progress. However, for an early-stage entrepreneurial project that has not yet generated income, its valuation often depends on the cost of developing to the next stage. The final value of start-up companies is more reflected in the acquisition or listing stage.

The above contents are the financing mistakes sorted out by the editor based on the practical experience of many people. I hope they can help you understand financing correctly. For knowledge of other aspects of financing, such as legal risks, regulations, methods and processes of financing, you can call us directly to consult our online legal chart website lawyer 。