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9 Mistakes to Avoid for Your Real Estate Startup

9 Mistakes to Avoid for Your Real Estate Startup
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Finding money for your real estate startup, let alone any startup really, is one of the most difficult things an entrepreneur faces. The chances of getting funded by a venture capital fund are significantly less than 1%. However, despite knowing how difficult it is, entrepreneurs often make the same mistakes and sell themselves short.

According to some experts, avoiding the following 9 mistakes will increase your chances of landing that all-important meeting and securing funding. Interested in learning more?

Targeting the Wrong Funds

Investors are all different. They focus on different stages (pre-seed, seed, Series A, Series B, etc.) and different sectors. Some have high-profile investment theses, others have a more generalist approach. Your goal as an entrepreneur is to find the right investor for your company. It will be much easier to successfully engage an investor who has invested in their space and probably has a more natural interest or passion for what you do than an investor who has not.

Lack of Investor Research

If you’ve ever applied for a job, you (hopefully) remember the extensive research they did on the company and the people who interviewed them. The same is true for investors. You need to set yourself up for success. Make a comprehensive list of investors you think will be a good fit for your company before planning how to approach them. Consider the approach of the fund and the investment team members.

Not Planning Your Approach

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Once you have identified the investors who are likely to be the best fit for your company, you need to plan how to approach them. Like all good business approaches, you should use a mix of channels and have a systematic approach. Meetings at events, warm introductions and cold approaches are appropriate. Be sure to schedule follow-ups.

Not Focusing On Relationships

No matter how good your business plan is, you won’t receive investment if you haven’t built a strong relationship with an investor. They must trust you and have confidence that their investment will be taken care of. Building strong relationships takes time. Engage with investors early on, before you actively raise money, to get to know them.

Not Having a Good Elevator Pitch

Investors hear thousands of pitches every year. You need to be the one that stands out. Have a 60-second summary of your business handy. You need to say who you are, what you do, and why you offer such an attractive investment opportunity. You need to generate excitement. You need to generate questions in the investor’s mind. This must lead to a follow-up meeting. Practice until you get it right.

Not Having a Good Introductory Email

An introductory email should stand out in an investor’s inbox. Be concise and to the point. You need to get the investor excited enough to respond and get more information. Emails that are too long will not be read. Careful personalization can help you stand out.

Being Too Persistent

Check everything you do by putting yourself in an investor’s shoes and thinking about how they will feel. Use the three strikes rule. If your first target is ignored, a second and third are appropriate if they are reasonably spaced. Follow-ups can be especially effective if you have new information to share, such as a team, product, sales or financial update. If you don’t get results after three tries, keep going.

Having a Bad Presentation

Your presentation is the equivalent of your resume when you are looking for a job. It must be perfect. You’ll go straight to the bottom if it’s: too long (10-12 slides max), too wordy (use pictures), doesn’t explain what the company does (you should do it in a sentence or two), ugly (it needs to look good), and has basic mistakes (typos). Invest in a designer if you must.

Not Asking For Proper Feedback

Even the most prominent entrepreneurs get told “no” many times during a fundraising process. A “no” is a “good” when you get feedback that allows you to improve your approach for next time. Be sure to always follow up to get this information. It’s generally not a good idea to ask for references from approved funds; they will either not feel comfortable referring to your network or will do so with a note: “We’ve already approved, but…” Not the best first impression.

There you are! Those were the 9 mistakes to avoid when you are a startup. Do you think we’ve missed others? Let us know in the comments below.

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