11 Reasons Crowdfunding Campaigns Fail

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s one reason why a crowdfunding campaign fails?

1. There’s Not Enough Buzz

Drew HendricksWhen it comes to a crowdfunding campaign, you have to hustle to create the buzz around it, convincing others that people are really “hot” on your idea. Once investors start rolling in, the momentum can take over, although you still need to continually leverage social platforms, influencers and all types of channels to remind people of your campaign. Talk about it continually.

– Drew HendricksButtercup

2. There’s Not Enough Incentive

Miles JenningsNo matter what your crowdfunding campaign is focused on, those contributing need some kind of incentive to give their money — product and/or service. They need to know that they will get something out of the deal.

– Miles JenningsRecruiter.com

 

3. You’re Not Understanding Your Target Audience

Stanley MeytinOften companies feel they have a great idea but fail to test it out before creating a crowdfunding campaign. It is important to first put in the research and understand who your target audience is. Create value, educate people and be sure your product or service is something people are really interested in, and market to them in the right way.

– Stanley MeytinTrue Film Production

4. You Have No Proof of Concept

Corey NorthcuttNot having a concise pitch can kill a campaign. So can a poor proof of concept. Before you ask for money, make sure you can demonstrate the value of your creation; not just talk. Even better, demonstrate its viability in the marketplace by drumming up demand and presenting evidence of as a part of the pitch.

– Corey NorthcuttNorthcutt Inbound Marketing

 

5. You’re Not Showing Your Audience How They’re Connected

Angela RuthBeyond the list of takeaways for certain contribution amounts, most campaigns don’t really connect with their audience of potential investors because they never say what the product or service will do for them. It may give a list of benefits, but there is no connection to an issue or problem the audience has or relates to. This connection would get them to invest or attract more people.

– Angela RutheCash

6. You’re Using Low Quality Video

Kristopher JonesIn most instances, I think it’s OK to pull out your iPhone, shoot some video, and post it to your Facebook page or YouTube channel. However, when it comes to launches a successful crowdfunding campaign, I don’t believe you should skimp on video production. In fact, I think you should invest several hundred dollars in making sure your video is shot professionally edited and polished.

– Kristopher JonesLSEO.com

7. You Fail to Build Trust

Andrew ThomasMost crowdfunding projects fail to deliver to their customers. Over two years later, our campaign is still one of very few crowdfunded hardware projects that fulfilled its orders. Visitors are aware of this, and crowdfunding projects fail because the campaign doesn’t build enough trust. Be trustworthy in your video, be realistic with your claims, and make a quality campaign page with good images.

– Andrew ThomasSkyBell Video Doorbell

8. Your Video Doesn’t Tell a Story

Derek CapoStories are the best way to sell anything and the only way you can effectively do that on crowdfunding campaigns is to have the right video to deliver the message effectively. Your video has to connect with the audience and has to feel genuine. If it doesn’t, then it will be difficult to get anyone to follow you or buy into your story.

– Derek CapoeFin

 

9. Your Product Doesn’t Solve a Problem

Obinna EkezieLet’s start with the No. 1 reason that crowdfunding campaigns succeed — your product solves a problem. If your product doesn’t solve a problem, you likely won’t succeed. Before you post your product, test it out on people who will give you honest feedback. If you’re leveraging crowdfunding to build a prototype, make sure to outline the product as much as possible and seek as much feedback as possible.

– Obinna EkezieWakanow.com

10. You Set the Wrong Goal Amount
Ayelet NoffIn crowdfunding campaigns, image is everything. If, within the first few days, your campaign is not able to achieve its funding goal, reporters coming to your page won’t write about it because it will appear like a doomed campaign, and backers won’t back you for the same reason. That’s why it’s better to set a conservative goal that you can actually succeed in raising. Once achieved, the sky is the limit.

– Ayelet NoffBlonde 2.0

11. You’re Relying Too Much on the Crowdfunding Platform

Fan BiNew entrepreneurs often tell me they’re going to launch their product on a crowdfunding platform — great. So I ask them how big their email list is, how many bloggers and publishers are ready to write about the launch. Huh? They think if they get traction on the platform, crowds will rush to their campaign. Even though that’s true, you need to first solve for the initial traction part.

– Fan BiBlank Label

14 Pros and Cons of Having a More Involved Relationship With Your Investor

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is one pro (or con) of having a more involved relationship with your investor where you actively seek or get advice?

1. You Get Brutal Honesty

Angela RuthWhile this can be a pro or con, a person who knows you better will tend to be more brutally honest about how they see things. The advice will hit at a much more personal level for this reason. While it may not always be something you want to hear, it is most likely something you need to hear. The tough love of a closer relationship with an investor can be what helps create change.

– Angela RutheCash

2. They Have Seen It Before

jeff epsteinGreat investors are happy to share advice from other portfolio companies. We’re fortunate to have a great relationship with our lead investors and provide insights from experiencing many of the issues we face. From high-level strategy to tactics, we can leverage to push forward as fast as possible.

– Jeff EpsteinAmbassador

3. They Want to Run Your Business

Blair ThomasInvestor advice is almost always welcome; so long as there’s a boundary between what is acceptable and what is not. It is important that an investor offers you advice in his or her area of expertise, but sometimes an investor can mistakenly feel that they know how to run your business, offering insight where it’s not needed, which could be detrimental to your operations.

– Blair ThomasFirst American Merchant

4. They Can Help You Network

Adam SteeleInvolved investors are probably the kind who have been working in your industry for a while. Their experience may have involved working with some of the biggest leaders in your field, and it’s possible that they’re willing to help put you in touch with them. The most experienced investors are often networking goldmines, and if you don’t know who you need to talk to, they likely do.

– Adam SteeleThe Magistrate

5. You Can Overshare

Miles JenningsAlthough its great to have a close relationship with your investor, you want to try and be sure not to overshare too much while seeking advice and being open with this individual. This doesn’t mean you need to hide things from them, but you shouldn’t be stressing your investors out with every little detail and up and down within your business. Keep conversation focused on your relationship.

– Miles JenningsRecruiter.com

6. They Support You During Tough Times

Nicolas GremionWe keep our investors updated in both the good and the not-so-good times. And while I was anxious to report bad news at first, I’ve learned that our investors are truly supportive. So don’t be shy to reach out to them in tough times. They may prove to be the help you need.

– Nicolas GremionFree-eBooks.net

7. You Might Take the Wrong Advice

Brian SmithSome advice you pay for, and some advice you’re paid to take. Taking good advice from an investor may make the next round easier to raise. But take the wrong advice and the next round may not happen. There’s a reason you have (or should!) set aside equity for advisors and board members. Surround yourself with smart guidance, not just rich advice.

– Brian SmithS Brian Smith Group

8. They May Know Too Much

Derek CapoSometimes it may be best that they don’t know everything. For example, if they get a sense that you aren’t getting along with your co-founders that may scare them from investing in the next round, especially if that said co-founder was a major reason for investing in the company. In a case like this, if they already know the issue, be transparent and ask for advice on what you’re struggling with.

– Derek CapoeFin

9. They Can Provide an Outside Perspective

Corey NorthcuttWe tend to be blind to ourselves. Nobody ever thinks they have an ugly baby. More than just an investor, any outside perspective helps, and getting feedback on how you’re doing from more angles is always a good thing.

– Corey NorthcuttNorthcutt Inbound Marketing

 

10. They Think About You in Their Off-Hours

Brennan WhiteGetting investor feedback is usually a great thing. However, the more powerful thing about a close relationship with an investor is that they are more actively thinking about you in their off-hours. For us, the investors we talk to most are constantly bringing leads, making introductions, and helping move the mission forward. They’re subconsciously working on the project at all times.

– Brennan WhiteCortex

11. They Help You Stay Focused

Brandon StapperI want investors to know that I do not operate in a vacuum and that seeking advice is part of my job. However, I tend to stay more focused dealing with investor input. I know what I want, get my questions answered, and then go back to work.

– Brandon Stapper858 Graphics

 

12. They Feel More Ownership Over the Investment

Andy KaruzaOne good reason to involve your investor by seeking advice is that they feel more ownership over their investment. This is one of the top two most important concepts for any investor. If they feel more involved, they will be more at ease and will trust you to make the right decisions. They will also be more likely to help you lead on your next round if they have a personal stake in the company.

– Andy KaruzaFenSens

13. They Don’t Have All the Context

Matt DoyleAn investor, as close as they may be, is still someone who has their livelihood to protect. You need to be very, very careful about venting about things that they may not be able to put in the proper context. You could accidentally leave them feeling threatened or conflicted about their investment even if there isn’t a real danger.

– Matt DoyleExcel Builders

14. They Share More of the Experience

Obinna EkezieChances are your investor has experience in many aspects of building a successful business. Therefore, it makes sense to keep your investor as close as possible at all times, and actively seek advice when his or her experience can help you make the best decision. Building a business should not be a test. You should do everything within your power to succeed, and one way is to keep investors close.

– Obinna EkezieWakanow.com

9 Questions That Will Determine Whether Your Startup Idea Is Worth Pursuing

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is one important question I can ask to evaluate whether a startup idea I have is worth pursuing?

1. How Much Time and Financial Investment Will It Take?

Jeff JahnHow much time and financial investment will it take to get the idea to an MVP (minimum viable product) stage? Generally speaking, I only pursue a concept if it can reach an MVP stage within three weeks of development time. That may seem short, but taking much longer puts you at risk of making too many assumptions. That can result in a product or idea that doesn’t come close to hitting the mark.

– Jeff JahnDynamiX

2. Will You Be Excited About It in 5 Years?

Ross ResnickWithout unrelenting passion and deep enthusiasm for the venture, it will fail. It doesn’t matter how solid the idea sounds on paper. Without an emotionally invested leader committed to succeeding at all costs over a lengthy period of time, it will fail. Starting a company becomes your life when you start a new venture — you have to want to live the life the new venture will bring along with it.

– Ross ResnickRoaming Hunger

3. How Big of a Pain Point is This Problem?

Tim JahnYou need to determine how big of a pain point your solution solves. If the pain point isn’t big enough, your customers won’t care enough to pay you for it. If the point paint is huge, your customers will be shoving money down your throat to get their problem fixed. If it’s truly a huge pain, then pursue it.

– Tim Jahnmatchist

4. Would You Be OK if It Didn’t Work Out?

Faraz KhanWould you be willing to risk the time, money and energy even if the idea didn’t come to fruition? If your answer is yes, then you’ll have enough energy to push through the inevitable hard times, both personal and financial. On top of validating the idea, attaining financing, acquiring customers and delivering the product, you will have to deal with your personal stress and life — so brace yourself.

– Faraz KhanGo Direct Lead Generation

5. Does Your Product Create a New Habit or Improve an Old One?

Nick ReeseIt’s no secret that habits are both hard to start and stop. Anytime I hear a startup idea that requires the user creating a new habit, I’m always concerned. On the other hand, any time a new product or service is capitalizing on an existing habit and making it better, I know the adoption phase won’t be an uphill battle.

– Nick ReeseBroadbandNow

 

6. Would You Use It if It Had Terrible UX?

adam_RoozenValuable tools are valuable tools. If you strip away all of the glitz and glamour and it’s still something you would use (not “want to” use), then the idea has potential. Great UXs and positive PR help scale a user base, but it doesn’t define whether a tool is essential or not.

– Adam RoozenEchidna, Inc.

 

7. What’s Wrong With the Idea?

Andrew KucheriavyEven the world’s best ideas have flaws. You just need to identify them and understand how serious they are. Have an unbiased person play devil’s advocate and poke holes in your idea. Once you uncover potential problems, determine whether you can prevent or overcome them by patching the idea or finding a suitable workaround.

– Andrew KucheriavyIntechnic

8. Is It a Product or Only a Feature?

David CiccarelliIt’s hard to build a sustainable business around a feature. People buy solutions to their problems, defined as benefits and packaged as a well-rounded product offering. They don’t use single features for very long. Why? Because the startup that offers a better product will soon include your break-through feature. Double check that you’re building a product, not just a nice-to-have feature.

– David CiccarelliVoices.com

9. How Much of the Market Can You Capture?

Jayna CookeYou first need to understand the overall market size. Next, decide what you think you can realistically do to capture that market. Most people are confident they can capture at least 10 percent, but in reality they only get about one percent. Ten percent is a lot more than it looks like on paper.

– Jayna CookeEVENTup

13 Tips for Determining Your Company’s Valuation Prior to Starting Fundraising

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What top tip do you have for determining your company’s valuation prior to starting fundraising?

1. Determine How Much Cash You Need Over the Next 18 Months

Mark CenicolaTry to raise money at a valuation that will leave you and your founders in control and provide you with enough cash to execute your plan over the next 18 months. If you can’t do that, then either change your plan or seek other investors. It may take a lot of no’s before you find investors who say yes.

– Mark CenicolaBannerView.com

 

2. Look at Comparables

Jonny SimkinThe easiest thing to do is find comparable companies, see how much they raised and what their valuations were. A great resource is angel.co for tech companies. Once you have a sense of what the market will value your company at, start talking with investors and test that valuation. If they think it’s reasonable, proceed. If they laugh at your valuation, revise and try again.

– Jonny SimkinSwyft

3. Find Balance

Omer TrajmanThere’s no hard and fast rule for setting valuation. It’s a negotiation between the company and investor. The company needs to have several interested investors (multiple term sheets really) in order to negotiate. Most important is finding a balance between cash needs and the implicit expectations that come with the valuation. The non-financial terms of an investment are often just as important.

– Omer TrajmanRocana

4. Ignore Industry Buzzwords

Matthew MoisanValuation of a pre-revenue company will always be tricky. Avoid the industry pitfalls of focusing on buzzwords like “traction” or “hotness,” and instead consider the following: Calculate how much you need for 18 months of growth. Then, figure out how much of the company you are willing to give in exchange. Let’s say you want $200,000 for 20 percent — then the range of valuation will be around $1 million.

– Matthew MoisanMoisan Legal, P.C.

5. Have as Many “Friendly” Meetings as Possible

Aaron SchwartzEarly on, there is no easy way for you to independently set valuation. You might be profitable, or you might be growing, but there are no companies on your same trajectory. Before any formal fundraiser, I spend a few weeks with investors and founders whom I know will not invest. Multiple viewpoints will help you narrow in on value, and friends tearing apart your pitch makes you better for primetime!

– Aaron SchwartzModify Watches

6. Do Your Homework

Zohar SteinbergEarly on, valuations are a function of the impression you make on your investors. Investors are looking to make as much money as they can and reduce the risk they are taking. Showing examples of similar companies’ valuations in different stages will do just that. Show your investors that you did you homework and that you’re basing your valuation on a proven model.

– Zohar Steinbergtoken

7. Know What Details Are Important

Jordan FliegelRely on your investor to make an offer and place a value on your company. You don’t need to mention or hint at what you expect the valuation to be. You do, however, need to be prepared to say how much money you are raising, and what you plan to do with the new funding to grow your business. Once you have a lead investor, it’s easier to fill out the rest of the round on the same terms.

– Jordan FliegelCoachUp, Inc.

8. Focus on Growth Potential

Obinna EkezieWhen raising capital, focus on growth potential versus how your business is currently performing. If you are going to raise money from a VC, you’ll want to put together, at a minimum, 24-month revenue projections. If your business will take longer to develop into a revenue producing machine, you may want to project out 3-5 years. Leverage revenue growth to shoot for highest valuation possible.

– Obinna EkezieWakanow.com

9. Use a Third Party

Adam RootIt will have more credibility than pulling a number at random. Early Growth Financial is great for very early stage companies and Silicon Valley Bank is helpful after you have received funding and want a 409A valuation or deep analysis on what other startups similar to yours are worth.

– Adam RootSocialCentiv

10. Listen to the Market

Mattan GriffelIn the early stages, determining a valuation for fundraising is more of an art than a science. It’s more about what you can convince investors you’re worth than about applying a multiple or doing a discounted cash flow analysis. Start out with a fairly conservative number based on comparable valuations, and don’t be afraid to adjust it based on how the investors you talk to respond.

– Mattan GriffelOne Month

11. Seek Input From Peers

Douglas BaldasareIf this is your first round, get input from peers about what you can realistically raise based on your industry and stage. Then soft circle to a few friendly investors (friends and family) with your desired terms. It’s harder for new investors to change the terms once you have already raised some of the round. I also recommend Fenwick & West’s venture surveys. They offer data on average valuations.

– Douglas BaldasareChargeItSpot

12. Don’t Get Caught Up

Katrina LakeMost outcomes are binary. You’re going to make money, or you’re going to make none. I see a lot of entrepreneurs nickel and dime valuations and focus on dilution at the expense of a quality investor. You should focus on what is most likely to get you on the successful side. Valuation and dilution are only one element of the decision you are making and I encourage people to have a long-term approach.

– Katrina LakeStitch Fix

13. Know the Demand and Longevity

Fam MirzaCompany valuation should be determined by demand and longevity of a business. Most tech company valuation is built off the growth of a user database. The goal is to build up a massive amount of users to monetize on them somewhere in the future, usually in the form of ads and data capitalization. However, for product based companies, it’s based off demand for the product and lifecycle of the brand.

– Fam Mirza1:Face

11 Ways to Practice for a Pitch Competition

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s the best way to practice for a pitch competition?

1. Record Yourself on Video and Watch It Back

Brittany HodakWhile practicing for “Shark Tank,” one of the most intimidating pitch competitions on the planet, I found it very helpful to video my pitch and watch it back until I was satisfied with my performance. Watching on video with another person for objective feedback, if possible, is a great way torecognize and correct any flaws in your speech, hand movements, posture and more.

– Brittany HodakZinePak

2. Practice With a Time Limit

Andrew ThomasThe hardest part of pitch competitions is the short time you have to make the pitch. Plan for success by timing yourself while youpractice. There are two benefits. First, you can alter the length to ensure you‘re as concise as possible. Second, you can create mental “markers” so you know where you are in your pitch for each minute of the pitch. This helps keep pace when you feel nervous.

– Andrew ThomasSkyBell Video Doorbell

3. Write and Rehearse

Corey BlakeAs a frequent presenter, I set up time blocks in my calendar — one hour per day, four days a week for two weeks. During that time, I rewrite my presentation from scratch each time. Writing it over and over helps solidify the key points in my mind. Then I set up time blocks to actually go through it out loud and I’m ready to rock. The key to this formula is keeping those appointments with yourself!

– Corey BlakeRound Table Companies

4. Don’t Have Too Many Notes

Kofi KankamMost slide presentations have too many notes. Try practicing your presentation with an increasingly fewer set of words each time untilyou can whittle it down to seven words or so and give a consistent presentation. Then, you are ready.

– Kofi KankamAdmit.me

 

5. Practice in Front of the Meanest Friends You Have

dave-nevogtGet people from your circle of friends who have the most difficult personalities and tell them you want them to be really mean to youwhile you present. Tell them that if they make you lose your cool, you‘ll buy them coffee or something similar. Then don’t stop practicing until you can get all the way through without losing focus. You‘ll go into the pitch competition with total confidence.

– Dave NevogtHubstaff.com

6. Practice Using a Microphone

David CiccarelliSo many entrepreneurs obsess over their slides but fail to grasp the basics of a good performance. Project your voice by speaking louder than you think is necessary. If you can, practice with a microphone. Hold the microphone right up to your chin, literally against your face. And never point the microphone at the speakers. That’s what causes that screeching feedback.

– David CiccarelliVoices.com

7. Forget That It’s a Competition

Blair ThomasRather than trying to “beat out” your competitor, remember that the point is to win the pitch for your business. If your pitch is off, it doesn’t matter who you‘re competing against, you will have lost an opportunity without any intervention from anyone else. Refine your language and messaging; be passionate about what it is you‘re trying to communicate. Lastly, be clear, concise and confident.

– Blair ThomasEMerchantBroker

8. Learn From Others

Cody McLainIn order to make it less intimidating for yourself, watch how someone else presents a pitch — there are plenty of TV shows dedicatedto this (“Dragon’s Den,” “Shark Tank”). If you can see what went wrong (or right) in someone else’s pitch, you can just as well incorporate those properties into your own.

– Cody McLainSupportNinja

9. Practice With Distractions

Afif KhouryHave your kids run in front of your screen, have your Internet go out — create imperfect scenarios. You know your pitch, and if everything runs smoothly, you’re fine. But this is the real world. It’s not going to go smoothly. Every time I help an entrepreneur practice for a pitch competition, I close his or her computer halfway through and say, “Your computer just died, but please continue.”

– Afif KhourySOCi, Inc

10. Make Your Own Slides

Andy KaruzaYou will be much more well-versed with your presentation if you actually make it. Surprisingly, some people have others make portions or even all of the presentation deck. Spend the time to make the content yourself, but have somebody else make it look nice if you need it. Your memory retention is higher for something you actually write or create.

– Andy Karuzabrandbuddee

11. Practice Like You Play

Eric MathewsDavid Cohen of TechStars fame said it best: “Practice Like You Play.” Put yourself into the same context and setup as you will find at the competition. That means standing up without notes, do-overs or looking at the screen. You stand and deliver a pitch in practice as if the judges and investors were standing right in front of you. Otherwise, you risk practicing in mistakes and crutches.

– Eric MathewsStart Co.

 

15 Smart Ways to Vet a Potential Investor Before Partnering

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s one smart way to vet a potential investor before sealing the deal?

1. Talk to Other Companies They Have Invested In

Diana GoodwinBy reaching out to Founders and executives at other companies that your potential investor has invested in, you’ll be able to get a sense of how hands on they will be, what type of advice or value-add they provide (aside from cash), and overall whether or not it was a good experience. This type of information will help you decide whether that particular investor will match what you are looking for.

– Diana GoodwinAquaMobile Swim School

2. Find Out What Value They Provide Beyond Money

Andrew ThomasAsk your investor to articulate exactly what value they will provide beyond writing a check.  If they can’t confidently and clearly articulate their value, you should not move forward in working toward terms. Ask them to explain how they delivered this value to other investments and how they can do the same specifically for your startup.

– Andrew ThomasSkyBell Video Doorbell

3. See How They Handle Negative News

Sean KellyThe only way to truly know a potential investor’s character is to go through tough times with him or her. To simulate that, strategically surface negative news and gauge their reaction. How they handle it will speak volumes.

– Sean KellySnackNation

 

4. Research the Investor Online

Shawn SchulzeIt’s amazing what you can find out about a person or entity by doing some thorough searches online. Research their background, prior investments, LinkedIn, business websites, online articles, press mentions, etc. Look for any red flags and validate any statements made. With social media and the amount of content published online, you can verify and uncover a lot about most individuals or entities.

– Shawn SchulzeSeniorCare.com

5. Break Bread Together

Nick BraunAlways meet in person before taking on a new investor. I recommend dinner or drinks to allow enough time for a thoughtful conversation. Too many entrepreneurs rely solely on email, social media and conference calls, but that will only tell you part of the story and can get you burned. I know it’s old school and a bit inconvenient, but all the research in the world can’t replace a handshake.

– Nick BraunPetInsuranceQuotes.com

6. Consider a Lawyer

Elle KaplanWhat many fail to realize is that you usually aren’t your own boss after getting funding. Investors can say that they’re on board with your company’s vision and core values, but might be singing a completely different tune after you sign the papers. That’s why I’m a huge fan of bootstrapping. If you really must get funding, do the research and consider a lawyer to make sure you retain control.

– Elle KaplanLexION Capital

7. Ask for References

Jordan FliegelIt’s important to ask for references of entrepreneurs the investor has previously backed. Set up calls with the founders to get the inside scoop on their experiences with the investor. A good investor will open up their Rolodex of contacts and offer to make an email introduction. If they are not willing to do so, it is a huge red flag.

– Jordan FliegelCoachUp, Inc.

8. Back Channel References

Joseph WallaAsk a lot of questions. If you really want to do a full vet, find out who they’ve invested in and do back channel references on them. You’d be surprised, not all VCs have sterling reputations within the community. Conversely, there are a lot of less well-known VCs who are both extremely helpful and have amazing reputations. The only way to find out is by doing back channel references.

– Joseph WallaHelloSign

9. Find Out if They Want to Learn From You

Julien PhamThere should be an obvious pattern. Look at their portfolio and the relationships they’ve maintained with the people they’ve invested in. A good investor is first and foremost a people person — someone with broad knowledge or experience and a thirst to learn through you. A good investor will trade their money and experience in exchange for an opportunity to grow and learn from you.

– Julien PhamRubiconMD

10. Discover if They Have a Willingness to Participate in Follow-on Rounds

Vishal ShahUnless your startup is witnessing hockey-stick growth, expect to raise multiple ‘bridge’ and/or ‘seed’ rounds before you raise Series A. If existing investors decide not to join a follow-on round, it sends a negative signal to other investors. Dig into the investor’s past track record and measure how often they have participated and/or led subsequent bridge rounds. Stay away from the one-timers.

– Vishal ShahNoPaperForms

11. Know Whether They Can Take on a Lead Role for You

Andy KaruzaInvestors typically know and work with other investors. Should you have to raise more money, they should be willing to take the lead on helping you raise. This type of investor is very important to have early on in your company as it will dictate success in future rounds.

– Andy Karuzabrandbuddee

12. Flip the Script

Aron SusmanAsk them how they view your company, what they see your company accomplishing, and their ultimate growth goal with your company. It’s ideal to find an active investor, instead of one who plans to put in some money and leave it at that.

– Aron SusmanTheSquareFoot

 

13. Talk to a Previous Company That Had A Period of Failure

Trevor SummersThe true test of a great investor is how they react when times are tough. Do they disengage? Provide helpful guidance and introductions? Do they redouble their efforts? Every investor has had struggling investments. Find out who in their portfolio went through tough times and getthe skinny about what it’s going to be like for you when you face your most important challenges.

– Trevor SumnerLocalVox

14. Focus on Investors Who Grasp Your Business Quickly

David CiccarelliHaving raised around $5,000,000 from a variety of investors, I’ve learned that those who grasp the business quickly will be the bestinvestors. Don’t waste time explaining your business model, including your value proposition, profit model, key resources and core processes to an uninformed investor. Instead, focus your time and energy with those who intuitively appreciate the opportunity.

– David CiccarelliVoices.com

15. Share Your Vision

Shilpi SharmaDo you share your vision with the VCs you are looking to get money from? Two things you would get to know: 1) Whether the VC would be a partner in your vision and help you refine it as you progress, and 2) If there is disagreement regarding the vision of the company, how would you two sort it out? It is very important for you to be open and transparent with VCs since you are looking for a partner for next three or four years with them.

– Shilpi SharmaKvantum Inc.

11 Instances When You Should Ignore Advice From an Investor or Advisor

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

When should you ignore advice from an investor or advisor?

1. It Isn’t True to Your Mission

Michael SpinosaIgnoring advice is never easy, but it is necessary when people blindly apply detailed actions or tasks to a situation/model you know they haven’t fully comprehended. Large scale recommendations that go against the very principles of why you embarked on this journey should be disregarded. Stay true to your mission. Keep external advice focused around common occurrences.

– Michael SpinosaUnleashed Technologies

2. The Context It’s Based on Is Outdated

Michael KleinmannSometimes investors/advisors think because they have 30 or more years of experience than you, they know how to handle situations. While many situations are the same as they used to be once you peel back the layers of the onion, many are not. Reframing the advice in the context of modern business and listening to your gut are very important.

– Michael KleinmannThe Underwear Expert, Inc.

3. They Can’t Substantiate It

Andrew ThomasIf you receive advice from an investor or advisor that just doesn’t feel right, ask them to support their position. If they can’t articulate exactly why they advocate for a certain decision or can’t substantiate their position with past experiences, then you should consider passing on the advice. When asking, politely state that you want additional insight so you can better understand.

– Andrew ThomasSkyBell Video Doorbell

4. Their Background Isn’t Aligned With What You‘re Doing

Brandon StapperI also consider the background of the investor/advisor and take their advice accordingly. Everyone wants to give you advice, and there is such a thing as bad advice. If you are taking business advice, make sure they’ve personally been there and done that.

– Brandon Stapper858 Graphics

 

5. It Doesn’t Resonate

Erica EasleySavvy leaders are good listeners, but that doesn’t mean they take all advice they are given. If advice, even from a key advisor, doesn’t resonate with you, than it isn’t the right move for your business. That said, ignoring advice from respected sources is sloppy. Reflect on what you don’t agree with, and why you are choosing a different path. That reflection will make you and your company stronger.

– Erica EasleyGumball Poodle

6. They Interfere in Day-to-Day Activities

Piyush JainInvestors and advisors are there to support long-term goals and management, not for micromanagement. As a business owner, youshould have full freedom for day-to-day operation. If investors/advisors are meddling with your daily work or tend to advise you on trivial items, you want toignore them or express your displeasure. You can listen to them, but be the final decision maker.

– Piyush JainSIMpalm

7. It’s Hard and Fast

Dan GoldenAdvice, whether paid or free, is just that — advice. It’s never a “must do.” It’s a “Hmm, maybe I should.” When it comes to not taking advice, any that comes hard and fast is usually worth turning down. “Dan, you have to change;” or “Dan, I’ve seen this a million times, you‘re doing it wrong!” I still consider the source, but most often, I won’t implement.

– Dan GoldenBe Found Online

8. It’s Short-Term

Elle KaplanAt LexION Capital, I advise a long-term approach to investing, and the same holds true for entrepreneurship. Chasing short term gains will not ensure long-term success. You should always be looking at how advice will affect you years down the road, because any gains now could be ruined out by potential damage in the future. Any advice that doesn’t follow this should be thrown out the window.

– Elle KaplanLexION Capital

9. They Are a “Check-in Advisor”

Roger BryanThe number one thing to look out for is advisors or mentors that are assigned to you via an incubator or accelerator that seem to jump in, have a bunch of ideas, and then jump out of conversations. These advisors are very easy to spot after about one or two meetings. They want you to make major critical changes but then don’t respond to emails when you have questions. Fire them fast (you can).

– Roger BryanEnfusen Digital Marketing

10. Never Ignore Advice

Mark SamuelNever ignore advice. The real question is whether or not you use that advice or act upon that advice, but you can’t do either if yousimply ignore it. If someone is offering guidance, be happy to receive it, whether or not it’s in line with your own thoughts. It allows you to look at it from another position and evaluate which direction to choose.

– Mark SamuelFitmark

11. It Ignores Customer Data

Adam RootInvestors and advisors provide invaluable expertise, but they can be wrong. If you suffer from the HIPPO complex (i.g., Highest-Paid-Person’s Opinion counts most), remember: that’s not your customer. If investors ignore customer data, ignore them. Following such advice shows your customers, employees and colleagues that you cower when things get tough.

– Adam RootSocialCentiv

15 Ways to Reach Potential Funders on Kickstarter or Indiegogo

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is the best way to reach potential funders when launching a Kickstarter or Indiegogo campaign?

1. Find Influences in Your Niche

Andrew ThomasIn the beginning of the campaign, I recommend reaching out to bloggers and influencers in your niche, either directly or through an early-stage PR firm. Find people who will join your mission and share it with their community. You want to focus on your niche and avoid casting too wide a net. This was a key part of our success — raising almost $600,000 on Indiegogo for our video doorbell.

– Andrew ThomasSkyBell Video Doorbell

2. Snowball Fast with Media Support

Jonathan LongSuccessful crowdfunding campaigns all have one thing in common: They launched with a bang. When sites like Mashable and TechCrunch write a story about a crowdfunding campaign, it creates instant credibility and the campaign snowballs into a funding monster. Establish media contacts well in advance and make sure your campaign has some major press ready to help you get it out there at launch.

– Jonathan LongMarket Domination Media

3. Work With a Strong Marketing and PR Company

Ken CauleyCrowdfunding is the future, no doubt about that. But success in crowdfunding is easier said than done. As this space continues tomature, startups will need to hire a qualified company to help manage the marketing and PR element of successfully raising capital.

Ken CauleyAdvanced Media

 

4. Start Early

Wei-Shin Lai, M.DWe funded in less than two hours, and it was because we did a lot of promotional activities before the campaign launched. We sent press releases to the local media, which put us on air and in the papers. We let our social media fans know, and we sent out emails to tell previous customers the exact hour of the launch. I exported my contacts from Gmail and sent most of them emails using the BCC field.

– Wei-Shin Lai, M.D.AcousticSheep LLC

 

5. Create a Video

Stanley MeytinCreate more content to encourage people to invest in your project. Consider creating videos like behind-the-scenes, inside the technology, or even a simple video that will update funders on the campaign progress. You want to create content that will make people excited about the product or service, leading them to share within their communities.

– Stanley MeytinTrue Film Production

6. Connect With Bloggers Who Reach Your Audience

Andy KaruzaGo after the major PR channels, but don’t count out the smaller, tier-two bloggers who still have a considerable following. It’s pretty easy to identify the audience they cater to based on their profile and the types of articles they write about. Many of them who would be happy to review and share your product with their followers without requiring a large budget to do it.

– Andy Karuzabrandbuddee

7. Launch An Event

RahulAn event already has a captive audience, press, influencers, bloggers and the potential for your product to go viral. The Pebble Watch, for instance, launched at SXSW. It surely helped Pebble get the word out there. They went on to have the most successful (potentially second highest grossing campaign) Kickstarter launch. You can even run an event-specific promotion for your campaign.

– Rahul VarshneyaArkenea LLC

8. Find Social Media Influencers

Marcela DeVivoUnless you are a social media rockstar already, leveraging your social circles won’t yield much visibility. An ideal way to gain massive exposure is to reach out to existing influencers on Youtube, Instagram and other channels and tell them about your campaign. Additionally, write for sites like Buzzfeed, Medium.com and Linkedin Voices to get instant visibility.

– Marcela DeVivoHomeselfe

9. Give Back

Miles JenningsAs an incentive for funders to put money into your Kickstarter campaign, give them something back for their donation and contribution toward your idea. You could give them anything from a branded T-shirt to a coupon to your products and/or services. You could even make them a part of your company in some way. This will push funders to get involved and even stay involved in the future.

– Miles JenningsRecruiter.com

10. Get Feedback

Andrew SchrageElicit feedback from potential donors and use this to improve your pitch and overall campaign. Folks will be more willing to invest when they’re engaged and involved.

– Andrew SchrageMoney Crashers Personal Finance

 

11. Spend to Get Started

Blair ThomasAlthough you‘re already looking for funding to help launch your business, spend some of that all important starting capital on hiring contractors to make your campaign a worthwhile endeavor. A well-designed, well-written page, with focused content and clear messaging, can go a long way — and it’s going to take a team of (part-time) professionals to ensure a win!

– Blair ThomasEMerchantBroker

 

12. Learn from Others

Clayton DeanCrowdfunding is a challenge and there’s no exact science to it, but you can start on the right foot by researching what other successful Kickstarter or Indigegogo campaigners have done to generate visibility. Better yet, find and connect with them on Twitter or Facebook and ask them. From my experience, most are more than happy to share their strategies and fundraising secrets.

– Clayton DeanCirca Interactive

13. Facebook Ads

Andrew TorbaFacebook advertising is something you should consider experimenting with for crowdfunding campaigns. Set up a few small budget experiments to test out different target markets and see how well they convert. Start small and scale as you learn what works best. Facebook’s video ads are also great for creating awareness and driving traffic back to your campaign page itself.

– Andrew TorbaAutomate Ads

14. Build an Email List in Advance

Mattan GriffelBefore running a Kickstarter or Indiegogo campaign, it’s very important to build a potential audience to promote your launch to; ,otherwise. you‘re starting at zero. One of the best ways to do this is to set up a blog-style site using Weebly, Squarespace or WordPress, and start writing regularly. You should shoot to get to at least 1000 emails before launching any sort of crowdfunding campaign.

– Mattan GriffelOne Month

15. Ask Mom and Dad to “Kick Start” Your Campaign

Obinna EkezieSuccessful Kickstarter campaigns generate social proof by getting backers right out of the gate. The most tried and true way to get early backers is to start with first level connections. Family (mom and dad), friends, co-workers, whatever it takes. Kickstarter investors invest in companies with traction. Don’t launch a Kickstarter campaign without having early friends and family backers.

– Obinna EkezieWakanow.com

12 Ways to Come Across as More Trustworthy During a Startup Pitch

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s your No. 1 tip for coming across as more trustworthy during a startup pitch?

1. Be Aware of Your Body Language

Darrah BrusteinYour body language says a lot without you saying anything. Be sure to maintain eye contact, face your body toward your audience, and if it’s natural for you, express your passion through your hands. Don’t cross your arms and legs, as it makes you seem uncomfortable and could come off as though you’re hiding something.

– Darrah BrusteinNetwork Under 40 / Finance Whiz Kids

2. Acknowledge the Risks

Kevon SaberThe best entrepreneurs don’t pretend their startup doesn’t have any risk. Instead, they manage risk better than everyone else. When you articulate your biggest risks and your plan for mitigating them, you demonstrate you’re a critical thinker who will manage their cash and the opportunity in a disciplined way.

– Kevon SaberJellyTelly

3. Listen and Don’t Interrupt

Andrew ThomasListening is a great way to earn their trust. By listening, we demonstrate a willingness to receive and learn from feedback. Also, don’t interrupt. This shows respect for the other person and their ideas. Investors hear plenty of pitches from hyperbolic founders who interrupt them or always have an answer for every question. Be humble.

– Andrew ThomasSkyBell Video Doorbell

4. Don’t Fake It

Corey BlakeIf you want to build trustworthiness, stop pretending you have all the answers. Acknowledge what you don’t know, and be honest about the fear you have as you embark on this journey. Being honest goes a long way to extending trust. It doesn’t mean that you’ll win every time, but when you do, you’ll be in alignment with your investor.

– Corey BlakeRound Table Companies

5. Show Solid Data

Nicolas GremionDemonstrate that your research and ideas are based on strong foundation of solid data. Make sure your info is recent, from reliable sources and compatible. Avoid vague statements and numbers. Be precise when you can and use supporting evidence. If your proclamations and numbers seem dodgy, so will you. If you come across as well prepared and researched, it will add to your credibility.

– Nicolas GremionFree-eBooks.net

6. Bring Someone Experienced Along

Matt DoyleWhether it’s someone close to you who’s willing to help you through this stage, or someone you’ve paid for their consulting services, a veteran always looks good on your side of the table. Bringing experience into the leadership early is reliable proof to investors that you are taking this venture seriously.

– Matt DoyleExcel Builders

7. Relax

jared-brownAny nervous tics you have will come out during a startup pitch if you don’t relax. Many of these tics, like failing to make eye contact, sweating, talking too much or too fast, or not talking enough, are often interpreted as a lack of trustworthiness. People respond much better to relaxed people than to someone who’s wound up, so find a technique you like and practice it as much as you can.

– Jared BrownHubstaff

8. Don’t Come Across as Too Eager or Desperate

Shawn PoratWhile you naturally want to be enthusiastic and persuasive, don’t be too attached to the outcome of any one meeting with a potential investor. Think of it as a conversation where you’re explaining your idea. If the other person is interested, great; if not, you can always approach others who are more suitable. If you are too eager, the other person can sense this and trust you less.

– Shawn PoratFortune Cookie Advertising

9. Stay Levelheaded

Mark SamuelIt’s very important to remember that when you’re pitching your idea, you’ll always be the most passionate person in the room. If you’re already fired up, take a step back and slow it down a little. Most people making the decisions will remain very levelheaded, so you want to passionately convey your idea without overkill, or you’ll scare them off. Make them believe in your idea.

– Mark SamuelFitmark

10. Share a Compelling Story

Lauren PerkinsWhether that means admitting something you’ve been wrong about or sharing a story from your past, investors are people, and they invest in people. Share a compelling story of how and why your idea came to be and why you are the best team for the opportunity. It helps to admit what you need to validate or learn to get to the big win.

– Lauren PerkinsPerks Consulting

11. Make Them Part of the Equation

Miles JenningsInvestors and venture capitalists don’t want to be treated solely as a source of funding. They want to know that they can be a part of your vision too! When pitching, make the story about them. Involve them in the outcome and success of your company and show that they can be an integral part of your dream in the future. They will be able to see much more value in this kind of opportunity.

– Miles JenningsRecruiter.com

12. Be Overprepared

SathvikTantryThe best way to garner confidence and trust in your startup is to anticipate and prepare for any curveballs ahead of time. To do this, you need to poke holes in your own business plan and understand all the risks associated with your startup ahead of time. Then you need to figure out how to either accept or mitigate each one of those risks and back them up with solid numbers and market research.

– Sathvik TantryFormSwift

12 Things You Should Do After a Promising Meeting With a Potential Investor

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s one thing I should do AFTER a promising meeting with a potential investor?

1. Check In

Alec BowersShow initiative after the meeting and proactively address your follow-up points (at the end of the meeting you should have set some items to follow up with). Don’t wait longer than 8 to 12 hours. Investors want to see your initiative, your attention to detail and how good you are at executing follow up. Many a startup has lost investors due to poor/incomplete follow up.

– Alec BowersAbraxas Biosystems

2. Act on Their Feedback

Jason LaIt’s essential to be a prudent entrepreneur and address potential investors’ feedback before scheduling another meeting with them. Investors believe in the adage “actions speak louder than words,” so demonstrate that you have taken action to address their concerns. Some entrepreneurs are so enthusiastic about their venture that they ignore valuable feedback and continue to solicit financing.

– Jason Thanh La, Merchant Service Group, LLC & K5 Ventures

3. Ask Questions

Bhavin ParikhA common mistake that founders make is coming across as too desperate. You want to show investors that they need to prove themselves to you as well — you are a scarce resource. In your follow up, you‘ll want to thank them for their time, but you also want to ask them to sell themselves to you with questions like, “Can you give me an intro to a founder you‘ve invested in?” You need to play the game!

– Bhavin ParikhMagoosh Inc

4. Keep Them Updated

Sohin ShahEven if a meeting goes well, it doesn’t guarantee closing. The best way to work towards converting interest into commitment is by keeping the investor in the loop on progress and new initiatives. This helps build their confidence in you, in your product/company and allows them to feel like a part of the team.

– Sohin ShahIFunding

5. Improve Your Fundraising Deck

Aaron SchwartzAfter you thank the investor, suggest next steps and take three minutes to celebrate, you must re-focus on your fundraise. Take all of the feedback from the meeting and use it to improve your deck. First, reflect on which insights impressed the investor, and emphasize them in the future. And just as importantly, take the questions they had and make sure you‘re better prepared for the next meeting.

– Aaron SchwartzModify Watches

6. Re-engage With Them

Blair ThomasIt’s important to keep your deck up to date and find constructive and effective ways to re-engage with your potential investor. Keep communication high by providing news of new milestones, new opportunities and goals won, and by creating a general feedback loop. This can go a longway in keeping your investor interested. Show them you‘re a highly proactive owner.

– Blair ThomasEMerchantBroker

7. Track Everything

john ramptonRight after a promising meeting (or sometimes before) you‘re going to be sending them a pitch deck. Make sure you‘re tracking everything. I personally use PandaDoc for this. It will show you what pages they are looking at, not looking at and how long they are looking at each page. Next, follow up with them accordingly.

– John RamptonDue

8. Send a Memorable Gift

Drew GurleyYou have a small time frame to make a big impression. A great way to follow up is to use a memorable and unique gift. I actually learned this in a boot camp a couple years ago from a corporate gifting guru. A thoughtful gift doesn’t need to be expensive; it needs to show you paid attention and care about the relationship. Send it quickly and stay top of mind.

– Drew GurleyRedbird Advisors

9. Do What You Say You Are Going to Do

Shawn SchulzeSo many investor meetings are full of discussion, ideas and intentions. If you propose all of the things you are working on and thatyou intend to do, then show the investor that you are doing them. Talk is just talk. Follow up with the investor to give them a concise list of progress being made. Show them you are progressing and committed to doing what you say you are going to do.

– Shawn SchulzeSeniorCare.com

10. Say Thank You

Nicole MunozThanking someone for their time and consideration shows that you are thoughtful and appreciative. Be sure to mention that you truly appreciate their attention. Try to slip in any loose ends you feel weren’t addressed. Let them know you‘ll follow up in a few days/weeks to touch base again in case they have any more questions. Lay the groundwork to ask for referrals at the next meeting.

– Nicole MunozStart Ranking Now

11. Send Favorable Market Research

David CiccarelliInvestors want to know that others have quantified the size of the market opportunity. It’s one thing for you to give your assessment, but it’s much stronger for the investor to learn about the industry and current trends in a third-party report. If you don’t have access to the full PDF report, consider linking to an article on eMarketer, Forrester, or Gartner in your follow up note.

– David CiccarelliVoices.com

12. Call Another Potential Investor

Justin BoggsDon’t stop until that money hits the bank account. So, calling the next investor increases your odds of getting a check, plus you will carry that positive energy into the call. Additionally, telling the next investor how good the previous investor meeting went puts the pressure on them to get in the game.

– Justin BoggsZeeBerry.com

Learn more about Monthly Investor Updates:

Watch the interview with Justin Miller and learn how his monthly updates helped land his startup with $10 million in funding: http://vergehq.com/2015/08/24/how-monthly-investor-updates-scored-10-million/