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6 mistakes to avoid after raising funding

Entrepreneur makes mistakes after raising funding which eventually affects startup performance. Here are some common mistakes that you should avoid.
BY Akshay Arora
Feature Writer, BusinessEx
Jan 30,2018

Fundraising has become common in current startup ecosystem as startups are raising funds on daily basis but the actual problem lies after the funds have been raised by a startup. The drawback is that the entrepreneurs dont use the raised investment properly which eventually affect the startup future. It is essential that entrepreneurs understand that only raising funds is not the difficult task but to actually utilise these funds efficiently is the actual task.

As startup entrepreneurs just entered into this business environment then sometimes it is possible that they take some time to learn how things work so they must take mentorship on every big decision. The optimum use of funding can change the future course of action of the startup. Here are some common mistakes that entrepreneurs make after raising the funding.

Not Planning

The most important task that entrepreneur needs to do is to plan and ask themselves these questions:

  • How to use the funding?
  • Where to put more focus?
  • Whether it will help in startup growth?

These are some basic questions that an entrepreneur needs to be clear about. Planning is crucial for every big decision that entrepreneurs make in order to find the success that they hoped for. Planning defines how to allocate investment in different activities and how it will benefit the business.

Focusing on too many things

Entrepreneurs who raised funding sometimes get off the chart and start focusing on too many things that may be irrelevant for startup future at present. After raising funding, an entrepreneur must ensure that the funds raised by the startup will be used to improve its core area of expertise. Once the core activity is stable then the rest-activity will eventually sync in and help startup grow to its full potential.

Diversifying money

After raising funds some entrepreneurs invest a part of it in another investment opportunity rather focusing on their startup needs. It is good to diversify investment but once you have found stability and your business is doing great. It is not a wise choice to invest somewhere else till you have found some stability in your business.

Not maintaining relationships with investors

The biggest fault of entrepreneurs after raising investment is that they dont maintain a proper relationship with investors because they dont realise how much benefit they can gain from their expertise. Investors have the experience and understanding so they know what the negative and positive aspects of your business are. The first decision that you should take after raising funds is to take advice from the investor as it can really boost up business growth.

Irrelevant spending

Raising funds doesnt mean that you can use it the way you want and still expects to get the benefit from it. You must ensure that the funds used should solely focus on the direction that will help in business growth. These funds are not for entrepreneurs personal use as investor invest to help the business grow so that in return it also benefits them.

Mentor Expertise

A mentor is someone who has experience in the industry you just started working on so taking mentor support in your business decision can really benefit your startup. After raising funds only a mentor can guide you in the right direction on how to allocate funds optimally. To find a mentor or investor for your startup then register on BusnessEX now.

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