7 Mistakes That Are Ruining Your Startup Funding (And What To Do Instead)

With US venture fundraising at a 6-year low, raising investor capital for startups has become more challenging than ever. Potential investors tighten their budgets and use a “wait and see” approach before putting their money at risk. However, some of the best startups – such as Airbnb, Uber and Square – were born during market downturns. Therefore, if you are an entrepreneur looking for money in this area, you may wonder about your chances of success.

As a serial entrepreneur and now the CEO of Builderall, I have heard over 3,000 properties and helped founders raise millions. In my experience, seven common mistakes often derail efforts to raise investment capital. If you are looking to raise your startup capital in this uncertain economic environment, be sure to avoid the following:

Mistake #1: Rushing the pitch

Many founders chase their pitch, but speed isn’t always your friend in the capital world. Your goal is to find the main points and let them be heard, not to finish your presentation as quickly as possible.

Think of it like telling a good joke at a party – you wouldn’t rush to the flagging line before everyone had a chance to catch the setup, right? The same principle applies when you throw. You want your investors to hang on to every word. But that’s not possible if you’re in a hurry or glossing over important information.

Another effective method is to use strategic pauses. Between slides or after making your main point, pause for about three seconds to let it sink in and observe your audience’s reaction. Don’t be afraid of silence. Patience in communication can be a powerful strategy.

Related: What Every Entrepreneur Needs to Know About Raising Money

Mistake #2: Skipping indicators of trust and important separators

Balancing detail and brevity is tricky, but important. There are important signals you should share to help build trust and differentiate your business. While many founders want to focus on how good their product is, there are two very important questions:

• Why is your team uniquely qualified to lead this business?
• How does your company stand out in the market?

In terms of team qualifications, don’t be shy about including specific details of years of experience, prestigious university degrees, previous exits, existing patents and/or impressive startup or business experience.

I once coached a founder who was struggling to raise money. After reviewing his pitch deck, I said, “The problem is you don’t have any real startup experience.” He then went on to tell me that he and his co-founder sold their last company for $80 million, but he thought it wasn’t as viable as it was in another industry. Let me tell you, your past success is 100% relevant to whether investors will trust you with their money.

Next, I can almost guarantee that any amazing idea you make – we’ve probably already seen it. This begs the question, how will you deliver differently when you get to market? This is where your current sequence becomes important: existing user base, early subscribers, accepted patents and strategic partnerships all come into play. These elements show that you are not just another idea but a viable business that is already making waves.

Mistake #3: Talking too much and for too long

I know – this sounds like an argument based on the first point, but hear me out. Blowing fire is another fatal mistake. You have to plan a nine-minute pitch, but you don’t want to “rush” your nine minutes. Instead, don’t worry about what to include — and what to cut out — so the flow feels natural and you still include the important data points that make your business compelling.

I often ask new founders to introduce their startup in just two sentences: What do you do, and why should I care? After that, you have less than 10 minutes to explain the market problem, market size, your business model, your solution, your traction, your team, and your ask. That means you need to be very specific about which details will tell your story most effectively.

I have seen many founders panic and overpay by filling the chat with unnecessary details and fillers. This often has the opposite effect of what they intended. If you talk too much or too quickly, investors may think you’re not serious, or they may get bored and lose interest.

Related: 5 New Ways for Entrepreneurs to Raise Money in Today’s Market

Mistake #4: Forgetting who you’re referring to

Remember, you are targeting investors, not potential customers. Investors are not interested in how good your product is; they want to know about your market, margins, and differentiation.

I once sat at a young women’s jewelry startup where the founder spent the entire time trying to sell me jewelry. As an investor, I was not the target audience and the pitch fell flat. Rather than selling me on the business, he was selling me on the product. When they talk to investors, they want to hear about the business opportunity, not the product.

Mistake #5: Undermining your credibility with weak language

This may seem like unnecessary semantics, but words like “hope” indicate uncertainty, and investors don’t like to take chances on “hope.” They want clear assumptions backed by data and logic.

Instead of “we hope,” use phrases like “we will” or “we will.” This change immediately increases the credibility of your voice. Be decisive; Your words should convey confidence, not wishful thinking.

Here are a few more examples:

• Instead of saying, “We think our product will succeed,” assert your confidence by saying, “Our product is positioned to succeed.” This subtle shift conveys confidence and strengthens your tone.
• Replace “We believe our revenue will grow” with “Our estimates show our revenue will grow.” This not only sounds more authoritative but also shows that your assumptions are based on concrete data.
• Don’t say, “We aim to capture 10% of the market;” instead, he says, “We’re on track to capture 10% of the market.” This adjustment shows that you are working toward clear, attainable goals.
• Change statements like “We expect to launch in Q2” to “We will launch in Q2.” This small change projects confidence and trustworthiness, which is important in building the trust of investors.

These subtle language changes replace doubts and possibilities with assertions. It emphasizes that your pitch is built on credibility and backed by a solid, well-thought-out plan.

Mistake #6: Using broad claims instead of precise data points

When pitching to investors, generic claims can raise red flags, making investors wonder if you’re trying to hide the truth or don’t have the necessary information.

For example, instead of saying, “We have a huge subscriber list,” focus on concrete details like, “We have over 20,000 subscribers.” Clarification not only clarifies your claims but also greatly increases your credibility and credibility.

Here are a few more examples:

• You can say, “Our team has a lot of experience.” It says, “Our team has eight years of experience in this field.”
• Replace “Our product is very sticky, and our customers rarely leave” with “Our product has an 89% customer retention rate.”
• Instead of “We expect faster growth,” say, “Our projections show 30% month-over-month growth in the fourth quarter.”
• Change “We dominate the market” to “We currently hold 45% of the market share in our region.”

These changes in phrasing turn vague statements into strong, data-backed statements, which help build investor confidence and convey that your pitch is grounded in reality.

Mistake #7: Telling instead of showing

Our final lesson: show, don’t tell. Expressing something visually instead of using words will be more impactful and more likely to be remembered. Instead of telling investors, “We have a good interface,” show the interface screens and let them decide for themselves whether it’s good or not. Instead of saying, “We’ve grown a lot over the years,” show a line or bar chart that shows your dramatic growth.

Another example: telling investors how much your customers love you has less impact than showing screenshots of social media posts where your customers are talking bad about you in their own words. Keep this mantra in mind: less talk, more attention.

Bottom line

Mastering the art of pitching involves more than just avoiding pitfalls – it’s about crafting a story that resonates with investors and builds trust. However, by avoiding these seven mistakes, you greatly increase your chances of getting the funding needed to take your startup to the next level.

In today’s challenging economic environment, accurate communication, consulting rather than telling, and delivering data-based arguments will set you apart. Investors want to support entrepreneurs who can navigate through adversity and propel their businesses to success. Continue to develop your pitch, build strong relationships, and show investors why your startup is the one to bet on.