In this competitive scenario, attracting investments is an essential step to the success of businesses. In April 2024, Brazil stood out significantly, representing 48.6% of the total invested in Latin America. In that month, Brazilian startups raised US$ 356.7 million in 73 investment rounds, as indicated by the monthly report released by the Distrito platform.
However, many entrepreneurs, especially beginners, make mistakes that can compromise their chances of obtaining the necessary financing.
Considering this, André Medina, Innovation Superintendent at Andrade Gutierrez, a pioneer in innovation in the engineering and construction sector, listed the five most common mistakes that startups make when seeking new investments:
1- Lack of proper preparation
One of the most common mistakes is the lack of preparation. Many entrepreneurs underestimate the need to be well-prepared before presenting themselves to potential investors. This includes having a well-crafted pitch deck, a detailed business plan, and realistic financial projections.
“Investors want to see that the startup has a clear vision and a well-defined path to success. Therefore, inadequate preparation conveys unprofessionalism and can deter investors”, points out the expert.
2- Unrealistic evaluation of the company
Another common mistake is the unrealistic evaluation of the company’s value. Startups often overestimate their value, which can deter investors who consider the valuation disproportionate to the stage of development and achievements of the company. An excessively high evaluation can be seen as a lack of understanding of the market and investor expectations. It is crucial to base the evaluation on concrete data and industry benchmarks.
3- Unfamiliarity with the investor’s profile
According to André Medina, seeking investment without knowing the profile and preferences of investors can backfire. “Not all investors are suitable for all startups. It is essential to research and identify investors who have interest and experience in the sector where the startup operates,” he comments.
Presenting to investors who are not aligned with the business can result in loss of time and opportunities. Understanding what investors are looking for and adapting the approach is essential for success in raising funds.
4- Excessive focus on the product and little on market needs
Many entrepreneurs become so passionate about their products that they neglect the needs and demands of the market. Investors seek startups that solve real problems and target a well-defined market. It is essential to demonstrate that there is significant demand and that the proposed solution effectively meets the needs of the target audience.
5- Lack of transparency and honesty
Transparency and honesty are essential characteristics to establish trust with investors. Withholding information or presenting data deceptively can have serious consequences.
“Experienced investors can identify inconsistencies, and once detected, the credibility of the startup is seriously compromised. Being honest about the challenges, risks, and the company’s needs creates a foundation of trust and can paradoxically increase the chances of receiving investment,” concludes the executive.
