8 Mistakes Entrepreneurs Can Make After Closing a Round of Funding


Entrepreneurial Q&A: What is the No. 1 mistake most entrepreneurs make after closing a big round of funding?

A: They don’t make a game plan with their investor. “The time immediately after you close your round is the best time to build a plan with your VC or investor, how they can be help you move forward. While this was likely discussed, the best time to actually define the plan with deadlines is right after the deal. That’s when the optimism and excitement is up.” Andrew Thomas, SkyBell Doorbell

They don’t see the big picture. “If you’re an entrepreneur who has bootstrapped and used every penny to get the business off the ground, it’s hard to change your mindset to see the big picture. For a while, you’ve been focused on small tasks that get you to the next step. The luxury of funding is that you can now focus on the big picture of your company — the one that’s going to take it global, not local. Don’t let this slip your mind when you close a round of funding.” Brooke Bergman, Allied Business Network Inc.

They don’t get back to work soon enough. “Too much money gives entrepreneurs an unrealistic idea of how well their company is doing. Whether the work is taking the new funds and going into customer acquisition mode or leveraging funds to move to the next round, it’s critical that an entrepreneur get over the big rush of closing a fundraising round and get back to business. Build the business you’ve promised investors you would with their money.” Charlie Gilkey, Productive Flourishing

They forget investor communications. “I hear from investors that, post-funding, many entrepreneurs forget about maintaining investor relations and communications. Leaving investor relations as an afterthought post-funding is a rookie error. It is critical after successful fundraising to keep your investors in the loop regularly, so they can support your strategic and tactical goals in revenue growth, team expansion and subsequent funding.” Doreen Bloch, Poshly Inc.

They don’t build a public relations campaign. “You’ll need to advertise your success in securing funding. This will help you in your recruiting efforts, and may assist with attracting new investors in the future. When applicable, partner the PR campaign for your funding with the launch of your product for added effect.” Andrew Schrage, Money Crashers Personal Finance

They take a larger salary. “One of the quickest ways to dilute VC money is to start paying yourself and others a lot more. The reality is that there should not be a big pay day until you sell your company, not before. Do not allow a round of venture capital tempt you to act ‘as if’ you’ve sold your business and are all of a sudden liquidated. Pay yourself only enough to be comfortable, and no more.” Obinna Ekezie, Wakanow.com

They over-celebrate. “Celebrating is important to do for many milestones, such as obtaining new clients or finishing a new development, but celebrating after you get funding can be dangerous to your success. Funds are typically meant to accelerate things or reach goals, which does not leave time to relax. The moment you receive funds you need to take action to execute plans that use the money efficiently.” David Tomas, Cyberclick

They spend money on the wrong things. “It’s easy to want to go out and get the nicest office, etc. However, you should view money like you’ll never see it again. While it’s important to use the money you have as a tool, you should also guard it, because you really don’t know if you’ll see it again. Use your investor’s money wisely.” Andy Karuza, FenSens

(Source: TCA)