#1
            •  Not doing their homework: 
                 •  Know who you are pitching (the fund and the partner)
                 •  Is there a fit between the amount being raised and the size of 
                    the fund (Don’t pitch a $1B fund for a $500k raise, or a $50M 
                    fund for a $25M raise)
                 •  Remember: you can divorce your spouse, but you cannot divorce 
                    your investor, so do your homework and choose wisely
                                                                                          2
       #2
            •   Not thinking big enough: 
                 •   VCs are in the business of outsized returns. They want to invest 
                     $10M and get $100M out
                 •   For that type of return, a company has to believe that it can be a 
                     $500M-$1B Enterprise Value company. Early stage VC may start 
                     with a 20-25% stake which may dilute to 10-15% by the time of 
                     an exit. For 10% ownership to yield $100M, the company has to 
                     be valued at $1B
                 •   Often the psychological threshold that VCs look for is a line of 
                     sight to $100M revenue possibility (with believable metrics) 
                     within a multi-billion dollar market
                 •   A lifestyle business is fine, but not venture fundable
                                                                                             3
       #3
             •  Wanting control: 
                 •   Entrepreneurs need to understand that as soon as they take 
                     other people’s money (OPM), they are indeed relinquishing 
                     control
                 •   Investors will take board seats and guide the company forward 
                     with certain rights, often veto rights.
                 •   Giving a hint to a VC that you are looking to retain control post 
                     investment will likely deter the investor from proceeding further
                                                                                              4
       #4
            •   Vitamin vs. Cancer Drug: 
                 •   This is connected to the “thinking big” bullet point. 
                 •   Investors like “monumental” rather than “incremental” 
                 •   10% improvement does not make a difference. A 10x 
                     improvement does.
                 •   Go after a real pain point for which customers will trip over each 
                     other to buy, and they themselves become ambassadors of the 
                     product or service.
                                                                                             5
       #5
            •   Not understanding the competitive landscape: 
                 •   Never say that you have no competition. That means either that 
                     the market is insignificant or that you are naïve and don’t really 
                     understand your market
                 •   There is always competition (direct or indirect)
                 •   Use a table of features/functionality or a 2x2 matrix to clearly 
                     identify your differentiation vs. others in the market
                                                                                             6