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Sandile Shabangu
Sandile Shabangu  
4 yrs

You're a startup; it's the greatest idea since sliced bread, but you can't secure a round! Why?

Each week, I receive 50-150 contacts from startups. If I'm extremely lucky, one every month or two, may have the ability to attract investors. The overwhelming majority have 1 or more of these characteristics:

1. No traction. Zero revenue. VCs and most Angels fund businesses, not ideas. Idea + traction = business.

2. They've jumped into an oversaturated competitive landscape without meaningful product differentiation.

3. There's no team. Investors want to be assured that if they put in money, there's a probability, given prior sucess of the CEO and team, of execution.

4. The Business Plan is nonsense. It fails to meet either the test of common sense or due diligence.

5. The Go To Market strategy, an absolutely key component of the BP, that's reflected, extrapolated, in the financial projections, is either missing or macro.

6. The financial projections are developed by nothing more than "if I sell X, then my gross revenue will be Z."

7. They're a service firm, not a product startup. Typically, some form of outsourcing. Investors want a profitable exit, typically via acquisition and that's more likely to be problematic.

#startupguy

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