Funding and Investment Mistakes

Mistake #7: Raising Too Much, Too Early

The Mistake: Raising large rounds at early stages, creating unrealistic expectations and unnecessary dilution.

Real Example: A marketplace startup raised €3M seed round at €8M valuation. They burned through it in 18 months without finding product-market fit. Unable to raise Series A, they sold assets for €500K.

Problems Created: - High burn rate habits - Pressure for premature scaling - Difficult next round dynamics - Team misalignment - Lost focus on fundamentals

How to Avoid: - Raise only what you need + buffer - Focus on milestones, not runway - Keep burn rate disciplined - Mix funding sources (grants, revenue) - Maintain founder control

Funding Strategy Framework: 1. Define clear milestones for next 18 months 2. Calculate minimum budget to achieve them 3. Add 30% buffer for unknowns 4. Raise that amount, no more 5. Focus on milestone achievement

Mistake #8: Ignoring Non-Dilutive Funding

The Mistake: Going straight to equity funding without exploring grants, subsidies, and tax credits available in France.

Missed Opportunities: - Bpifrance grants (up to €1M+) - Regional subsidies - EU funding programs - CIR cash refunds - Innovation loans

Real Example: Two competing startups in 2020: - Startup A: Raised €1M seed, gave up 20% - Startup B: €300K grants + €500K seed for 10% - Same runway, half the dilution

How to Avoid: - Map all available programs - Apply early and often - Hire grant writing help - Layer funding sources - Plan application timelines

Non-Dilutive Funding Stack: 1. Bourse French Tech: €30K 2. Regional grants: €50-200K 3. Bpifrance ADI: €100K-1M 4. CIR refund: €50-500K 5. EU programs: €50K-2.5M

Mistake #9: Wrong Investor Fit

The Mistake: Taking money from investors who don't understand your market, stage, or vision.

Red Flags in Investors: - No portfolio companies in your space - Unrealistic growth expectations - Frequent founder replacements - Poor founder references - Misaligned values

Real Example: A deep tech startup took money from a consumer-focused VC. Constant pressure for quick revenue led to premature productization, technical debt, and eventual failure.

How to Avoid: - Due diligence on investors - Speak to portfolio founders - Clarify expectations upfront - Ensure sector expertise - Value fit over valuation

Investor Evaluation Criteria: - Portfolio relevance - Value-add capabilities - Board experience - Follow-on capacity - Founder references - Cultural fit