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Pitfalls To Avoid In Applying For A Venture Capital

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Most entrepreneurs know what they have to do when searching for venture capital. But there also common mistakes that you have to avoid when presenting your business. An applicant can be rejected for a number of things.

Most venture capitalists are only required to approve a certain number of business plans they come across everyday. Your business must have a competitive edge over others that will get the attention of the investors.

You have prepared all of your legal documents and practiced your pitch a thousand times only to get rejected. At some point, you won’t even know why you got rejected. Don’t wonder if applicants get rejected over something trivial. To be able to increase your chances of getting approved you must know what to do and the common pitfalls to avoid when applying for a venture capital.

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Don’t be too technical. Investors pay more attention to number and figures because they understand them better. Although this may give the impression that you know your business like the back of your hand, the investors may not understand you. Your presentation should be able to communicate well with your audience.

Don’t give false hopes. Overly optimistic projections may ruin your credibility. Investors rely on credible financial projections not expectations. Unless your assumptions on future earnings are back up by credible sources, don’t mind bringing them up. It’s better to present realistic figures that can be achieved by the business.

Do not provide incomplete financial information. You must present both past and projected financial data. Historical financial information informs your investors what the company has accomplished and communicates future projections. You will need balance sheets, income and cash flow statements.

Sales are not the solution to all problems. Investors are looking for businesses that have potential for long term returns. Earning in small profits that can be collected in a timely basis proves a better survival strategy. Earning large amounts of profits while loosing money at the same time will ruin your business.

Concealing problems of the business is not a good idea. Investors also understand that all business has problems. State the whole story and inform them how you will manage and solve it in the future. Owing up to past and existing problems is better than hiding them. As long as you can present a solution your investors will understand.

Low price leverage. The low price strategy can only be achieved by one leader in an industry. It’s not a good sign to your investors if you are relying on a low price rather than the quality of your product or service. Wal-mart is one the few who can manage to capitalize on this strategy.

Overconfidence in your product is also not a good idea. Your idea maybe unique but you should always remember that the possibility of a competition will always be there. Every business profits from a need and any smart entrepreneur knows that. Your ideas may different but looking at the whole picture you may also be focusing on a need that others are also addressing.

State the facts in print. All entrepreneurs have a clear vision of what their business is but not all of them are good in putting them in print. It’s important to be the author of your own business plan than get outside help that may not be bale to capture your thoughts.

Crowdsourcing Data Not Without Major Pitfalls

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Houston, Texas (PRWEB) February 28, 2012

The popular practice of Crowdsourcing occurs when a company makes an appeal to consumers to add data to their sites. One example of crowdsourcing would be Wikipedia, which relies on contributors to update its files. Another example is a website like Crowdspring, which lets freelance designers submit logo and design ideas for businesses. Pabst Blue Ribbon is dabbling with crowdsourced ownership for anyone who contributes toward the $ 300 Million asking price for the company. While crowdsourcing is a quick and easy way to bring in massive amounts of data or opinions, not everyone is a fan.

Crowd sourcing is not the end-all be-all for companies trying to wrangle huge consumer-based data sets, says Mark Davidson, Director of Data Operations for SaveOnBrew.Com, especially data sets geared towards consumer goods.

Davidson should know. SaveOnBrew collects data from more than 50,000 retailers across the country and uses the data to fuel their beer price-search engine. “As the data set broadens, it becomes less practical to rely on a crowd for accurate, timely data.”

Our original design spec for SaveOnBrew was a combination of data-scraping and crowd-sourcing. We quickly ran into a host of crowd-related problems and came to the realization that, for our needs, crowdsourcing just simply was not the answer.

He shares five potential pitfalls to crowd-sourced data.

1) Damaged Reputation: At SaveOnBrew, were only as good as our data. If it isnt accurate, well lose our core audience. Unfortunately, a crowd can be unpredictable. If our customers lose faith in our data and we become known as being inaccurate, theyll leave and not come back.

2) Unmanageable Labor. By its very nature, the crowd is made up of those most willing to help the project succeed. But at the end of the day, you cant correct, discipline or fire them. They are inherently unmanageable. When youre dealing with a data set of 300,000 records every day, you need to be able to manage the collection of that data. By shifting from a crowd to dedicated data-scrapers, we build in the ability to manage our work force, including the ability to reward and discipline them as employees of the company.

3) Sabotage. If data is your claim-to-fame, then crowd-sourcing gives your competition an in to sabotage that data. We have procedures in place where we audit our data for accuracy. We literally go back and check the data entry work, Davidson explains. Crowd sourcing tends to rely on input directly into a production database, without the necessary checks and balances. We wouldnt want our competition to enter inaccurate beer deals that might alienate our customers and business partners.

4) Rewards That Lose Their Luster. Davidson explains, “Once you start rewarding, you have to be prepared to do it for the long run. If you decide to incentivize the crowd, they will grow to expect it, and may feel resentment when the incentive changes or, in the case of a drawing, they are not the person chosen for the reward. Instead of building loyal followers, you might be building a crowd full of resentful people who eventually just move on.”

5) Difficult to Predict. According to Davidson, it’s difficult to predict participation which leads to difficulty in business planning. “Our operation runs six days per week, and we need to have the deals up early in the day. Our tests showed that, no matter how we incented our crowd, some of them just simply wouldnt participate to the level we needed them to participate. Back when we were a start-up, our crowd size was way too small to support the needs to the business. They simply were not dependable, and that left us scrambling for data.”

But Davidson does see some advantages to the approach. “We actually do plan to come back to crowdsourcing, which we refer to internally as ‘the street team.’ We see that we have an opportunity to build a culture where participation is rewarded with both physical and social rewards. We want to make sure, though, that we build in checks and balances to ensure accurate data delivered in a timely manner.”

About SaveOnBrew.Com: Founded in 2010 to help thirsty beer drinkers across the United States find the lowest advertised prices for one of the worlds most popular beverages.

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