Introduction: What are the reasons that lead to financing failure? Entrepreneurship is a difficult and tortuous road, full of hardships, difficulties and challenges. Financing during the entrepreneurial process also worries many people. So, what are the reasons that lead to financing failure? Let’s take a look at the specific content.

There are many cases of financing failure, and the causes of death are ever-changing. What is more important is whether a company has achieved better and more outstanding performance within a certain time frame than within this time frame. The investment growth rate is very important, and many VCs will feel that the company has not succeeded, is not very special, and the business is not growing rapidly. This is more likely to happen.

Among them, the focus of the team is to look at the CEO himself, his entrepreneurial level, strategic vision, vision, judgment, and execution ability, and at the same time, whether the team has enough genes to support them. The chosen track, the relationship between the team’s core figures and the CEO.

Dennis, the project director of Huaxing Alpha, said that most entrepreneurs do not have rich financing experience, and they are not very good at summarizing the reasons for success and failure in financing, which leads to entrepreneurs’ independent financing process. They can't grasp the rhythm well. Dennis further pointed out that this lack of rhythm will cause different problems at different financing nodes.

First, do not pay attention to investment managers.

In funds, VPs and above generally have the decision-making power for project investment. Therefore, many entrepreneurs mistakenly think that talking about projects with investment managers is a waste of time, or they have reservations during road shows and want to invest in projects. The best part will be discussed when you meet with your partners. In fact, partners are exposed to many projects every day. Unless a project happens to fall on the track that the partners are concerned about, it is unlikely that partner-level investors will spend a lot of time studying each project. On the contrary, investment managers are usually the most motivated group in the fund to learn and promote projects. It is very important to attract and educate this group of investors in an efficient way within the limited roadshow time.

Second, it is divorced from actual valuation expectations.

A reasonable valuation expectation is the basis for healthy communication between both parties during the financing process. Many founders will negotiate valuations with investors with a bargaining mentality. They will first quote a very high valuation, then wait for investors to discuss the price, or even falsely report an imaginary investment intention to increase valuation negotiations. chips. In fact, the valuation information in the primary market is not as opaque as everyone imagines. Investors who have studied the industry have concepts and expectations for the valuation of subdivided areas. A valuation that is not in line with the company’s development stage or that clearly deviates from the industry average will only increase subsequent communication costs and affect the investment process. Judging from the more than 100 star startups that Huaxing Alpha has handled, the fluctuations in valuations of similar companies are mainly affected by the following aspects: the background of the team, the gap in the company's core values, and changes in the supply and demand relationship in the capital market. However, there are still very few cases where negotiation skills are relied solely on to drive valuations.

As for entrepreneurs, the reasons that affect financing are relatively concentrated.

GSX CEO Chen Xiangdong believes that it is the team, model and data that determine the financing results.

Wu Gong, chairman of Souminglu, believes that the growth rate of users, the number of active users, the cost of acquiring users, and business models are important factors that determine the success or failure of financing.

Menusifu Li Yu summed it up in one sentence, which he described as "the absolute truth", that is, in the early stage, we look at people and teams, in the mid-term, we look at products and models, in the later stage, we look at data, and in IPO, we look at competitors. The market depends on the monopoly situation.

?Kuaikanmovies? CEO Bian Chunshan believes that successful financing depends on three aspects: the prospect and development speed of the project; the circle, that is, the scope and number of investors contacted; the ability to negotiate and appropriate concessions.

Mr. Z, who is engaged in maternal and infant e-commerce, believes that everything is still "the right time, the right place and the right people", that is, the financing environment is favorable, the project has good prospects, the team is reliable, and the three factors add up to the probability of successful financing. will be larger.

Hu Lishan, co-founder of Weiwei.com, said that early investment is still based on people, and a reliable team is an early guarantee for obtaining financing. In addition, it is the personal accumulation of the founder. Most of the entrepreneurs he has contacted are very good. It is difficult to get money. It is not easy to get money when starting a business. It requires a lot of accumulation and the help of many friends. Our co-creator Huang Lei and I have accumulated many years and accumulated a lot of resources, so we can successfully get it. money. ? In addition, disagreements over valuation may be an important reason why financing negotiations cannot be reached.