David Cummings on Startups

5 Common Mistakes Entrepreneurs Make After Raising a Seed Round

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David Cummings

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After talking with dozens of seed stage entrepreneurs at the Atlanta Tech Village I’ve come to see a variety of patterns. Now, no two entrepreneurs are the same and no two startups are the same, but there are some general “business physics” that exist. Here are the five common mistakes entrepreneurs make after raising a seed round:

  1. Not doing whatever it takes to get 10 unaffiliated customers as quickly as possible
  2. Not following the 3:1 customer acquisition to engineering spend ratio (depending on the size of the seed round)
  3. Not budgeting to make the money last at least 18 months
  4. Not understanding there’s a Series A crunch before trying to raise the next round and the metrics required to raise a Series A
  5. Not updating the Simplified One Page Strategic Plan every quarter

The next time you talk to an entrepreneur that has just raised their seed round, share these five common mistakes and help them not make the same errors.

What else? What are some more common mistakes entrepreneurs make after raising a seed round?

Comments

2 responses to “5 Common Mistakes Entrepreneurs Make After Raising a Seed Round”

  1. Nikhil Bhaskaran Avatar
    Nikhil Bhaskaran

    So good !! Just devoured all into my planning sheet !! Thanks a ton!!

    Reply
  2. Chris Bell Avatar
    Chris Bell

    Good points. I do feel that for SaaS businesses, it is critical to not only sign 10 unaffiliated customers but to also show that those customers are actually using the product and showing early signs of finding it indispensable. I have seen several SaaS companies come out of the gate strong with customer signings, only to struggle with actual adoption and usage which obviously leads to problems down the road.

    Reply

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