Fundraising is rarely easy and is usually a far underestimated undertaking by entrepreneurs that haven’t done it before. In the fundraising section of this blog, I describe ways of approaching the exercise (see related article titled “The Domino Effect of Fundraising“) and what to do if you don’t reach your goals (see related article titled “Stuck at 75% of your Fundraising Goal – Now What?”). But if you genuinely feel 
like your product idea and business model approach is sound, and have gotten validation of this via investor prospects and your Lean Startup validated learning approaches (order book here), you’ve got to turn your attention to other things that might be getting in your way of convincing investors to write a check. Below are a few on my short list to start with:
Valuation
The single most common issue I find is founders being stubborn with their desired valuation (in the case of raising money on a convertible note, let’s just use the valuation cap as a proxy for valuation because that’s what many investors will do). Some investors will try to negotiate the valuation, even if what you’re proposing is reasonable. But if they keep pushing, keep arguing and keep resisting, you’re valuation expectations are almost certainly too high.
Fundraising is hugely distracting and you need to get back to running the business otherwise you’ll die anyway just due to the hourglass running out of sand. Why keep dragging things out for a slightly higher valuation? Download a cap table calculator and model your equity through a couple of rounds of financing and you’ll see that the difference between a valuation of $3.0M and $3.5M (for example) doesn’t really matter in the long run. Optimize for growth, not dilution and get back to running the business.
For a deeper dive into this topic, read my article titled “Negotiating Valuation with Investors“
The Team
Do the founders have the relevant experience that the investors are looking for? Be truthful with yourself and think hard about any feedback you’ve gotten. If you’ve got meaningful experience gaps, create an advisory board with that specific experience. It will cost you in the 0.25 – 1.5% range of equity per advisor but if it fills the void and alleviates the investors’ concern, it might make the difference in allowing you to continue your journey.
For a deeper dive into leveraging advisors, see my 3-part article series that includes “Selecting an Advisor“, “Compensating an Advisor” and “Maximizing Value From Your Advisor“
How about founder “funk”? Do the founders tag-team well during investor meetings or do they contradict each other or trip over each other?
Sales Traction
What does the trajectory look like? Graph it. Is it an exponential curve or a straight line? If it’s a straight line, what is the slope of the line? What are your key conversion rates (ie – downloads-to-purchases)? If the investors aren’t impressed enough to write a check, what amount of sales traction would get them excited? Ask them. Demonstrable sales traction often trumps just about everything else when it comes to investor objections and concerns.
If you’re seeking a Series A round of funding, read the related article titled “Series A Sweet Spot Combines Size & Slope“
Market Attributes
Is your market big enough? Is it trending and sexy from an investor’s perspective? Is your specific niche in the market already crowded?
For a deeper dive into communicating your market size and other interesting attributes, read my article titled “Sizing Your Market“
Investing Terms
If you’re using convertible debt, the obvious things to evaluate are the conversion discount and the valuation cap (see related article titled “Convertible Note Basics“). Of these, the valuation cap is the one that most often trips up entrepreneurs when asked to justify (see related article titled “Justifying the Cap in Your Convertible Note“). If you’re raising an equity round, then valuation is everything. If you’ve already had some investors write checks using your originally proposed terms and later realize your terms are getting in the way of closing the round, you’ve got a challenge. Seek advice from your advisors and attorneys to understand your options.
“Selling” Method
See my related article titled “Getting Closure with an Interested Investor” for more details, but it’s possible you just aren’t good at closing the interested investors. Seasoned sales people have lots of techniques for moving a prospect to closure. You need to do the same with your investor prospects.
Buzz Factor
Are people in the local startup circles talking favorably about your company and your opportunity? How about the trade press? Social media pundits? If you aren’t getting buzz while you’re in fundraising mode, spend some time thinking about how to influence.
The bottom line is that if investors aren’t writing checks, you’ve got to be brutally honest with yourself and need to get to the bottom of the issue(s) so that you can take appropriate action. I’ve also got a pretty comprehensive checklist of things you could attempt to achieve to convey lower risk to your investor prospects (see related article titled “Boosting Valuation Before You Have Revenue Traction“). Also, if you are still going back and forth regarding the exact amount of money to raise, or aren’t able to explain/justify it well enough, check out this article titled How Much Should You Raise?
Venture Capitalist Sarah Downey published a much longer list of the most common reasons investors pass on deals. You can find it here.
Hitting the Wall at 90% of Target
Sometimes getting on the serious downhill slope of fundraising success continues all the way to the fundraising target. But sometimes fundraising founders hit the wall after getting as close at 90%. This presents some real dilemmas, which I describe in the following 3 min podcast recording.