The 5 worst mistakes first-time entrepreneurs make when raising capital

At GlobalWelsh Invest, we work with ambitious founders every day - helping them refine their investor pitch, understand the funding landscape, and connect with our network of 600+ high-net-worth individuals, angels, venture funds, and family offices with a connection to Wales.

Over the past two years, we’ve helped Welsh-led startups raise over £1.5 million in equity funding through this powerful global network. In that time, we’ve seen what works - and, just as importantly, what doesn’t.

If you’re a first-time founder preparing to raise capital, here are the five most common (and costly) mistakes we see - and how to avoid them:

1. Overvaluing the Business

One of the most common missteps is assigning an inflated valuation to the business without the traction, revenue, or market validation to back it up.

Why it’s a problem: Overvaluing your startup signals naivety and can turn off serious investors. Even if you manage to raise at a high valuation, it may backfire in your next round if you fail to hit the ambitious milestones you've implied. That can lead to a dreaded down round, which hurts your reputation and dilutes your equity even further.

What to do instead: Ground your valuation in a realistic assessment of both tangible and intangible components. Tangible factors include current revenue, user base, and growth metrics. Intangible elements might involve your brand strength, intellectual property, and team experience. Use industry benchmarks and comparable businesses as reference points. Where possible, seek an independent valuation to gain an unbiased view. Additionally, consider reaching out to someone who has successfully sold a similar business (such as a GlobalWelsh mentor) for guidance on how investors may perceive your value. This shows you're thinking long-term and positioning your company for sustainable growth, not just chasing an impressive number. 

2. Pitching Without a Clear Story

Too often, founders pitch a product instead of a vision. A vague or overly technical pitch with no compelling narrative rarely lands well.

Why it’s a problem:  Investors don’t just back products, they back teams and stories. If you can’t clearly articulate the problem you're solving, your unique solution, your market opportunity, and how you’ll make money, your pitch won’t stick.

How to fix it: Use the 20–2–20 rule:

• First 20 seconds: Hook the investor - make them lean in.
• Next 2 minutes: Build intrigue and establish credibility.
• Remaining 20 minutes: Dive into the details and back up your story with substance.

Practice this structure until its second nature.

3. Approaching the Wrong Investors

Not all money is equal. Yet many first-time founders take a scattergun approach - pitching to anyone with “investor” in their LinkedIn title.

Why it’s a problem: Wasting time with investors who don’t align with your industry, stage, or business model burns precious energy and relationships. Even worse, it may close doors you'll want open later.

What to do instead: Research your target investors. Find out:

• What sectors they invest in.
• What stage they typically come in at.
• What portfolio companies they already support.

Don’t overlook diaspora investors - those with a connection to your location or heritage. These individuals are often predisposed to support ventures in regions they care about, making them more aligned and emotionally invested in your success. A well-researched, tailored approach shows professionalism and drastically increases your chances of building meaningful, long-term investor relationships.

A well-researched, tailored approach drastically improves your chances of success.

4. Failing to Follow Up with Interested Investors

You’ve had a great meeting. The investor seemed excited. And then… you go quiet.

Why it’s a problem: Investors are looking for entrepreneurs with drive, energy and sense of urgency, delaying your follow-up makes you look laid back, disorganised or uninterested. Investor interest is time-sensitive - momentum fades quickly, and you're competing for attention with dozens of other deals.

The risk? You lose the opportunity altogether. Once they move on mentally, it's hard to win them back.

Best practice: Follow up immediately with:

• A thank-you note.
• Any promised materials (deck, data room, metrics).
• A proposed next step (e.g., another meeting or intro to a partner).

Responsiveness builds trust.

5. Waiting Too Long to Raise Capital

Many founders wait until their runway is dangerously short before they start raising. It’s one of the most damaging errors.

Why it’s a problem: When you’re low on cash, investors sense the urgency - and it kills your leverage. You’re now negotiating from a position of weakness bordering on desperation.  Investors also know that you should never stop building your network and looking to raise - unforeseen opportunities and/or setbacks can happen any time which may raise the need for more capital

Consequences include:

• Accepting poor terms.
• Losing out to better-prepared founders.
• Running out of time for due diligence or iteration.

The truth is: Raising money isn’t something you do in a few weeks - it’s a long-term process. You need time to build relationships, test your pitch, gather feedback, and adjust your strategy.

Final Thought: You Don’t Have to Go It Alone

At GlobalWelsh Invest, we understand how challenging (and overwhelming) the fundraising journey can be, especially for first-time founders.

Whether you're:

• Actively raising now, or
• Planning to raise in the next 6–12 months, or
• Just starting to explore how to become investor-ready

We’re here to help.

We combine deep in-house expertise with our global investor network to support you in refining your pitch, preparing for funding, and connecting with aligned investors who genuinely want to see Welsh businesses succeed.

So whether you're simply curious to learn more about GlobalWelsh Invest or you're actively looking for funding, feel free to get in touch directly with me at tomos@globalwelsh.com or book an introduction call here >>