When Dubai-based Philip Bahoshy was looking for funding for his new business, Magnitt, he found himself face-to-face with at least 40 different people who had deep enough pockets to help him with his launch. Unusually, perhaps, Philip’s tactic was to see each of these encounters as an opportunity to get some advice/feedback – rather than just a chance to walk away with a large pile of cash. ‘You’re always pitching your company,’ he says, ‘whether that be for business development, sales or fundraising, but ideally you say, ‘This is my business concept: can I have 15 minutes of your time because I’d love to get your feedback.’ And if you see that the conversation moves towards the other party showing interest, then you can say, ‘Well, I am currently fundraising and that’s something I would be interested in discussing with you going forward.’’

Philip Bahoshy

To say that fundraising is a minefield for first-time entrepreneurs would be something of an understatement – in fact, Philip’s new business is an online platform which is aimed precisely at helping fellow entrepreneurs launch their businesses in the MENA region. It’s a good time to be a start-up, though, and Philip agrees that government policies, a boost in the number of institutions that support start-ups and a rising number of angel investors make the UAE as entrepreneur-friendly as it has ever been.

But there’s a chasm between your big idea and launch, and definitely a right and wrong way to go about fundraising. Below are the top 12 things that can derail you at the first hurdle...

1. You waffle

Sonia Gokhale is a founding partner of VentureSouq, an early-stage tech investment platform with a global portfolio based in Dubai. She has no time for wafflers. ‘Investors have a short attention span, so if a founder is passionate about their business they should be able to pique the interest of an investor in two minutes or less,’ she says.

Sonia Gokhale

‘Being able to synthesise your business, the market opportunity, risks and long-term value in two minutes is a sign that the founder has clarity of vision and is laser-focused on the problem they are trying to solve and how they are trying to solve it.’

2. You’re a part-timer

Investors can sniff out the heavyweights from the dabblers in a heartbeat and one clue that the entrepreneur is not as committed as they could be, says Sonia, is if they refuse to meet up on weekends. ‘We look for founders that are hungry for success,’ she says. ‘In our portfolio we have a founder that is an American who started out a car-sharing company in India called Zoomcar and has built the business into a national company operating in 30 cities. He lives, sleeps and breathes his business – but the greatest thing is that he loves every minute of it. I will happily back a founder that works hard and enjoys doing it.’

3. You think your product is perfect

‘Some entrepreneurs simply refuse to consider that there might be potential issues with their product or service,’ says Elissa Freiha, a UAE-based investor and the founder of the Womena investment network. ‘They think what they have is perfect, and they feel entitled to funding because of that.’

Elissa Freiha

It’s a common complaint – entrepreneurs often become so wrapped up in their little world that they cannot conceive that they might have missed something. Sometimes, says Elissa, they get annoyed that investors just don’t ‘get it’. ‘In reality it is the entrepreneur’s job to explain their mission to anyone and convince them of the value. We all have room for improvement and people should be able to take constructive criticism from experts who are trying to help.’

4. Your valuations are insane

‘This annoys me a lot because it usually reflects deeper and more problematic issues with founders,’ says Suneel Gokhale, a founding partner of VentureSouq.

Suneel Gokhale

Suneel feels that a founder who throws out a crazily high valuation makes it clear right off the bat that he or she has likely not done any work on analysing the market they plan on operating in from a funding perspective – which probably means they haven’t properly assessed the competitive landscape, possible challenges to scaling and a host of other key commercial issues. ‘Most importantly,’ he says, ‘it demonstrates they are greedy, and not someone I want to be working with for the next five to seven years.’

5. You think you have no competition

‘Founders who say they have no competition send out a very negative signal to me as an investor because it shows that they have not comprehensively studied the market in which they plan on ‘disrupting’,’ says Suneel. Virtually every technology success story operated in a market where there was already competition, he points out, and a founder who has taken the time to assess their competition and is able to clearly articulate how their idea solves a key problem better or is cheaper or easier to scale is much more attractive to investors. ‘At VentureSouq, we are very founder-driven in terms of the early-stage companies we invest in, and significant attention to the competitive landscape is one indication of a strong founding team,’ he says.

6. You don’t know your numbers

When Mashal Waqar was seeking funding during the summer for The Tempest, an online media company for diverse women, she quickly came to realise that most investors want to know a whole bunch of things when it comes to a start-up’s numbers: among other things she found that KPIs and monthly active user numbers were extremely important because, she says, the logic and explanation behind each metric is key to understanding growth.

Mashal Waqar

On the financial side, she says that if you can explain to an investor the breakdown of why you’re fundraising and what you need the money for, it becomes easier to justify the amount.

7. You have a scattergun approach

Mashal deliberately avoiding plucking investors out of a hat, instead opting to chase those with whom she felt there might be a connection. ‘We only targeted investors who were familiar with The Tempest and our work,’ she says. Of these, some really respected the way Mashal had researched their backgrounds, as well as her explanation as to why investing in The Tempest would be great for their portfolio. ‘This was super effective, because with the nature of our start-up, we could explain how investing would be beneficial for their other investments as well.’

8. You give up too soon

A third thing that Mashal noticed was that commitment levels of entrepreneurs varies wildly: she was determined to be one of the ones who simply wouldn’t give up. ‘A few angels originally declined to invest, only to get on-board after seeing our sheer determination,’ she says. ‘I’ve always heard that ‘investors invest in people’, but I didn’t realise the truth of it until most of our investors echoed similar responses about how our reaction to original rejections are what changed their mind.’

9. You misread the signs

Tammer Qaddumi is a venture capitalist and partner at VentureSouq, and his personal bugbear is the entrepreneur who interprets any interest from an investor as a sure-fire sign that there’s a big pile of cash just around the corner. ‘I like to be helpful in any way I can,’ he says.

Tammer Qaddumi

‘This could be meeting multiple times to talk through the business; offering advice on specific issues; or making introductions. Of course, what most companies really want from us for capital. I get it. So any kind of attention often turns into an expectation that we intend to invest, even though we have not given any such signalling. I hate to find myself in that situation.’

10. Your ego is out of control

Sonia Weymuller describes herself as an ‘accidental venture capitalist and partner’ at VentureSouq, and she finds herself looking for the exit door when an entrepreneur’s ego starts to spiral out of control.

Sonia Weymuller

She explains it like this: ‘Confidence, determination, passion, energy, fearlessness and resilience are all traits that, channelled in the right way, contribute to an entrepreneur’s success and enables them to overcome challenges. When the boundary is crossed, however, and enters the realms of unhealthy ego and arrogance, this is when it can lead to a path of self-destruction.’ Honesty, integrity, trust and loyalty are the values that she looks for in a founder whose company she wants to invest in.

11. Your team is weak

VentureSouq’s Maan Eshgi is an ex-banker who now helps people chart entrepreneurial waters: he says that woolly management teams are almost impossible to back. A start-up’s team is critical to investors, he says, and weak ones will be ill-suited to the kind of agile adaptation that is often needed during a business’ first years.

Maan Eshgi

‘Someone founded an amazing start-up specialising in sports advertising but didn’t have the right talent to convince investors that they had what it takes to pull this through,’ he says. ‘Most of the founders had other obligations and didn’t make the new business a priority.’ These type of situations are quite common because the early financial and mentor support entrepreneurs get from accelerators and incubators is just not enough to produce self-dependent, scalable start-ups, he said.

12. Your idea isn’t really new

‘Repetitive ideas are annoying to investors,’ adds Maan, ‘because they basically mean that start-ups are trying to copy an existing concept and compete in a growing market led by big boys.’ What investors prefer, he says, are high-growing ‘disruptive’ technologies and companies that cover gaps in the market. Uber is a good example of a brand that came out and tried something quite revolutionary in an existing market – and with staggering results.