Don’t Scare the Money: 10 Founder Pitfalls That Kill Deals from a VC lawyer’s perspective

Raising money isn’t just about the pitch, pitch deck, luck or timing — it’s about showing you’re ready to build, scale, and exit.

But even the best idea can struggle if your investment processes are messy. Based on hundreds of fundraises, we’ve collated the top 10 avoidable pitfalls that we’ve seen trip up Irish founders (and importantly, tips on how to avoid them):

1. Not being ‘Transaction Ready’ – get your house in order for investor due diligence. What does this mean? Get signed and dated documents into one location (dataroom, shared folder), make sure the company owns all relevant IP, stay on top of corporate governance (CRO filings and statutory registers), and get your cap table in order. If you’re not legally ready to transact, you’ll burn time, rack up costs, erode investor confidence — and increase deal fall-down risk. Key takeaway – prevention is better than cure. Keep the house in order from the outset.
2. Friends & Family – F&F is typically the first cash injection, usually by inexperienced investors, however the cheques your F&F cut might be a large percentage of their personal liquidity so might not be as passive as initially envisaged. We’ve seen early F&F investors hassle founders for more business updates, fail to appreciate key concepts like dilution, and slow rounds down when compared with a Family Office, high-net-worth investor, or experienced angels. Sometimes the smallest cheques cause big problems. Key takeaway – include an ability to pool all F&F shareholdings into a single nominee. This minimises issues and helps to keep the cap table as clean as possible.
3. Not choosing the right advisors – engage experts in the legal, accounting and tax fields that understand the lifecycle of a scaling company and are willing to go on a journey with you. Not doing so will cost you more in the long run. Key takeaway – personal referrals are a better friend here than Google. Ask other founders who they have engaged (ideally at the next stage of their journey as they will have real deal advisor experience). If possible, look behind the brand to see the individual advisers.
4. Valuation – it is universally acknowledged that valuations can be “finger in the air” particularly so pre-revenue. Early stage founders often mistake setting a high valuation as a success marker. However, an inflated valuation, without a concrete basis, is not just off-putting for investors, it might also lead to problems in the next funding round. Key takeaway - Be realistic to increase your chances of securing investment. Reduce the chances of a ‘down round’ as your next round or having to resort to emergency bridge financing. Consider convertible loan notes / SAFEs / ASAs if you are pre-revenue or trying to raise funds in advance of a key milestone that will underpin an increased valuation.
5. Choosing the right team – find team members (it could be a co-founder, or a key developer) that complements your skill-set, and lets you focus on your area of expertise. Search for the ying(s) to your yang(s). A weak or fragmented founding team is a red flag in early-stage investing. Key takeaway – sole founder companies are more the exception than the norm. Investors prefer and are more likely to invest in a settled team. Make sure that relevant vesting / leaver provisions are included for any co-founders.
   
   
6. Waiting for the perfect time – don’t get caught in waiting a certain number of months between raises or hitting a specific revenue target. Instead, are you demonstrating growth, proving your business model, and showing you’re ready for the next step? Have you achieved your previous funding round's goals? Have key metrics improved? Are you showing consistent sustainable growth? Too soon and you may struggle to attract interest. Too late and you may run out of cash – or put yourself in a weak or desperate negotiating position which investors will take advantage of. Key takeaway – no two growth companies are the same. Consider your specific needs, cash burn, objectives and plan accordingly (also have a plan B!).
7. Tax efficiencies – personal holding companies and entrepreneurs relief:
   
   

   Personal holding companies (PHC). A PHC can hold a portion of your shares in the trading company, and provided certain criteria are met, your PHC can potentially avail of a capital gains tax (CGT) exemption when you sell the trading company, which can lead to significant tax efficiencies. Considering a founder’s base cost of their shares is typically their nominal value, CGT would be ~33% of the gain between nominal and price per share on disposal. With a PHC, post disposal of your company, you will be in a position to invest the gross proceeds as opposed to net of CGT proceeds.

   Entrepreneurs relief. Provided certain criteria are met, founders can avail of a CGT rate of 10% on gains from the disposal of qualifying business assets (reduced from the normal rate of 33%).

   Key takeaway - Significant tax efficiencies can be ensured if Founders have the correct structure in place at the outset (or at least well in advance of a priced raise). Most well advised founders opt to hold the largest chunk of their shares through their PHCs and retain a balance in their own name to maximise available reliefs. Tax advice should be obtained early – from a recommended adviser.

8. Researching investors – institutional investors will do extensive due diligence on your company (e.g., finances, operations, contracts, technology and potential risks), so make sure you do your due diligence on them. Pitch to investors that have funded businesses similar to yours in terms of size, stage, and business model. Warm intros and targeted outreach always outperform cold blasts. Key takeaway - Reach out to founders currently in an investors portfolio or even better, founders from their portfolio that have exited and will be willing to tell you the full story – warts and all. 
   
9. No plan for scaling – create a strong pitch deck. Fine-tune your business plan. Get used to meeting with investors, attending events, securing deals and devising a strategy. Seek mentors, create a network, immerse yourself in the space / ecosystem and use whatever tools you have at your disposal. Serial entrepreneurs, accelerator alumni, Furthr Founders network, Enterprise Ireland development advisors, and lawyers active in the space can all be great sounding boards. Key takeaway – network and lean on as many advisors within the ecosystem as possible. They will all have different angles / nuggets that you can use to your advantage.
10. Unrealistic timelines – it will take longer than you think to prepare, pitch to potential investors, agree/sign a term sheet, agree transaction documents and lastly, receive the investment funds. Plan for a longer runway than you think needed. Otherwise, you’re fundraising under pressure—and that kills leverage. Key takeaway – fail to prepare, prepare to fail. Set out your roadmap. Make allowance for unavoidable diversions that will need to be navigated.

Final thought

Fundraising isn’t just about raising money — it’s about setting the tone for your entire business going forward. Avoiding these mistakes won’t guarantee investment, but they will keep you in the game, looking credible, negotiating from a position of strength, and makes you a founder that investors want to back.