The BUzzLab director shares his advice in Fortune

Entrepreneurs, take note. When it comes to fundraising, don’t forget the basics of business. So says Ian Mashiter, senior lecturer of strategy and innovation at the Questrom School of Business and director of the BUzzLab, Boston University’s center for entrepreneurship, in a piece for Fortune: “They think money from any source is good money, and in the process, set themselves up for failure.”

Mashiter offers 10 tips to remember in the search for funds:

1. Not all startups are suitable for equity financing.
Equity financing usually only makes sense for high-growth businesses that have the potential to return 10-20x the initial investment through an M&A or IPO exit event within 10 years.

2. Consider all potential sources of funding.
Non-equity crowdfunding, grants, business plan competitions, incubators/accelerators, family/friends and potential customers are all great sources of non-dilutive capital. Don’t overlook prospective customers as a source of early capital. If a prospect needs a product badly enough, they may be willing to pay in advance for it.

3. Bootstrapping can set you up for long-term success.
If you are able to raise money from other sources rather than from investors early on, do it. Having investors involved frequently complicates operations by putting another voice at the table and reporting requirements that may consume your valuable time. Making progress before trying to raise money demonstrates that the team can execute, creates tangible business value, and begins to de-risk the investment. This in turn improves the power balance between entrepreneur and investor, and makes for a more productive negotiation of financing terms and the long-term relationship between both parties.

4. All investors are not the same.
Targeting the right investors is critical. The best money comes from experienced investors with relevant industry expertise, useful contacts, and tolerance for the ups and downs and pivots of early-stage ventures. Personality matching is also essential – a poor relationship with an investor is usually a recipe for disaster.

5. Warm introductions are essential.
Investors rarely react to unsolicited pitches. It is important to find someone willing to make a positive introduction and then to arm them with a compelling one-paragraph introduction to the business. Don’t send a lot of information in the introductory exchange. The goal is to get in front of the investor to tell your story.

6. Taking fundraising advice from the wrong people can derail your fundraising.
Testing the pitch with friendly investors and experienced entrepreneurs can accelerate the process. Conversely, taking fundraising advice from anyone who hasn’t raised money or invested in an early-stage company will just lead to confusion and conflicting advice. Network your way to other entrepreneurs who have successfully raised money and ask them about their experience. Have informal meetings with early stage investors who are not your key targets but can look at your investor proposition with a critical eye and provide feedback.

Check out all 10 tips here.

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