You've been underground for months with your team, turning your idea into a real product with real users. Now you need money to hire more engineers, acquire more users and scale your company into the billion-dollar behemoth you know it is. It's time to go pitch investors and raise a round of funding.

Of course, if it were as easy as setting up meetings and pitching your idea, everybody would hit their fundraising targets. But the truth of the matter is that most entrepreneurs don't get any funding, much less hit their targets. Entrepreneurs--especially first-timers--tend to make a lot of the same mistakes. I see them over and over again.

Here are a few of the common mistakes entrepreneurs make when going out for their first fundraise and how you can avoid those mistakes for your business:

1. Not focusing on milestones: Too many entrepreneurs talk about how much money they want to raise and don't focus on what that money will accomplish. This is a trap that Josh Elman of Greylock Partners sees all the time.

"At the end of the pitch, entrepreneurs share how much money they are trying to raise," Elman says. "However, when they explain why they chose a certain amount, they talk about how long it gets them, or how big a team they can hire. Instead, they should focus on results--with X amount of money, I should be able to drive the business to these significant milestones. That's all investors care about--how much money does it take to get to the next proof point."

Investors look for entrepreneurs who think through how they will manage the thousands or millions they will raise and what milestones they need to hit to either become profitable or raise the next venture round. Focus on what you will deliver with an investor's money, not how much you want.

2. Demanding pricey valuations: Early-stage startup valuations are more an art than they are a science. Without revenues or a large amount of user data, it can be hard to pinpoint a number that the entrepreneur and investors can agree upon. But ending a pitch with a ridiculously high valuation is an easy way to detail your meetings. When a first-time entrepreneur with no product and no users demands $10 million pre-money, there's just no way I can say yes.

In general, lower your price if you're a first-time entrepreneur or if you have yet to release your product. Better yet, ask other seasoned entrepreneurs for their opinion--they've gone through this before. Some entrepreneurs meet me without a valuation in mind, allowing a lead investor to help set the price. Seasoned entrepreneurs with track records of success know the market and can demand a higher valuation.

In the end, there is no silver bullet for picking a valuation, but don't shoot yourself in the foot by asking for a number that's well above the realities of your company.

3. Spacing investors meetings over way too long of a time: One surefire way to kill your fundraise is to spread out your meetings and lose momentum. When an investor can wait before making a funding decision, he or she is going to wait. The longer he or she waits, the more information that investor can gather about the company and the entrepreneur. But when an entrepreneur is holding several investor meetings per day for several weeks straight, the investor has no choice but to make a decision, because the investor perceives the window of opportunity as rapidly closing. The scarcer the opportunity, the quicker the decision.

When you officially start fundraising, don't string out your meetings: put them as close together as possible and don't let investor "yes" or "no" decisions drag out. This also minimizes the distraction fundraising can have on building a great product and company.

4. Not building an investor network before you need it: If you think of investors as just obstacles to the money you need, rather than partners to befriend and build relationships with, you're already in trouble. The best investor-entrepreneur relationships are more than business--they are friendships built on shared values and ideals. If you already are friends with an investor, you already know who they are and whether he or she is the right partner.

On the flip side, the longer an investor knows an entrepreneur, the better. Investors want to be comfortable giving thousands or millions of dollars to a first-time entrepreneur, and knowing an entrepreneur months or years before a pitch builds immense amounts of comfort. And just like anybody else, they want to work with their friends. Even if you don't have an idea, but think you'll start a company in the future, start building your investor network now. You won't regret it.

Published on: Oct 1, 2014