When raising capital, founders often feel like they’ll get multiple chances. In reality, the market can be brutally unforgiving. As Michelle Mullany puts it:

“If they look under the hood of it and go… they can’t deliver… they can’t make the sales, the profit margins are terrible… they don’t know how to manage their cash, the fallout isn’t just losing a deal; it can close doors for years.”

Michelle doesn’t just talk numbers; she helps business owners turn them into deals. As Head of Deal Origination at MHA Corporate Finance, and with 20 years at one of the Big Four firms behind her, she’s worked with founders on funding rounds, exits, employee ownership trusts, and management buy-outs. After seeing the good, bad, and ugly from both sides of the table, Michelle knows the stakes: Get it right the first time, and you unlock growth or a clean exit; get it wrong, and trust can vanish overnight.

The 12-month reputation death spiral

Investors don’t just walk away quietly. Word spreads. Michelle explains:

“At the 11th hour, something happens within the business, and they drop out… sometimes word gets out in the market that that company’s had a failed private equity approach… so then… what’s wrong with it?”

This creates what Michelle calls a scarlet letter effect. When a PE approach fails after 12 months of engagement, the rumor mill activates. Future investors don’t just evaluate your business; they consider why the last investor walked away. The question “What’s wrong with it?” becomes harder to answer than your original pitch. Sometimes, Michelle notes, founders have to wait another 12 months before trying again, only to find that “I’ve heard so-and-so say they pulled out” has permanently damaged their prospects.

The regulatory shadow market

Behind the scenes, there’s a dangerous underground economy. Michelle reveals,

“It’s against financial regulatory authority… there could be jail time for that; it’s against financial regulatory authority.”

Yet unregulated consultants continue to illegally advise companies on early-stage funding because the regulations are complex and enforcement is patchy.

This shadow market creates two problems: founders get bad advice that can damage their prospects, and legitimate advisors like Michelle’s firm avoid early-stage deals entirely.

“We don’t get involved in those rounds,” she explains, leaving a gap that’s filled by people who shouldn’t be operating in this space.

The narrative vs. numbers evolution

The fundraising rulebook changes as your business matures, and many founders miss this shift. Michelle breaks it down:

“When you’ve gone through early-stage funding… you are pitching… on your own, and you don’t have the numbers… It’s all about the story because you’ve not proven anything, have you?”

But as businesses grow, the equation changes to 50% story and 50% defendable numbers. This isn’t Michelle’s opinion; it’s what she’s seen across hundreds of deals. Early-stage is 100% vision because investors are “buying into you and that you’re the person that could solve the problem.” Later-stage requires proof: “Investors still need to buy into you… but you’ve got to have the numbers that underpin that.”

This fragility is why embellishment is so dangerous. Founders naturally hype their “baby,” but Michelle has seen how this backfires:

“It’s your baby, right? So you… talk it up.” Investors, however, are trained to interrogate every claim. It’s the classic fintech scenario: a founder proudly claims, “We’ve secured a partnership with Mastercard,” but in reality, it’s only an exploratory call. Those tiny cracks destroy credibility.

The valuation cliff

There’s a brutal mathematical reality that has nothing to do with business quality and everything to do with industry perception. Michelle is blunt about this:

“If you’re a tech business, you might manage to get eight times ten times your EBITDA number. If you’re in construction, it might be two or three times.”

This isn’t a reflection of profitability, growth rates, or market opportunity. It’s pure sector bias. Construction businesses can be highly profitable and stable, but they’ll never achieve tech-level valuations because “unfortunately, the industry is so hard” in investor perception. The valuation cliff is real, and it’s often insurmountable regardless of how well you tell your story.

Numbers, too, carry disproportionate weight. Michelle is clear:

“You’ve got to have the numbers that underpin that… putting together a financial model that actually is defendable.” Inflated metrics may open a few doors, but they won’t withstand due diligence. As she warns, “They really, really will look at those numbers and stress test your forecast.”

The uncomfortable truth is that raising money is less about dazzling people than proving resilience. Storytelling is vital – but without numbers to defend it, your story turns to spin. And once an investor feels misled, even unintentionally, the trust is gone. Michelle sums it up:

“You really want to do it right the first time.”

Three practical steps to get it right the first time

1. Stress-test your story before investors do. Practice your pitch with a trusted outsider who will poke holes in your assumptions. If they can unravel it in 10 minutes, so will an investor.

2. Back every headline with a number. Don’t just say you’re “profitable” or “scaling fast.” Put the data front and centre – monthly revenue growth, customer acquisition costs, churn rates. If you can’t defend a metric, don’t include it.

3. Resist the temptation to oversell. Replace “we’ve secured a partnership with Mastercard” with “we’re in early-stage discussions with Mastercard.” Transparency shows maturity and protects you from credibility gaps that can tank a deal. In fundraising, unlike most other areas of business, there are rarely second chances.

*Views expressed are personal