Are You Approaching Investors With No Business Plan and Fuzzy Profit Projections? Get Real.

If you expect an equity investment from reputable investors for your new startup, you need to know the boundaries that often limit their interest. In the jargon of investors, certain businesses may be viable but not fundable. For example, investors recognize that online gambling sites or a medical marijuana site may generate big returns but may tarnish their squeaky clean reputation.

Related: 5 Ways Raising Money Is Just Like Asking for a Date

There are many other more mundane reasons that your startup might be deemed non-fundable, depending on your own circumstances, where you live, or the case you have put together. As an active angel investor, here are some key ones I have seen, with some guidance on how to improve your odds.

1. Poorly written or missing business plan

If you recently sold your last startup for $800 million, you probably don’t need a business plan at all to get money for your next startup. On the other hand, if you are a new entrepreneur, a well-written and complete business plan demonstrates that you understand the issues and have a real plan for execution.

2. Team not a good match for the challenge

Outside investors bet more on the team than the solution. If you and your team have no experience in your chosen domain or no credentials starting a business, you will have trouble attracting investors. A solution would be to find a co-founder with the requisite background or investors who know you.

3. Business is a good cause, but has limited returns.

Your plan may eliminate world hunger -- but hungry people don’t have much money. If you have a great social cause, perhaps you should be looking for philanthropists instead of investors. Other social ventures may make good family businesses, but scaling and profitability are limited.

4. 'Secret sauce' or competitive advantage is not clear.

Investors are wary of startups with no intellectual property, even with a first-mover advantage. They know that showing market traction will attract big companies, like Apple or Google, who can easily overrun the best startup. It costs very little to file a provisional patent to begin your protection.

Related: 4 Reasons Why a Traditional 40-Page Business Plan Is an Insane Waste of Time

5. Revenue and profit projections are not credible.

Attractive businesses to investors may show revenues that double every year but don’t exceed the gross national product of your country. Investors do expect gross margins that exceed 50 percent, and double-digit penetration rates by the fifth year. Find existing cases to validate your numbers.

6. Market is new or unproven, or your solution is 'disruptive.'

When Facebook first started looking for investors, there was so social-media market. In these cases, you need to show more traction, or find highly motivated investors with vision. Also, disrupting an existing market typically takes too much time and money to interest the average investor.

7. Go-to-market strategy is missing or not clear.

Entrepreneurs with exciting new technologies too often assume that the technology will sell itself. In fact, it is your job to show how the technology will be embodied in a solution that satisfies a painful customer need, what channels will be used for sales and what business model maximizes return.

My advice to non-fundable startup entrepreneurs is to look past individual investors for partnerships with potential acquirers, grants from related institutions and support from your rich uncle. If all else fails, I recommend bootstrapping your own efforts, at least until you get enough traction to relieve the qualms of accredited investors.

In any case, it pays to listen to investor feedback, update your plan and make the rounds of additional funding sources after each new milestone has been achieved. Real customer revenue and thousands of new users represent traction and are the best indication of fundability. The right business advisors can also build your investor credibility through market connections.

Related: Innovation Inhibitors Include Dependency on New Infrastructure and Investor Risk Tolerance

Even if you aren’t searching for outside investors, don’t forget that you are making a major investment of yourself into your startup. Thus, these reality checks should always be taken seriously. The odds of finding funding generally correlate highly to your odds of business success -- and your personal risk is even more critical than outside investor risk. Minimize both.