Challenges of Startup Fundraising

Posted by on April 4, 2016

Startup is like a latest trend in fashion now, more and more people are coming up with startups, almost everywhere in India. Most of the startup Entrepreneurs are building their startups just for raising funds. However, startups should be built to solve problems, create value and generate profits. I am mentioning the challenges or the problems that are faced by the entrepreneurs in fund raising: Most Common Mistakes

  • Asking early: This is a most common mistake, many entrepreneurs connect with the potential investors at the idea stage. There is no value of an idea until it is executed, or it has to be a great invention/innovation.
  • Begging for funds: I've seen many entrepreneurs start begging for funds. They think that investors risk their money on the ideas of unknown random people. Nobody will fund a startup or an idea that does not have good potential of providing returns.
  • Approaching the wrong people: Not everything that glitters is gold, select whom to approach by performing a proper scan of the profiles. Don't get trapped.
  • Lack of Pitch deck: Many entrepreneurs send me just a presentation, they don't understand what is a pitch deck. So, please prepare a pitch deck before you approach an investor.
  • Unscheduled calls: Don't call any investor without booking a call. Unscheduled calls disturb the entire work schedule.
  • Idea validation: Get the idea validated before you approach any investor. This will reduce the chances of rejection. Get the idea validated even if your startup is in revenue stage.
Problems faced by Entrepreneurs
  • Lack of guidance: As most of the entrepreneurs don't care to find a guide/mentor/adviser, they don't know whom to ask for help. This is a great challenge in raising funds for your startups.
  • Little or no research about the investor: I've seen most of the entrepreneurs apply with investors without even knowing about the investors investment objective, corpus, previous investments and the focus.
  • Over confidence: I have experienced this many times, entrepreneurs think that their website is a million dollar money making machine. This is because they have never discussed about it with an expert who may validate the idea and curate the product/process.
  • Technical terms: Many entrepreneurs don't know what is the meaning of bootstrapping, they don't know what is a pitch deck, they don't know what is the difference between a VC and an angel investor.
  • Fail to answer: Many entrepreneurs fail to answer the questions like why are you raising funds?, why can't you raise funds from your customers?, etc.
In my coming posts I'll write about how to find Angel Investors. Thanks for reading.
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