November 14, 2022   / Uncategorized
Why Are Investors Not Investing in My Startup?-Part 2
2 minutes Read

So, in the first part of why investors are not investing in your startup, we saw the following reasons: 

Choosing the wrong investors

Approaching too early on in the cycle

The numbers are not as needed

Cash flow is a concern

Now, let us look at some more potential reasons for why your startup can’t get an investors

No entry barriers

Investors do search for a proprietary idea or execution that has a unique selling proposition. They favor entry obstacles like patents, exclusive agreements, and contracts.

Investors seek out long-term advantages. If they decide to invest in a firm, they consider if it has the ability to hold a significant portion of the market or to continue to be the market leader after they leave.

They’re backing your competitors

An investor seldom funds two comparable companies in the same industry. If you are the owner of a T-shirt retail business, speak with an investor who has previously backed a business like yours. Due to the fact that they already support your rival, there is a good likelihood that they will decline.

You don’t know your KPIs

Investors seek entrepreneurs who have a solid grasp of their company’s finances and critical metrics that show how successful it is in reaching important business goals. If you don’t know your top priorities and the crucial KPIs that reflect those priorities, it may be difficult to attract investment.

Investors can reject your offer if they don’t see convincing evidence that you comprehend your KPIs and have strategies to raise them.

The addressable market is small

The Total Addressable Market, or TAM, is the maximum growth opportunity of a startup. Even though many founders try to scale their TAM down so that it is less ambiguous, many scale it down to such a level that it looks too small to invest in. 

If the investors find your TAM too small to produce results, then they might turn down the offer. 

You don’t have in-depth knowledge about your competitors

One of the typical questions investors have for founders is how they differ from their competitors. The answer to this question comes from in-depth market research. It comes from understanding who our competitors are and what they offer, and how what you offer is different from it. 

If the investors are not confident about your competitive advantage, unique-product market fit, and value proposition, then they will not go ahead with it. 

You don’t have the right business model

A business plan outlines your vision, objectives, and strategies for achieving them, all of which are articulated numerically. On the other side, a business model describes how you run and generate revenue. If the business model cannot pack a punch, then it is very difficult to trust that the business will run smoothly. 

Your fundraising proposal can be rejected by the investors if any of these don’t appeal to them.

More often than none, solid research about the investors, your own startup, and the competitors and a sound understanding of how the business is going to progress will do wonders. You can also connect with us, so that you can find out how to kickstart your business!

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