To fuel any startup idea, funds are extremely necessary. And even after many attempts, if you’re not funded, it gets difficult. So, here are some reasons why your startup might not be funded. You could look at these probable issues and work on them to strengthen your chances.
You’re not solving a problem
If the product you are introducing to the market doesn’t address a problem, you will find it difficult to raise money. So, if you’re not addressing a pain point and only working on interesting solutions or just developing new intriguing technology, it is difficult to get investors on board. Display your anguish. And explain why it’s a significant, unresolved issue.
Not first or unique
Let’s divide this problem into two components: funding and market realities. According to a recent study, patents are crucial for new companies in the biotechnology and IT hardware industries to secure venture capital funding. It may also come as a surprise that this study concluded that patent protection was important for software-based firms getting venture capital funding.
Therefore, patents act as a good source of funding as a barrier to entry. A different concern is whether these will actually protect you in the marketplace. If you don’t have patentable intellectual property, you’ll need something else, like something distinctive that’s challenging to imitate or being first to market, where you can establish a sizable lead, etc.
You don’t have a good team
A group is necessary. Nobody is capable of doing everything. assemble a team of individuals with complementary abilities and traits. And it’s okay if you lack experience. Recognize this, though, and enlist the aid of a formal team of advisors. Create an advisory board or include a mentor on it. Despite our admiration for individuals, the truth is that entrepreneurship is not a solitary endeavor. It is a team activity.
Not enough money/too little money
This one is challenging. You might not meet a venture capitalist’s requirement to invest enough money based on the amount you raise. VCs need to invest a certain amount of money in each venture based on their resources and returns.
You won’t receive an investment if you require $1 million, and they need to invest $5 million in each contract for it to be profitable for them. Period. Pass on. Before you invest a lot of time with one company, you must comprehend this.
Too soon for money
Many startups are too young to raise money. The days of getting funding for a concept from the back of a napkin are long gone. Investors today look for traction, which is defined as having at least some users of your business. Better yet, they prefer to see an initial clientele as proof that your concept will succeed.
Yes, you do need money to develop your idea and market it to clients. So consider how you could obtain the same proof that these clients would purchase if you had the product you want investors to pay for. If they give you the money and you build it, will the dog eat the dog food? They seek to “de-risk” the proposition. Aid them.
No clear exit
As soon as someone invests money, they want to know when and how much they will receive in return. They see you as an investment and an asset. Therefore, you must be clear about how and when you will make them liquid.
If there is no exit, you may have created a wonderful sandbox or lifestyle business without knowing how to generate the return that justifies the risk money you are demanding.