Common Fundraising Challenges For Young Startups

To have a successful startup, you need to think outside the box and have a disrupting idea or innovation. For that to happen, you will need good funding to make your foundation strong and running. These days, an investment in technology has become a basic and it is not cheap. Even hiring good talent or launching an effective marketing idea comes at a price. For all this, you need to find a good source of capital to hit the pedestal towards your success.

Entrepreneurs are filling in the gaps of the market of every industry that multinationals create by turning a simple idea into a million-dollar solution. There are lots of risks involved as it is either something that has never been done before or you will be facing the competition from the big giants. As someone who believes in their idea needs to have a lot of confidence, knowledge and a good streak of persuasion to get someone to invest in you.

Realistic business model

Your business model cannot have unrealistic measures. Not only achievable but it should show investors that your business looks like it has the potential to make profit with as less cost as possible in the near future. No investor wants their money to drown, so it is very important that you convince them, with accurate figures and prediction, of your unique, money-making and economic business idea. Moreover, your competition’s business model does not have to be the benchmark you compare yours against. It is not necessary that what worked for them will also work for you. Build a model that will work better for you and against your competition.

What is the right amount of money to ask for?

To know how much funding to ask for you need to first calculate how much of your costs is being covered up by the loan that you already took. You also need to see how much profit that fund can generate in return. The bigger the amount you ask for, the more pressure there is on you to make double its profits for your investors as they expect that you use their money wisely and efficiently.  

Funding Options

There are several ways you can get your funding for your business. You can always fund it yourself if you have enough savings or borrow from your friends and family. Bank loan is another reliable way to get your capital, but you will have to show them all your financials and your credit history to approve. Angel investors is a popular method since they are flexible with their investment in exchange for a part of equity of your business. Venture capitalists on the other hand only focus on bigger businesses that are already on high stakes. And lastly, crowdfunding where anyone can invest any amount of money in your business but this might take some more time than other ways to reach your target fund.