You might have great ideas on mind and are ready to get started to transform them into reality. However, without sufficient resources, these ideas could remain abstract concepts, unless you initiate a necessary plan of action. This is where investors have a crucial role to play in helping startup founders achieve expected business goals. However, attracting investors to capitalise their investments in your start-up venture is not an easy task.
As a newly-born entity, your startup should be scalable enough to appeal stakeholder’s attention. The problem is, sometimes founders do not consider their business scalability before handing out finance proposal to the stakeholders.
To grab investor attention, a startup needs to be in good business shape. Owing to this pitfall, no wonder most startups fail at securing investments to develop and grow their business. Investors do not want to flow their cash into a startup that does not guarantee stability and a future.
Rather, they would ensure that the businesses they intend to finance be ‘the next big thing’. Anticipating fantastic returns on investments, the investors favour startups who have a potential customer base for the service and product. So if founders do not have a clear and exact idea on this aspect, you will ultimately not attract the investments you seek for business growth.
If you are wondering why nobody wants to fund your startup, here are a few reasons that you should look at:
Your lack of proof for potential success
Have you ever run a startup before? Do you ever sell a product or service to the consumer? How do you hold a crowdfunding campaign? If you cannot show enough evidence to the investors, that your startup has the right potential for growth and success, then they will not bother pumping in investments.
You have no business plan
There are only two strategies for business success; invent first a new product on the market, or create unique products. If you do not have a strong business case and appropriate marketing strategy, or maybe you fail to explain where you aspire to grow your startup in the next few years, chances are, investors will think thousand times before funding your project.
Your team is too ‘green’
The people you recruit in your startup are those with limited experience to run a business. While you might have an interesting proposal, but investors do not see that your team will help, then they will retreat. In addition, investors do not like the team that is not coachable and are not flexible to constructive suggestions.
You ask too much
At first, you might think that your startup is worth one million dollars, but investors do not think the same thing. They consider whether the proposed value by founders is quite reasonable with a potential promise. Therefore, you should be able to see how much your startup actually value in the market standing.
You don’t understand your customer
The customer is the most important part in developing a startup. A founder should know clearly the targeted customer profile, such that the products and services offered meets their exact requirements. Evaluate whether the vision you bring and choose to offer helps meet customer expectations. If you find a gap then be rest assured that, investors will not be interested in funding your startup.
You have no co-founder
You cannot do everything by yourself. Although most startups only have one founder, investors see that the role of a co-founder is equally important for a startup. With a co-founder, investors are better able to place more trust in investing their money in the right place. The existence of a co-founder is very important, just in case something undesirable happens, such that the company still has a backup plan to lead the team.