5 Reasons Why Truly Innovative Startups Have a Hard Time Getting Funding

Published on Jan 24th 2021 by Admin
Share this post:

Getting sufficient funds is something all companies struggle with at one point in their business cycle. Startups face the brunt of the problem - barely 1% of startups are successful in securing funds to survive another year.

 

It begs the questions, why do startups suffer this much when it comes to the financial elements of business? Here are five reasons why innovative startups may have a hard time getting funding.

 

Determining how much money to ask for

Startup founders frequently struggle with asking for the right amount of money. Whether you’re asking investors or considering bank loans, you need to know the exact amount of money you require. Your goal should be to raise as much money as you can.

 

However, keep in mind that you don’t go overboard - it’ll drive investors away! The key to overcoming this problem is to write a business plan with specific financial details so that there is no chance for ambiguity.

 

Finding the right funding option

In today’s corporate world, there are various funding options to choose from as a startup. As a startup, you might want to invest your savings or appeal to your family for investing. Banks also offer special credit cards for small business owners.

 

Funding methods can either make or break your business. Therefore, it is crucial to research and analyze the pros and cons of every option you consider.

 

Presentation skills

Another prominent mistake startup founders may make is not presenting their ideas appropriately enough. If you don’t believe in the potential of your vision, investors and banks may not either. Besides establishing a concrete social network of professional contacts, you need to focus on your presentation skills.

 

It is vital to know the balance between being insufficiently aggressive and too aggressive. Many truly innovative startups suffer because the founders don’t put adequate effort into presenting their business ideas.

 

Neglecting to build strong relationships

As a startup, it can be easy to lose yourself in the financial aspects of the business. Nobody wants to start a relationship by asking for money. Because startup founders are adamant about solving financial problems first and foremost, they miss the opportunity to build strong, lasting contacts in the corporate world.

 

Long term investments don’t come along by chance. You need to build thousands of connections to secure one lasting investment, but it’s definitely worth the grueling work!

 

Wasting money once you get funding

Once you get your funds, it’s hard to hold back from spending on the latest software or the newest equipment. Here is something most startup founders don’t consider: if your current software and equipment are functioning to fulfill your needs sufficiently, you don’t need to purchase the latest tech. Wasting money can make your potential investors wary of funding you - who’s to say you won’t waste their money as well?

 

Sticking to your plan and spending wisely on equipment and software will help you stay on track. Keep your investors in the loop as well - it is essential to let them know that their money is being invested the right way.