Getting capital for a business idea is often seen as being as vital to a startup as the central nervous system is to your spine. It’s important to know that it’s true that this is, by and large, an exaggeration of the importance of capital (most budding business owners are probably better off just getting down to work with what they have instead of spending all their time trying to get capital). But let’s face it: getting funding of some kind is often necessary!
If you’ve been spending a long time trying to get funding, then it’s worth simply working with what you have, if you can. If that isn’t desirable or even feasible, then you need to take a close look at the mistakes you’re making when it comes to your hunt for capital. We’re going to take a quick look at some of the most common reasons why venture capitalists are often reluctant to put their money on a given prospect.
The competition is tough
More and more businesses are looking for funding than ever. By and large, this means that the standards when it comes to a potential business venture have risen somewhat. After all, it seems easier than ever for a venture capitalist to take their money elsewhere, considering the ever-increasing number of start-ups. So try to get an idea of what sort of businesses are receiving funding. What makes them so attractive to the people with the money?
You don’t have the right background
The right background can come in two forms: professional experience and academic achievements. A college degree is rarely on the minds of employers and venture capitalists, but there are a lot of them out there who would be a little more impressed if you could back up a solid business plan with some academic qualifications.
You can look into getting an online MBA degree if you want to add such a boost to your proposition. Hard work experience can be even more valuable; if you have no experience in the field, then your inexperience is going to look like a massive risk. Speaking of which…
Lack of financial risk mitigation
A lot of startups make the mistake of underestimating the risk they’ll be in once they get off the ground. Small businesses are the most common target of fraudsters and cybercriminals, which puts you at a bigger risk of financial loss than you may think. Don’t make the mistake of investing so much expertise and resources into pretty much everything except risk mitigation.
No-one has heard of you
Last but not least: if you’re not on anyone’s lips, then an investor isn’t going to look too kindly on your proposal. They’ll generally expect you to have gotten some of the legwork done when it comes to marketing and outreach.
This is why social mediaaccounts for your business can be so useful. It’s also why a lot of budding entrepreneurs are actually taking to crowdfunding to get the capital they need; their campaign for more cash can be combined with digital marketing with ease.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.