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What are the Fund Raising challenges and solutions for Start-ups?

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  • What are the Fund Raising challenges and solutions for Start-ups?

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  • #2
    Problems faced by Entrepreneurs:-
    • Little or no research about the investor: I've seen most of the entrepreneurs apply with investors without even knowing about the investor’s investment objective, corpus, previous investments and the focus.
    • Over confidence: I have experienced this many times, entrepreneurs think that their website is a million dollar money making machine. This is because they have never discussed about it with an expert who may validate the idea and curate the product/process.
    • Technical terms: Many entrepreneurs don't know the meaning of bootstrapping, they don't know what is a pitch deck, they don't know what is the difference between a VC and an Angel Investor.

    Solutions:-
    1) Bootstrapping your start-up business:
    Self-funding, also known as bootstrapping, is an effective way of start-up financing, specially when you are just starting your business.
    2) Crowd funding As a Funding Option:

    Crowd funding is one of the newer ways of funding a start-up that has been gaining lot of popularity lately. It’s like taking a loan, pre-order, contribution or investments from more than one person at the same time.
    3) Get Angel Investment In Your Start-up:

    Angel investors are individuals with surplus cash and a keen interest to invest in upcoming start-ups. They can also offer mentoring or advice alongside capital.
    4) Get Venture Capital For Your Business:

    This is where you make the big bets. Venture capitals are professionally managed funds who invest in companies that have huge potential.



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    • #3
      FUND RAISING CHALLENGES AND SOLUTIONS FOR START-UPS
      Challenges:-
      1. Lack of Mentorship
      Lack of proper guidance and mentorship is one of the biggest problems that exists in the Indian start-up ecosystem.

      2.Struggle to Reinvent Constantly

      The biggest challenge is the need to constantly reinvent and come up with a service to be able to meet the customer expectations.

      3.Funding

      Due to high rate of interest involved in debt financing there is risk to rely on that. Thus Venture capitalist and other investors are the best one to go for start-up funding but it’s very difficult to convince them with n idea.

      Solutions:-

      Three major things to be kept in mind before start-ups

      1.Market validation

      Market validation refers to a series of interviews of people in target market. The interviews are used to check a product concept against a potential target market that will help the start-ups to come up with valid and real ideas.

      2.Business Traction

      Business traction means the progress of a start-up company and the way it gains as the business grows. To measure traction, companies usually rely on customer response and revenue as indicators of their success. Investors want evidence that your financial projections are just not a dream.

      3.Pipeline

      Pipeline is the term often used to refer to the amount that a company expects to receive in the coming months or year. It is used when companies have a long time between the placement of orders and when the goods or services actually are delivered.

      Discounted Cash flow must be used while making different strategies during the start-up.

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      • #4
        WHAT ARE THE FUND RAISING CHALLENGES AND SOLUTIONS
        FOR START-UPS
        Challenges for start-ups:

        Financial Management
        Start-ups basically don’t want to rely on debt financing due to high interest rate. They prefer to pitch their ideas in front of venture capitalists and other financial investors to get funding.

        Unrealistic Expectations
        The young Start-ups face challenges when they set ‘unrealistic expectations’ following a booming success. Therefore to succeed in a competitive business world, they need to have high but controlled expectations, keeping view of the resources available, growth potential, and other market factors.

        Solutions can be attained by:

        These can be used as a mantra to solve all problems

        1.Pipeline

        Pipeline is the term often used to refer to the amount that a company expects to receive in the coming months or year. It is used when companies have a long time between the placement of orders and when the goods or services actually are delivered.

        2.Market validation

        Market validation refers to a series of interviews of people in target market. The interviews are used to check a product concept against a potential target market that will help the start-ups to come up with valid and real ideas.

        3. Angel Investment In Your Start-up:

        Angel investors are the investors with surplus cash and take keen interest to invest in upcoming start-ups. They also offer mentoring or advice alongside capital.

        4. Venture Capital For Your Business:

        Venture capitals are professionally managed funds who invest in companies that have huge potential.

        Last edited by Tanmay; 05-02-2017, 02:39 AM.

        Comment


        • #5

          FUND RAISING CHALLENGES FOR STARTUPS



          Finding Energy in Rejection:

          Even though the initially there may be rejection by investors. There may be words like, “NO", "absolutely no" on first round funding. It may be a moment of doubt and introspection. But if there is confidence in the idea. We shouldn't lose our start up hope on the first funding. Refresh your mind and again go for the startup idea.

          Unrealistic Expectations
          The young Start-ups face challenges when they set ‘unrealistic expectations’ following a booming success. Therefore to succeed in a competitive business world, they need to have high but controlled expectations, keeping view of the resources available, growth potential, and other market factors.

          Globally Scalable:
          Investors look into the aspect whether the startup is globally scalable in the market. Whether, the startup is applicable in every part of the world or not. If it is applicable in every part of the world. it becomes easier to persuade the investor.

          Technical terms
          Many entrepreneurs don't know the meaning of bootstrapping, they don't know what is a pitch deck, they don't know what is the difference between a VC and an Angel Investor.

          Market Validation:
          The startup must first validate his/her product in the market. It can be done through series of interviews and research. Find out whether the product available is necessary for the market.

          Have a practical model ready:
          Investors of a startup would like to see practical examples of products in the market. Investors give higher marks to startup which is up and running in the market and funding would be easier for practical products.

          Exit from the startup:
          Investors like to exit quick from the startup. So investments where the return is fast is preferred by investors. So startup should focus on fast returns of investments in the market.

          SOLUTIONS TO SEEK PROPER FUNDING

          PIPELINE
          Pipeline is the term often used to refer to the amount that a company expects to receive in the coming months or year. It is used when companies have a long time between the placement of orders and when the goods or services actually are delivered.

          MORE SEED FUNDS:
          Entrepreneurs can have the seed funding for the startups. Most of the funds can be arranged through Venture Capital, and angel investors.


          MENTORSHIP
          The entire journey of entrepreneurship should be guided by someone with knowledge, expertise and experience. proper mentorship aids in choosing the right source of funding from bootstrapping to angel investors to venture capitalists. Mentors can show a better path because the above mentioned criteria as can be better judged by someone with ample degree of experience.
          Last edited by rahul94; 05-03-2017, 01:48 AM.
          http://gph.is/1jZKy4a

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          • #6
            CHALLENGES FACED BY STARTUPS
            Startups or entrepreneurial ventures are in a growing trend in relation with the current market scenario. setting up one’s own business from scratch is a cumbersome work and involves a a plethora of steps initiating at the stage of idea generation, its validation post proper research, arranging for funds, selecting proper and contributing team and the list goes on. An entrepreneur performs humongous number of functions of planning, forecasting, finance, marketing and recruiting, to name a few. Specifically talking about the finance function, an entrepreneur has various issues to deal with and problems are often encountered while arranging for the necessary funds which are pre requisite for the successful implementation of the idea. The issues faced by the entrepreneur while arranging for the funds and deciding about the type of funding required are mentioned below:
            • PERCEPTION ANALYSIS OF THE INVESTOR: the plan often prepared by the entrepreneur is made often ignoring the perception and the need of the investor. The investor readily invests by analyzing the future profitability of the project and the sustainability of the business. these factors should be given due emphasis primararily to trap the desired investor.
            • MARKET VALIDATION: due to un justified over confidence in the venture, the entrepreneurs usually ignore the process of market validation of the idea by testing which generated problem on the part investors due to the higher level of risk involved in an untested idea which might turn out to be unfeasible
            • MILESTONES AND VISION: An idea must not be limited to a working model on a parchment, rather the entrepreneur should have a clear vision regarding profitability, growth and expansion which is to be attained in the distant future as well as the feasible milestones that the business is expected to achieve in the due course of time.
            • RETURN ON INVESTMENT: sometimes, the return that would be generated for the investors is not properly evaluated which causes a trouble in generating sufficient funds as investors demand a lucrative return on their investment.
            • LIMITED OR LACK OF KNOWLEDGE: often, in the fund raising meetings, it is noticed that the entrepreneurs are not well versed with the terms that are used in the normal functioning of startups like bootstrapping, venture capitalists or pipeline which tend to depict a poor impression on the investors pertaining to the seriousness of the entrepreneur as well as the research and preparation done on his part.

            SOLUTIONS TO SEEK PROPER FUNDING
            • PIPELINE: Pipeline is the term often used to refer to the amount that a company expects to receive in the coming months or year. It is used when companies have a long time between the placement of orders and when the goods or services actually are delivered.
            • TRACTION: Business traction means the growth path to be followed by a start-up company and the manner in which profitability is attained and retained in the long run. Traction is usually measured by means of customer response and feedback and assists in magnifying investors trust in the project as the project has been tested in the real market amidst the prospective customers.
            • MENTORSHIP: the entire journey of entrepreneurship should be guided by someone with knowledge, expertise and experience. proper mentorship aids in choosing the right source of funding from bootstrapping to angel investors to venture capitalists. Mentors can show a better path because the above mentioned criteria as can be better judged by someone with ample degree of experience.

            Comment


            • #7
              FUND RAISING CHALLENGES FOR ENTREPRENEUR
              1. Driving parameters
                1. Uniqueness of the product business model
                2. Globally scalable
                3. How challenge is global/ local competition.
                4. Traction, market validation and pipeline
                5. How do the number look
                6. How much do you really need and in what from
                7. Nirvana strategy for your investor or for yourself
              2. Pie line
                1. Ongoing discussing
                2. Clear read map of sales and marketing activities for customer acquision
                3. Alternative monetization sours
              3. Use of market validation assumption
                1. Various revenue stream
                2. Increase in the number of user year on year
                3. Change in price over the year etc
              4. Types of investor
                1. Friends and family
                2. Financial smart investor
                3. Strategic investor


              Attached Files

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              • #8
                FUND RAISING CHALLENGES FOR STARTUPS

                Funding is a big concern for startups and small businesses. Seed round is mainly used by a startup to begin operations, hire a small team of 5-6 people, launch its product or service, and to rent out a small office. Post this stage, a startup needs more cash to improve its technology, hire more people, increase its customer base and for marketing purpose. VC firms and private equity firms typically lead the series A round of financing. However, the process is not a piece of cake. A startup faces many hurdles before raising this round of investment.

                Efficient Capital Burn

                Many a time, startups face difficulty in having a clear vision of deploying the raised capital. Some may give more weight age to team, some to the traction numbers, some to the market sentiments, while others may look for global expansion etc. Hence, prioritizing comes up as a major dilemma at this level.

                Talent Acquisition

                Hiring the right people is one of the most difficult challenges faced by startups. At times, despite having invested a good amount of money in talent acquisition and employee training, startups fail to get a good ROI. In other words, putting money in hiring employees sometimes backfires as they fail to yield the result that was expected of them. In such cases, startups have to bear heavy losses.

                Incompetency of the Team

                The most powerful asset of a startup is its team. In many cases, despite having a good business model, its execution fails. Why? Because the team disappoints in carrying the plan out. The team is the foundation of a company on which rests the company’s future. There are instances when startups have failed to raise funds owing to the incompetency of the team in executing the business ideas.

                Lack of In-market Validation of the Product

                Lack of in-market validation of the startup’s product is also a reason for its decline. Market validation is the base on which a startup raises its first institutional round of funding series A. It is at times difficult to identify ways of applying market validation to their products which thereby increases time to generate revenue and decreases the chance of success.

                Investor’s Selection

                Many a time, startups face difficulty in choosing a right investor who believe in their vision and allow them to execute that vision without getting in their way. Startups come across a variety of situations in their path towards their goal, and in lack of a resourceful investor, it become impossible to crawl out of these situations.

                Comment


                • #9
                  Fund raising challenges and solution
                  Initially problem faced by entrepreneur when starting their start up none other than funding, from where we get fund who will be the investor.
                  Rejection:
                  Many time entrepreneur faced rejection, they have idea but not aware about proper execution and sometime it is impossible to convince investor and create interest about plan.
                  Over confidence:
                  Entrepreneur have confidence about their plan and idea and make sure it will be required by market, make market need but they thought their idea is different and due to lack of market research and over confident faced many problem rejection is one of them and failure.
                  Lack of mentor-ship:
                  Lack of proper guideline is another problem.
                  Solution:
                  Pipeline:
                  Pipeline is the term often used to refer to the amount that a company expects to receive in the coming months or year. It is used when companies have a long time between the placement of orders and when the goods or services actually are delivered.
                  Market Validation:
                  The startup must first validate his/her product in the market. It can be done through series of interviews and research. Find out whether the product available is necessary for the market.

                  Comment


                  • #10
                    The three most basic issues confronted by Startups are:-

                    Subsidizing: Start-ups fundamentally don't have any desire to depend on obligation financing because of high loan fee. They like to contribute their thoughts front of investors and other money related financial specialists to get subsidizing.

                    Unreasonable Expectations: Most of the Startups these days confront this issue. Along these lines, to prevail in a focused business world, they need high however controlled desires, keeping perspective of the assets accessible, development potential, and other market variables.

                    Inappropriate Market Research: Before beginning endeavor, it is constantly prudent to do a careful statistical surveying to run a Startup effectively. Research is the key component of achievement for any Startup.

                    Market Validation: The business people as a rule disregard the procedure of market approval of the thought by testing which created issue on the part financial specialists because of the more elevated amount of hazard required in an untested thought which may end up being unfeasible.

                    Solutions to the above problems:-

                    Pipeline: Pipeline is the term frequently used to allude to the sum that an organization hopes to get in the coming months or year. It is utilized when organizations have quite a while between the arrangement of requests and delivery of goods/services.

                    Market Validation: Market validation refers to a series of interviews of people in target market. The interviews are used to check a product concept against a potential target market that will help the start-ups to come up with valid and real ideas.

                    Comment


                    • #11
                      Challenges Faced by a Startup While Raising Series.

                      Efficient Capital Burn

                      Many a time, startups face difficulty in having a clear vision of deploying the raised capital. Some may give more weightage to team, some to the traction numbers, some to the market sentiments, while others may look for global expansion etc. Hence, prioritizing comes up as a major dilemma at this level.

                      Scalable Cost of Customer Acquisition

                      The hardest part of building up a startup is figuring out their customer acquisition cost i.e. what are the scalable channels for acquisition, and how much would acquiring each customer cost. Startups use Paid Search models to acquire customers but these models are also drying up, for these channels are too expensive and have saturated already.

                      Talent Acquisition


                      Hiring the right people is one of the most difficult challenges faced by startups. At times, despite having invested a good amount of money in talent acquisition and employee training, startups fail to get a good ROI. In other words, putting money in hiring employees sometimes backfires as they fail to yield the result that was expected of them. In such cases, startups have to bear heavy losses.

                      Demonstration of a Scalable Business Model

                      To have a scalable business model is a mandate for a startup for its growth. However, it is also the most demanding factor that a budding enterprise carries. For a startup to evolve, a business model that has the potential of augmenting profit over time, by fueling revenue while eliminating cost is a must have. But given the current scenario, it is extremely onerous to come up with an idea that fulfills the mentioned clauses, and at the same time is unique and original, for the market has already been taken by hundreds of thousands of startups with their individual business models.



                      Incompetency of the Team


                      The most powerful asset of a startup is its team. In many cases, despite having a good business model, its execution fails. Why? Because the team disappoints in carrying the plan out. The team is the foundation of a company on which rests the company’s future. There are instances when startups have failed to raise funds owing to the incompetency of the team in executing the business ideas.

                      Lack of In-market Validation of the Product

                      Lack of in-market validation of the startup’s product is also a reason for its decline. Market validation is the base on which a startup raises its first institutional round of funding series A. It is at times difficult to identify ways of applying market validation to their products which thereby increases time to generate revenue and decreases the chance of success.



                      Investor’s Selection

                      Many a time, startups face difficulty in choosing a right investor who believe in their vision and allow them to execute that vision without getting in their way. Startups come across a variety of situations in their path towards their goal, and in lack of a resourceful investor, it become impossible to crawl out of these situations.

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                      • #12
                        Fundraising Challenges and solutions for start up
                        • Lack of commitment to the fundraising function on the part of the charity’s trustees, CEO and other stakeholders. A fundraiser working for such an organisation is usually on thin ice and will probably be the first to be blamed for any financial shortfalls. The remedy for this might well require a professional consultant from outside the organisation who can help the stakeholders to focus on this primary issue.
                        • Over-dependence on one stream of funding, be it statutory or corporate. The usual scenario is that the charity has been depending on one source of funding for some years and has not established a public fundraising function. The funding is suddenly withdrawn and the organisation is in crisis. What should have been put into operation is a comprehensive fundraising programme to include fundraising from individuals. Let’s call it ‘jobs for fundraisers’

                        One of the best ways to raise money for your cause is doing fundraising challenges, so here is a long list of fundraising challenge ideas. World record attempts, extreme fundraisers and other big challenges draw lots of interest from the media, from corporate sponsors, and from the general public.

                        Properly done, a fundraising challenge is both an epic event and a testimonial to the willpower of the participants to raise money for a good cause. You want pick a unique fundraiser idea that’s doable, yet still very difficult, and especially one that hasn’t been done in your area before.

                        Fundraising Challenge Event Ideas
                        1. Extreme Fun Mud Run – The harder and the muckier, the better!
                        2. Over The Edge – Rappel down the side of a skyscraper.
                        3. Guinness World Record Attempt – Any world record attempt is noteworthy for local media. Just think outside the box.
                        4. Wings Of Kilimanjaro – 200 paragliders soared off Mount Kilimanjaro and the 800-strong support group all climbed the mountain as well.
                        5. Ninja Challenge – Build your own extreme obstacle course and make it a huge challenge fundraiser event.
                        6. Hunger Games Fundraiser – Katniss and costumes means lots of interest, so build it bigger and better.

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                        • #13
                          FUND RAISING CHALLENGES FOR STARTUPS
                          Roadmap:
                          Roadmap of 3-5 years. i.e. the finance of 3-5 years is appreciated by investors. The future financial prediction by a startup has a higher chance of getting funding from the investors
                          USP:
                          If a startup has a USP it has a higher chance of being invested. As with USP the investors will have trust the startup on the consistency aspect.
                          Business Traction:
                          Business traction means the progress of a start-up company and the way it gains as the business grows. To measure traction, companies usually rely on customer response and revenue as indicators of their success. Investors want evidence that your financial projections are just not a dream.
                          Have a practical model ready:
                          Investors of a startup would like to see practical examples of products in the market. Investors give higher marks to startup which is up and running in the market and funding would be easier for practical products.

                          Comment


                          • #14
                            FUND RAISING CHALLENGES FACED BY ENTREPRENEURS

                            The main challenge before starting the business is "MONEY". The start-ups face the difficulties related to raising the fund for the business future. Following are the problems faced related to the funding of start-up:

                            1. LACK OF INFORMATION:
                            Most of the entrepreneurs are unknown to access any adviser to get the help related to the fund raising pitch deck and how to get the attention of the investors towards the idea. They don't know whom to approach for help regarding the fund raise. This is one of the greatest challenge for an entrepreneur.

                            2. NO RESEARCH ON INVESTORS:
                            Before going to pitch the investors one should have gone for the research on the investors so that they can get to know about the investor's investment objectives, previous investment made by them and their focus. This is main cause of failure for fund raise at the time of pitch deck.

                            3. HIGHER EXPECTATIONS:
                            Entrepreneurs are having the dream that their product would be making billions and trillions at once after starting the business. But they are unaware about the investors' requirements and have high confidence over their way of pitch deck.

                            4. UNKNOWN TO TECHNICAL TERMS:
                            Mostly the entrepreneurs are not known to the technical terms that are Venture Capital, Bootstrapping, and angel investors. They don't have much knowledge about the type of funding required for their business at starting state.

                            5. FAIL TO ANSWER:
                            Most of the entrepreneurs failed to answer the questions regarding the why

                            SOLUTIONS TO FUND RAISING CHALLENGES

                            1. PIPELINE:
                            Pipeline is the term used to have the fund raise in the upcoming years of starting the business. It includes the persons interested to grow the business.

                            2. MORE SEED FUNDS:
                            Entrepreneurs can have the seed funding for the startups. Most of the funds can be arranged through Venture Capital, and angel investors.

                            3. MARKET VALIDATION:
                            Market validation can be used to interview the persons for the checking the products concept used for the targeted market efficiently. This will help the startups to get the ideas for the product served to target market.

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                            • #15
                              BUY MOVIE TICKETS ON DISCOUNT FOR NGO STUDENT
                              For that I search for the app on which i got the tickets on discount and I got the app which is NEAR BUY and on which I got tickets on 40 % discount and i buy the tickets for that NGO students and complete my target of buying the tickets on cheapest price .

                              Because of this project I learn about The app NEAR BUY how it is useful for and help full. Actually buying from this app it is mainly beneficial when we purchase something in bulk. This company make that type of strategy so that no user can drop this app because they providing the cash back in its app account and you cannot transfer that amount in other source. So because of this app I learn lots of business strategy, and marketing strategy.

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