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The startup acid test- raising money

Raising funds for a startup is the crucial baby step towards successful entrepreneurship. Majority of the entrepreneurs have to go through a turbulent journey in the initial phase of it. A few of them get it right as well.

Startups are on a boom now than they were anytime else. World’s top three startups, namely Didi, Uber, and Airbnb have a valuation of $56 billion, $54 billion and $31 billion respectively. But, they have had their own hiccups before they achieved massive success.

raising money

The prime factor is also lack of investors which makes the competition even tougher.  Out of the handful left, they look for the growth period of 12-18 months to give themselves enough confidence before they invest. This becomes a hindrance when you have just started and are looking at getting funded.

The chances of getting immediate acceptance are even lesser if you don’t have proper networking around your field. Awareness level and grip on the industry are some of the factors that bring in the investor confidence. If the investor is aware of your connections and inner circle, it is more likely to make the approach smooth.

Even if everything goes fine according to you, there might still be chances of things going haywire. According to stats, about 8 out of 10 entrepreneurs crash within the first 16-18 months of starting their venture. Only 3% were able to get into the fifth year of the small businesses that commenced in 2011.

Therefore, one should also be ready to self-invest. Ola, a prime Indian startup got its initial funding of about 90 lakhs from its founders.

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