{"id":121283,"date":"2022-08-08T11:51:22","date_gmt":"2022-08-08T08:51:22","guid":{"rendered":"https:\/\/www.tehnopol.ee\/?p=121283"},"modified":"2022-08-15T15:36:00","modified_gmt":"2022-08-15T12:36:00","slug":"5-main-reasons-why-early-stage-startups-fail-to-get-funding","status":"publish","type":"post","link":"https:\/\/www.tehnopol.ee\/en\/5-main-reasons-why-early-stage-startups-fail-to-get-funding\/","title":{"rendered":"5 main reasons why early-stage startups fail to get funding"},"content":{"rendered":"
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\u201cThere\u2019s an investor for every startup. You just have to find yours!\u201d \u2013 Lev Dolgat\u0161jov, the President of Estonian Business Angels Network EstBan and key mentor of Tehnopol Startup incubator.\u00a0<\/a><\/em><\/p>\n\n\n\n

According to a U.S. Bank study, a whopping 82% of businesses that failed, cited cash flow problems as a factor in their failure. Money doesn\u2019t buy you happiness, but if your goal is to develop a successful business and grow fast, you sure will need it to make it happen.\u00a0<\/strong><\/p>\n\n\n\n

As a founder, before you go after the money, make sure you know, which stage you\u2019re in. A typical startup journey has three stages \u2014 ideation, growth and expansion, the funding opportunities depend on your stage. If you don\u2019t know where you are, you don\u2019t know how to get moving. But whatever is the stage, the basics are the same and here\u2019s a checklist of 5 top reasons, why startups fail to get funding.<\/p>\n\n\n\n

1. No team or a wrong team<\/strong><\/h2>\n\n\n\n

Investors love teams. If you are a lone wolf or a man with a dog kind of team, then the investor isn\u2019t convinced that you are going to make it. In fact, 23% of startups mentioned team issues leading to failure. A smart man once said that in real estate, it\u2019s all about location, in a startup, it\u2019s all about the team. It\u2019s the key to success and the foundation of a startup that investors can\u2019t resist!\u00a0 It\u2019s obvious that in the very early stage you don\u2019t have the resources to build a full-time dream team just yet, but it definitely should be one of your first goals while building a successful startup. Let\u2019s take a simple example of a dream team, that surely everyone knows \u2013 the A-team:<\/p>\n\n\n\n

  • CEO (Hannibal) \u2013 the leader and the main idea-generator, planner and strategist.<\/li>
  • CTO (B.A) \u2013 the leader of technology, who knows everything about the enterprise\u2019s product and its life story. Knows how to build and develop the product and stands for it being really a good thing. Pedantic and meticulous characteristics ensure that the product portfolio is exactly what it needs to be.<\/li><\/ul>\n\n\n\n
    • The salesman (Faceman) \u2013 salesman and marketing provider. He likes performing in public and meeting people. Is best characterised as a \u201chustler\u201c. Makes sales and creates customer relations with the support of good looks and a modicum of sneakiness.<\/li>
    • Engineer (Murdock) \u2013 somewhat crazy, teased in a positive way by teammates. The weirdo that teammates need to keep in check. Capricious and diffused at times, but immensely smart part of the team with all the twists.<\/li><\/ul>\n\n\n\n

      So, before investors want to invest in your idea, regardless of how amazing it is, you must invest in putting together a team and building relations that last. Only then investors believe that you are able to deliver what you promise.<\/p>\n\n\n\n

      2. The investor just doesn\u2019t believe in you. How to build trust?\u00a0<\/strong><\/h2>\n\n\n\n
      \"\"<\/figure>\n\n\n\n

      Being an early-stage startup, it\u2019s not easy to get the investor behind the table, not to mention getting a YES to the deal. Investors have a lot of interest in early-stage startups but they also want to lower their risks and are way more likely to give you the money if you are pre-validated by a trustworthy partner, an incubator or an accelerator that they know. Tehnopol Startup Incubator startups have raised over \u20ac25M investments while being in the program or shortly after finishing it. In the eyes of the investors, it\u2019s like a quality assurance stamp. So, take the shortcut to your investment through a quality support program.<\/p>\n\n\n\n

      3. You\u2019re the guy from \u201cNew venture\u201d paranoia club<\/strong><\/h2>\n\n\n\n
      \"\"<\/figure>\n\n\n\n

      Do you fear that somebody will steal your idea? Guess what, Google is full of great startup ideas that just need establishing. No matter how innovative and unique your idea may appear to be, nine times out of ten, there will be something similar already on the market. Even if it\u2019s very niche or unique, it\u2019s impossible to have no competition at all. That just might mean the problem you\u2019re solving isn\u2019t really a problem after all. If you\u2019re pitching your idea and saying, you don\u2019t have any competitors, it\u2019s a red flag for the investors. This means, you probably haven\u2019t done the research well enough. Share it with investors, other founders, mentors, and you\u2019ll get some valuable feedback to improve it instead. Don\u2019t focus on that others might steal it or what your competitors are doing. A successful entrepreneur knows, that his real competitor is in the mirror and you just have to validate your idea like a rockstar.<\/p>\n\n\n\n

      4. Are you going to survive the Valley of Death?\u00a0<\/strong><\/h2>\n\n\n\n

      The valley of death is a feared phase in the startup life cycle, typically occurring after the company launches a product but has not yet seen any revenue<\/strong>. Surviving the death valley curve marks a significant milestone in the life of a startup company, signalling to investors that it has survived its startup phase and stands a better chance of reaching maturity. How to survive it? Accumulate some resources before you start, don\u2019t quit your day job until revenue starts to flow, use crowdfunding, apply for contests and business grants or join a startup incubator. By, the way, we happen to know a great one, where 6 startups out of 10 will not only survive but also succeed.<\/p>\n\n\n\n

      5. You don\u2019t have product-market fit\u2026<\/strong> yet<\/strong><\/h2>\n\n\n\n
      \"\"<\/figure>\n\n\n\n

      A huge factor in a start-up\u2019s success comes before the company itself ever launches. Before you do anything else, carefully research your target audience and your offering\u2019s potential product-market fit. Do people really need your product or service? Is your startup building a vitamin on a painkiller? Make sure, it\u2019s something your target group really needs today, helping them solve big pain points with established budgets.<\/p>\n\n\n\n

      Have you got customers? Have you got revenue already? Are people downloading your app, using your product or advocating your service? These are really good indicators that you\u2019ve got a good product-market fit and that\u2019s what investors are looking for. If you\u2019re not there yet, it\u2019s better to save as much money as you can, spend more time with your customers, and build a product they really need.<\/p>\n\n\n\n

      Being an entrepreneur and finding the resources to build a successful business is not just a walk in the park, but more like a rollercoaster ride in an amusement park. At sTARTUp Day, we invite you to Tehnopol Startup Incubator demo area, where we assure you\u2019re going to have an epic ride full of adrenaline rush and excitement with us!\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

      \u201cThere\u2019s an investor for every startup. You just have to find yours!\u201d \u2013 Lev Dolgat\u0161jov, the President of Estonian Business Angels Network EstBan and key mentor of Tehnopol Startup incubator.\u00a0 According to a U.S. Bank study, a whopping 82% of businesses that failed, cited cash flow problems as a factor in their failure. Money doesn\u2019t […]<\/p>\n","protected":false},"author":31,"featured_media":116425,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_s2mail":"yes","footnotes":""},"categories":[17],"tags":[],"class_list":["post-121283","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/posts\/121283","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/comments?post=121283"}],"version-history":[{"count":3,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/posts\/121283\/revisions"}],"predecessor-version":[{"id":121455,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/posts\/121283\/revisions\/121455"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/media\/116425"}],"wp:attachment":[{"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/media?parent=121283"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/categories?post=121283"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tehnopol.ee\/en\/wp-json\/wp\/v2\/tags?post=121283"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}