Raising Capital Challenges: what are they and how to overcome them?

17 August, 2021

Many businesses and startups failed because of lack of funding, but is it really money that the world lacks? With more than 13 million investors in the US alone in 2020, perhaps money is not the problem. These great numbers of investors leave founders and entrepreneurs in a big highly competitive environment where hearing back from an investor can be a big achievement in and of itself.

With that in mind, it can be really stressful to raise the money you need and get your business going, the question is

How can entrepreneurs overcome raising capital challenges?

  • Having a scalable business model
  • Investors are always looking for remuneration, so preparing a business plan with a realistic scalability report for your startup would increase your chances of getting an investor’s attention. It should demonstrate that your business will be able to generate the highest possible revenues with the least expenditure rate within a specific period of time.

  • Determining the uniqueness of your idea
  • When you are trying to come up with a model that would prove successful, the idea of copying already successful models will sound very alluring. However, relying on the same model your competitors have - if we can name them “competitors” at this early stage - has been proved to be a failing way to initiate your business.

    Remember that your idea has to be unique and authentic, so if you have an idea that solves the same problem in the same industry that another business already solves, just make sure not to copy the same model already in the market, instead, you should think out of the box and be innovative.

    Your business plan should show how creative your idea is and how it does have improvements that could serve the market.

  • Having a realistic time frame
  • Most entrepreneurs underestimate the time they will need to raise capital, hoping that the less time raising capital takes up, the quicker the process moves forward.

    Give yourself the time you need and if you are putting in the right amount of effort, your journey will lead you either to raising the capital required for your business or to gaining experience and valuable feedback to start again.

  • Not giving up
  • No matter how many times you got rejected, do not quit! Keep doing what you are doing and importing your process and the results will come sooner or later.

    Sometimes you approach investors who initially show interest in your startup and when you try to call them again you enter the maze of the uncertain "yes" and the horrible "no". It can be really frustrating, but you just need to go on with your quest and the awaited "yes" will come at the right time.

    Time and experience will make your business model more mature and ready for the future growth and scaling phase.

  • Business Networking
  • Try to increase the number and the quality of your connections as much as you can, as the more intricate your network is the more you can learn and the more alternatives you have, of course, it might take some time, but it is definitely worth being executed.

  • Prioritizing opportunities
  • Finding the right investor should happen after making sure that you're well prepared for the challenge. You need to make sure that you are backed up with the essential required equipment, an interesting innovative idea, a good business plan, and a reliable co-founder who can support you and give you extra knowledge and extra opportunities to secure the funds that you need.

    Try to show up in as much business networking websites as possible in order to increase your chances of meeting investors and industry leaders.

  • Checking global and local banks and special Credit Cards opportunities
  • Some banks offer special credit cards for entrepreneurs and small business owners. But you shouldn't miss the point that this is the most expensive option, and because most of the credit cards are personal, then you will be personally liable for any debt.

  • Approaching Venture Capitals
  • Surely, this is not a usual option for startups in the early stages, as venture capitalists usually tend to invest large amounts of money, so trying to find venture capitals interested in your ideas would probably be in vain.

    Before approaching any venture capital and losing the chance altogether, you have to be really prepared by having the right approach and enough understanding about the industry and the competitors out there. Also, make sure your Pitch DeckBusiness Plan, Financial Forecast, and other documents are all ready and in good shape, metaphorically speaking!

  • Starting a crowdfunding campaign on crowdfunding platforms
  • These platforms are considered the perfect places and hubs for entrepreneurs and investors worldwide, but as the name suggests, they are usually crowded, and you usually need to have access to a wide and well-established network of friends and contacts of professional people for support in order to succeed in your campaign which needs to be unique and properly-executed and planned for.