The deficiency of finances is thought to be the main problem slowing down the development of startups. The matter of investments is especially urgent for social startups that do not have capital generation possibilities and precise market entry strategies other ones do, but have lower marginality levels and smaller scalability potential.
To solve the problem and attract finances, there are many granting programs directed to help startup entrepreneurs in presenting their project and winning the desired jackpot if they’re lucky enough.
Our essay writing service cheapest experts listed main delusions and mistakes of startupers looking for investors, and told about avoiding those failures.
1. It Should Be the IT Startup Because They Are Trendy
It should, but only if you really have a breakthrough technology and its practical use. There is too much hype around everything connected to IT: artificial intelligence, virtual reality, robots, cryptocurrencies, etc. These branches attract much attention and money because they promise fast investment return. Such companies are sold with the x10 multiplier easily nowadays. And if they were able to enter the American NASDAQ stock, this multiplier reaches x20: companies became public, reached certain levels and did not die on the road.
All in all, the field is really trendy, but there are too many entrepreneurs willing to develop in it. Your project risks getting lost among dozens of similar products.
What to do in order to stand out? You can try integrating new technologies into usual services. For instance, to build Big Data technologies into a network of hairdressing salons and collect data about visitors: hair color, preferred styles and so on. Later, you can sell this data to big fashion, cosmetics or medical companies. This means, you make hairs for people and collect the database simultaneously.
Another option: to find out which goals interest local and foreign investment foundations, your city government, etc, and to begin a startup exactly in that field.
The third direction: to look for things clients or other businesses need. What unsolved problems exist? This approach is based on researching of client experiences.
New markets and possibilities appear, disappear and change all the time. Stay posted.
2. A Good Idea is Enough for a Startup to Bring Profits
Unfortunately, an idea is not enough: any business means huge efforts and investments. You need to become an entrepreneur. This definition means, among other things, a very attentive attitude towards finances.
Among startupers and beginner entrepreneurs, there are many people obsessed by their ideas. But this quality is very frequently combined with absolute incompetence in business questions and unwilling to deal with trivial things like financial accounting, staff hiring, keeping to labor laws, etc. Here’s the point: you’ll have to learn and love all that, otherwise your startup is bound to fail.
3. Getting a Grant is Enough to Reach International Markets
Beginning entrepreneurs always want to conquer the world but fail to calculate their strength very frequently, too. It would be very easy if getting an investment grant could give you free and automatic entry to international markets, but that’s not obligatory, especially if the local grant is the point.
Getting a grant from the international organization can help you reach international levels because you’ll communicate with people abroad and foreign media will mention your company. But finally, everything depends on your activity. That’s obvious: if you got a grant from a foreign company, you have a communication channel with this partner. Your task from here: to expand and develop this relation.
To become successful on international levels, you should hold a careful market research and product adaptation for countries where you plan to promote your product first. The development of an idea abroad without understanding its nature and global market place is a threat for a startup itself.
4. It’s not Necessary to Plan Finances Precisely
When you send an application to get investments, you need to have a precise plan about spending money. This thought may seem obvious, but still there happen such cases: when meeting their investors, young entrepreneurs tell they need million dollars. And after getting asked about how they plan to spend this money, they get lost and fail to answer a thing.
To avoid getting trapped into such situation, you should have defined goals you need money to reach. Of course, some part of funds will be spent operationally: staff salary, equipment, etc. But still, you need to connect them with team achievements somehow: for instance, your goal is to introduce certain functions into the project within 6 months.
Another “obvious but important rule: you need to keep to your finance plan strictly. You have to show that money was spent exactly as it was said and not to buy a luxury car for private use. Otherwise, you can get serious troubles including lawsuits. The next point defines this in details.
5. You Can Relax after Getting Money
There is a popular joke among startupers: you can get first money from 3F – family, friends and fools.
In case these finance sources are not enough (this means almost every case), entrepreneurs start searching for investors, business-angels, grant-givers and visit crowdfunding platforms. Getting finances frequently becomes the idea in itself, and that is a threat, too.
It is really very useful for any startup to get a grant. No, not only because this is the serious financial aid, but because this is a great PR option providing access to client bases. Entrepreneurs enter new connection circles and get new business contacts through grants. In fact, their startup gets free promotion and advertising, a chance to show themselves from the shadows. Branch specialized media show such projects with pleasure and watch after successes of different companies attentively.
But here it is: the money is yours. What’s next? Many startupers get relaxed after that. But it is important to know: incubators, accelerators, investors and foundations give money only for certain purposes. You can’t just get funds and then spend it as you want. If your startup stated the need in money to buy equipment, then it should have to buy that inventory and then prove actions with appropriate papers serving as evidences.
Entrepreneurs should develop a precise business plan indicating how much money is needed and for what purpose. This is to be treated seriously.
Consider another moment: it often happens that the startup has to pay certain percent plus to the sum it gains later. As a rule, it is up to 10-20%, so read demands of all grants and incubators attentively.
6. Media Promotion after Grant Getting is Enough for Long
Yes, grant giving is lighted by media widely and actively. But you shouldn’t enjoy the victory for too long. You need to do everything to make those writing about grant foundation tell about you. Of course, you need additionally to share news on your own, too: on the website, your blogs, social media, etc. It is great if your PR-campaign is planned in details: today we speak about this thing, and tomorrow we mention this feature, etc.
Pay attention: you should tell not only about getting the grant. You need to say how you spend it, too. In fact, you can create a PR reason on any stage of business development.
If you have the limit dictated by your own modesty, just remember: modesty is the way into the unknown. You won’t be able to develop a business if you led your way to the uncertainty. If serious and rich people gave you money to develop a project, then they think it to be important and interesting. This means, it is worth telling about.
