Every business starts with an idea and needs a lot of money to run smoothly. Funding enables bootstrapped businesses and companies to take off. Entrepreneurs may have to seek funding from external investors to fuel product development, marketing, operations, expansion, and sometimes, to exist somewhere down the line. However, it is not easy for a business to scout for funding opportunities and get the money it needs. 2023 has been a painfully slow year since 2018, as the global funding data suggests that venture capitalists are shying away from spending. Overall funding data shows cutbacks across funding stages, as overall funding was reduced by 20 percent in 2023.
This doesn’t mean that the funding woes are persistent for the businesses. Securing funding can be difficult, given the investors are cautious and not too optimistic about the market. However, they are still putting money where they see a proper exit plan, can mitigate their liability, and are sure to get a return on their investment. At these times, funding data is a godsend for businesses looking for funding opportunities. If you are in dire need to raise money for your business, the funding database can help you with the following:
- Zeroing in on the companies and investors open to invest
- Understanding the type of financing being raised by a company and comparison based on company funding information
- Clarity on eligibility criteria and legal framework
The above data is not to dishearten budding entrepreneurs but to help them make informed decisions and to make them aware of the realities. It is to let them know that once they know what’s out there in the real world, they can better prepare for the challenges and thrive in the market.
Navigating the investors’ landscape can be complex and, sometimes, a testing process. Hence, let’s start with questions a potential investor might be interested in before getting ready to give some of their money. Start-ups and new businesses are considered high-risk by investors. They face many challenges in the market owing to their inexperience and competitive market and because they work in unproven and newer realms that make investors dubious about their investments.
While there are many reasons businesses fail and entrepreneurial dreams are crushed, there are also a few ways to make a business an attractive proposition and a worthy contender in the eyes of investors. Before the funding checklist and diving deeper into the funding database come these pointers that entrepreneurs should ask themselves to bolster investors’ confidence.
Money Matters:
While it is difficult to understand why a company fails to take off, it is majorly the cash flow that is the reason for death for 82 percent of businesses. No money, no business, and there goes your multi-million idea that could have changed lives or brought about a change. So, a long-term business plan and strong cash flow management are the first and foremost. Entrepreneurs or start-up founders should know at what stage they refer to the funding data. What do they require funding for? Is it to expand their business, acquire customers, or fuel product development? They should equip themselves with a cash burn rate and control it. These questions and considerations are significant because no investors would touch a sinking ship steered by an inexperienced professional.
Is your product ‘worth it’?
Many entrepreneurs don’t think about the product-market fit, which is a deciding factor in a funding round. The rose-tinted glasses come off the minute they are hit with the market reality. If the product-market fit hurdle is crossed, a rock-solid business plan is imperative to manufacture, market, and promote the product. Is the market opportunity big for the product or service to scale? Do they have a target audience? Are the founders experts and have experience in the market? Do they have relevant education or exposure? Apart from money, product-market fit is the main reason that companies fail. When your product has no takers, you can hardly sell, make money, and stay in the market.
A solid framework and product line is indispensable:
Spending too much on optics and not walking the talk is the biggest red flag for investors. Marketing is a cost center and a necessary evil that businesses must toe the line of. However, it doesn’t mean that founders keep neglecting the need for a solid foundation regarding the quality of their products. Distribution and logistics will come later in this journey. You need a solid product or service with even robust research. However, it still doesn’t mean it is your ticket to the funding. Your target audience may not like your product initially, or you may be unable to scale due to saturated markets, or your sales may plateau. Even Apple Inc. couldn’t sustain its run when the Windows computers were launched and liked for its affordability factor.
Over-discounting is a risky business:
Discounts and freebies in an already crowded market are the way to go. Even Uber started and launched its cab services by promising free rides to first-time users. Still, with the emergence of other cab service providers like Lyft, it resorted to unethical business practices. While it remains one of the fastest-growing companies worldwide, the only year worth mentioning in its history of operation is 2018, when it clocked profits. Besides, offering freebies reduces the profitability of a business and shouldn’t be at the cost of a core product or service. The freebies or discounts should be offered as a value-add.
Know your competition:
Being unaware of the competition and market is a recipe for disaster. Let’s take Uber’s example once again. Uber’s failure in China and Vietnam is a constant reminder that a business shouldn’t undermine the local way of doing business.
Unwavering focus and dedication:
Sailing on two boats is a big NO for successful entrepreneurship. It is acceptable for a side hustle, and if you’re interested, here’s how to start a side hustle to supplement your main income stream. Be full-in. Launching a business is a full-time, 24-hour, round-the-year work. You can’t be mentally off, and honestly, it is exhausting. So, unless you have a passion for entrepreneurship and truly believe in your business idea, it is better to stick to a 9 to 5 job for a steady income stream. Investors love that you have skin in the game and believe in the idea wholeheartedly. If you don’t, nobody else will.
Connect with mentors who care:
Having a mentor changes the whole game. A person whom you could look up to for honest advice is everything. A mentor doesn’t have to be an investor in your business but somebody who keeps the founders sharp, honest, and on track.
Don’t focus on the closed door:
The second-mover advantage is often overlooked in the industry. While the first-mover advantage is great. You have less competition and fewer entry barriers and can enjoy customers’ undivided attention. However, it also means that as a first business, you will spend most of your resources on educating the customers and promoting your products or services. So, being a second-mover isn’t that bad either and should be tried.
Know your options:
Acquiring funding from external investors at a valuation means you don’t have complete control over the business, revenue, or profits. You will have to hear their suggestions, and you are answerable to the stakeholders. Bootstrapping is the way to go if you aren’t ready for this.
Stay open-minded:
Last but not least- investors invest in a person before investing in a company. If you are arrogant, not receptive to the questions or feedback, or fudge the numbers on the balance sheet, you can stop expecting to find your name in the funding database.
If you are sure your business can surpass all these challenges, your chances of getting funded and raising capital exponentially increase. Unless you are featured in Shark Tank and can talk to the investors directly, a funding database can be the ultimate companion for finding potential growth and venture investors. Since many start-ups or some businesses have founders with little to no experience and no track record of entrepreneurship, acquiring funding becomes a mammoth task for them.
Types of Funding:
If bootstrapping your start-up or business isn’t working out anymore, securing funding can take your business to the heights you have always wanted. However, it is of utmost importance before you move down that road you understand the types of funding available to you:
Equity Financing:
When an investment is made in lieu of a part of ownership in the company, it is called equity financing. This can affect existing investors’ financial interests and your ability to reach other potential investors.
Debt Financing:
The same good ol’ borrowing money from the investors as a loan. This is done only when the investors have assessed the abilities of an entrepreneur to repay them.
Lease Financing:
Financing in lieu of some equipment, machinery, or commercial vehicles is known as lease financing. It is quite a popular financing model with small and medium industry businesses.
Royalty Financing:
The investors or royalty holders offer money, and the business must pay the agreed-upon part of its revenues till the principal amount with interest is recovered.
Once you have figured out how much funding is required and explored what type of funding is best suited for your business needs, let the BizProspex global funding data do its magic!
How BizProspex global funding data can help your business to take off?
The company funding information and data are challenging to acquire, and while the knowledge is in the public domain, it is often inadequate, scattered, inaccurate, and all over the place. To secure funding, mitigate financial risks, get investors’ confidence, and make informed decisions, turn to BizProspex’s funding database.
BizProspex’s intuitive data analysis and aggregation help entrepreneurs find relevant data in one place and connect with the right type of investors per the business’s needs.
The company funding information in the funding database helps them narrow the investors according to their financial needs. Whether they seek active participation from the investors in terms of advice, feedback, and suggestions to grow their business or just money, structured data and capital to secure business funds are just a few clicks away.
Funding database services provided by BizProspex are tailor-made and customized to your business’s needs. If you don’t want to reach out to the VC firms and investors who have invested in your competition, you can get that information and avoid conflict of interest. It is not always a limiting factor but always an enlightening one.
BizProspex offers company funding data that lets you analyze where your competition stands in terms of cash flow and the type of funding available to it. Based on that, you can continually formulate your funding strategy and approach investors. The funding data isn’t just to secure money but is an invaluable tool to navigate and explore the market landscape. Equipped with artificial intelligence and machine learning models, the funding data offers revenue-based, industry-specific marketing insights to help businesses understand the market and challenges that come along with it.
There is more. Many VC firms and angel investors are known for being entrepreneur-friendly in the community and have been actively investing in pre-seed and seed-stage start-ups with high growth potential. Since global funding data also compiles information on companies that have attracted funding from investors in their domain, it is the perfect kickstart to find business opportunities to network and collaborate with companies that can use your services or products to grow. A win-win!
Elevate your funding strategy, make informed decisions, and mitigate your financial risk by harnessing the power of funding data. Request your industry-based funding data sample here and take your first step towards being a viable business. You can also schedule a demo call with the BizProspex team here to learn more about funding data.