Raising capital as an early stage startup.

Posted by Ventures Online on Fri Oct 09 2020
From Airbnb to Uber, even these now behemoths were once startups looking to raise capital. Yes, the ideas and market timing were impeccable, but the rapid rate at which these businesses were able to ascend was significantly influenced by their ability to raise capital.

The topic of fundraising is an important consideration, or should be, to many founders of startups as it is something that most will have to go through at some stage in the lifespan of their businesses. While different investors follow different strategies and look for different things, below is a list of some of the factors that tend to make startups more attractive in fundraising:

1. Abilities of the founding team — Even a great idea needs a great team to execute it. Things like skills, experiences and backgrounds of co-founders are important to signal the teams capabilities to put plans into action.

2. Business model — Investors generally look to generate returns on any funds they invest in businesses. The innovation has to be able to make money and there should be an effective plan to commercialize it.

3. The size of the market — Commercialization becomes futile without a sufficient market size to adapt the innovation. There needs to be clarity on who is going to buy the product or use the service and how much they are willing to pay for it.

4. Competitive advantage — Investors take careful consideration of the aspects that differentiate your business from current and prospective competitors.

So, aside from taking a deep sigh and asking, “Why didn’t I come up with that,” entrepreneurs should look to the likes of Uber to learn what made them so attractive to those that took a chance on them in their beginnings.