You may have planned for a startup or want to take your new startup to great heights. But without sufficient capital, achieving this objective is simply impossible. You do need finances and hence wish to approach potential investors. But some investors might not show interest in investing in your startup. You need to understand the reasons. There are a few telltale signs that might show that your business is not suitable for investment. No one would like to lose their precious money on purpose!
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Reasons for Investors to not show interest in Investing in your startup
1. Lack of trust in you and/or your abilities:
It could be that investors are not confident in your abilities or simply lack trust in you as an entrepreneur. You may not sound convincing to them the reason they might just back out. No investor would like to invest if they are unable to trust your leadership skills, judgment or character.
2. Lack of proof of potential success:
If you are just planning to start a business, then you are not likely to have any proof of success. Have you ever run any successful campaigns? Did you manage to launch before a startup? You need to qualify those tests for your potential investors to display Risk Tolerance. You need to show them that their money is safe and will work hard to provide them with the desired returns.
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3. Your team members fail to work together:
Your startup team members or co-founders might bicker constantly. If this is the case then, you will have trouble trying to get capital for your startup. No investor would like to invest in any setup where colleagues fail to get along!
4. Inexperienced team:
Team members might not lack the kind of experience that is otherwise required to operate smoothly a startup. Perhaps, your idea is good, and you have the capability to become a successful entrepreneur, but your team might demotivate the financer. They will find it better to invest in Mutual Funds than in your startup to make money.
5. Not having a solid business plan or model:
You need to explain to your financer where and how you desire to take your business in the coming years. There could be good interest among the public in your region for your products or services. Hence, what you require is a well-devised business plan to source precious capital.
6. Hiding information:
Risk Tolerance starts with being open in the plans and not hiding any vital or even trivial details. Remember, the financier needs to know everything concerning your startup. At least let them be aware of the basics that make the startup click.
7. Not having belief in your developing the product:
It is good to have a great idea. However, it will have to be implemented correctly and made a reality. You need to convince your investor that your product will work in the market. Also, show them some working prototypes. It would be more convincing if your products are being used by a few customers. Let them discuss this with your product manager.
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8. Evidence shows that your startup will earn scant money:
Your service or product might not have many signups or preorders. You need to prove to your investors that people are interested to shelve out money for your products/services.
9. Startup cost is exorbitant:
Perhaps, you consider your new startup to be worth around $10 million. However, in reality, investors might believe it is worth just a tenth of that amount! Trying to figure out your startup’s value can be a tricky aspect. Value is generally based on the company’s potential and past accomplishments. Mutual Funds can be a better option for investors.
Overcome the challenges
Now that are aware of a few reasons, you can undertake several changes to ensure your investors start investing in your startup.
Source: Cosmo Politian