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Are You Facing These Common Fundraising Challenges?

The process of fundraising and its challenges faced by the businesses continue to haunt start-up owners. Let’s take a look at some of the common challenges faced by new businesses during fundraising.

Prithvi Manjunatha
Common Fundraising Challenges SaaS Founders Face

To say that 2020 changed the way we do business is an understatement. Many businesses shut down for good, whereas a lot more boomed in ways we never expected. But amidst all this, the process of fundraising and its challenges faced by the businesses continue to haunt start-up owners. Let’s take a look at some of the common challenges faced by new businesses during fundraising.

  1. Undefined Target Market

One of the biggest hurdles a lot of businesses run into is not having identified their target demographic. This makes it difficult to lock down whom to address when they run campaigns and ads. If your idea is more B2B oriented, it would be a smarter idea to first identify the biggest competitors in the market in that field and narrow down your investor’s target demographic.

  1. Risky Partnerships

A lack of investment can cause a sense of desperation and might push you to take partnerships that might not be in your best interest. Be it partners who look to exploit you for your ideas or for monetary benefits, never make decisions out of desperation. Always have legal counsel by your side so you have more than one point of view on anything and consult with your existing partners before making a major decision.

  1. Short-sightedness

In business, having a long-term plan can be beneficial. When you have a solid foundation for your company, it helps paint a better picture of your company than words can to your investors. This also helps you look well planned and organized as opposed to someone who’s unprepared to face investors with figures and statistics.

  1. Relying heavily upon donations

While donations are a good source of funding for the company, they’re not the only source. Donations can be unexpected at times and a small amount compared to what would be available by sources such as venture capital firms, and angel investors. Firms can expect a maximum donation of a few thousand dollars whereas venture capitalists’ investments usually range from $500,000 to $50 million.

  1. Lack of interpersonal relationships

Business is run by people and people remember something if you give them something to remember. Be more friendly, follow up on your investors and stakeholders, and meet often with your board of directors to ensure that you don’t have a 9 to 5 relationship. It can even be beneficial to maintain good relationships with your customers and vendors. This is the foundation of brand loyalty. 

  1. Social presence

It’s no surprise that every brand or company has a social media presence.  This is a “two birds with one stone” type of situation. Having an active social media profile for your company and frequently interacting with your customer or stakeholders can give off the impression that you care about their opinions too. It can also be used as a platform to make product-related announcements and to keep your customers up to date.

  1. Multiple donation streams

Sticking to one donation platform is limiting and does not help your company reach as many people as having multiple platforms of donations. Donations from family members and friends can be your primary option but also look into platforms such as AngelList, Kickstarter, Indiegogo, and GoFundMe to name a few. This not only increases your chances of being funded but is also good exposure for your company.

  1.  Lack of story

Keeping it short and sweet is a good option but isn’t always the appropriate one. Your fundraising campaign needs to tell the story of your company and the struggles you’ve had to face to get to this place. It needs to grab the attention of everyone present and make it harder for them to forget about your company.

  1. Finding better partners

Sometimes the people you start a business with won’t last till the end and that’s fine. You can always find new partners with a similar mindset as you to run the business along your side. This can also be a new opportunity for the business to see some new investment and a fresher perspective for creativity. Having creative and like-minded people as your business partners can truly increase your chances of being funded and adds a professional look to your company.

  1.  Money mismanagement

If your investors and stakeholders are unsure about where and how their money is being invested or spent, they would not want to invest further. They might see your business as a dead investment or even worse, a scam. Instead, hire a professional accountant and make it a habit to log all expenses, no matter how small they may be. 

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