If funding is the fuel to a start-up, then fill your tank enough for the start-up to take off and ensure that it doesn’t crash. Keep in mind though, that several rounds of refueling may be required at different stages in the timeline of a start-up to keep it afloat. Clarity on the requirement and allocation of funds at each stage is imperative. For the number of start-ups that fail due to lack of funds, an equal number of start-ups fail due to over-abundance of those very funds.
Those who believe that start-ups are destined for rapid growth, acknowledge that scalability is the key. Therein lies the difference between a start-up and a business. A start-up is essentially an idea that can quickly be turned into a profitable company. Small businesses which simply do not have a vision or a growth plan to scale can never be termed as start-ups for the same reason. These businesses, although self-sustaining and at times huge in nature, are small in terms of design and therefore deemed non investable. Most investors put their money into ideas and businesses which can be scaled and most start-ups strive for a scalable and high growth business model.
One question that usually escapes the minds of most entrepreneurs today is: Is there anything else I need to do once I have all the funding and market research that I require before I hit the start button? It so happens that attracting top talent and retaining them through the initial months and years is for sure, one of the true catalysts for ensuring success for your start-up. Why is a strong core team indispensable?
A common mistake most entrepreneurs make is misreading competitive advantage for a business plan. As any failed product / company’s review will quickly reveal, the primary reason for not making it was because of some else’s competitive edge that edged everyone else out eventually. For a start-up seeking to blow away and impress potential investors, a viable or sustainable business advantage or competitive edge is what shines through.
For start-ups, cash is always, well, expensive—and elusive. Early stage investors (HNIs, Angels, friends and family, Seed Funds) who are themselves usually investor-evangelists, need a demonstrated, tested and ‘battle-hardened’ concept before parting with funds. Therefore, start-ups and entrepreneurs need to go beyond their great ideas and get down to figuring out and eventually, walking the talk. A proof of concept (PoC) makes you aware of your challenges and the future road-map, thereby, raising the level of confidence of your potential investors in your business idea and team commitment.
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