India is witnessing a start-up boom. But many entrepreneurs even today are deterred by a plenty of misinformation about funding. Even investors willing to invest in startups get discouraged by some traditional beliefs surrounding investment philosophies.
This article will throw light on 4 myths that influence startup investment philosophies. The reality of start-up investing is very opportunistic and optimistic. Lets us break some of these myths in the following lines:
Myth 1: The whole funding thing is bogus because the raised amount goes towards extravagant office setup and for buying sports car for the founders
Founders can’t just buy sports cars and go drifting on highways while their competitor takes away their market share. Although I understand the reasons why most people believe this really happens, it seems very ridiculous to even imagine it. In reality, founders of startups are more than willing to use the raised amount for staffing, facilities and marketing. They have to scale their business. They also have an obligation to answer their shareholders.
Myth 2: Getting funded by an “A-list” firm is key
It’s really not at all necessary to beg for big Venture Capitalists to be a part of your startup. In the end, money is money. It is more important to find investors who believe in your ideas and they value your efforts more than anything.
Myth 3: Everyone has an equal shot at getting funded:
Well in reality not every startup has an equal shot of getting funded. The investors look at numbers, company’s potential and also whether the startup will sustain the unforeseeable dynamic world or not. It really matters who you know, what is your background and your connections. Investors want to invest in startups whose founders have got an unbiased advantage over others because they know what an individual with a good background & big connections can bring to the table.
Myth 4: You only need a venture-capital partner for funding for start-ups
There are many ways to finance your startup. You can raise loans from banks and other financial institutions, provided you have the capacity to repay the loan. Then we have Revenue Based Financing (RBF). Revenue based financing (RBF) allows Indian businesses to raise funds based on their projected revenues. The other alternative is Invoice discounting, which allows businesses to fulfill their financial needs by using their unpaid invoices.
These myths still surround the startup segment. Startup founders & investors must look beyond these myths so that they can bring more funds under their roof and also have an advantage over others to endure in the game for a long period of time.
We at Convey Connect have a dream to revolutionize the startup ecosystem by connecting early stage startups with High Networth Individuals (HNIs). If you’re aspiring to raise funds for your startup or you’re willing to invest in these early startups then contact us ASAP.