Startup Financing Challenges and How to Overcome Them


    Finding funding is stressful. Whether you’re starting a business from square one or trying to find funds to push your startup forward, raising capital can be a full-time job.

    For businesses with a short runway, or limited operational timeline, this full-time job can come with crushing stress. Startups and new businesses begin with so much hope, excitement and promise, but the search for capital can be a crushing responsibility that grounds the soaring excitement of starting your own company.

    “Getting in front of the right investors is always a challenge, but even when you do that you’re also competing against a lot of people for the same money,” said Bill Rader, president and CEO of Efferent Labs.

    The type of investor you approach will depend largely on where your company is in its development. Self-funding, for instance, is the first step for most companies, followed by finding angel investors or venture capital firms to back larger funding rounds.

    Regardless of what stage you are in – or how successful you’ve been in raising capital in the past – the best way to find prospective investors is join your business’s community. Rader, who is based in Buffalo, New York, said this is as great way for new companies to get out, start networking, and meet local investors and organizations. Establishing a local foothold can be an important first step for businesses that don’t have a lot of clear funding options.

    “You need to network all the time – not just going to events,” Rader said. “As a startup entrepreneur, you have to be talking to people, constantly, because you just don’t know who’s going … to lead you to the person you’re looking for right now.”

    From here, as your business grows, bigger firms may begin to reach out and take interest in your company.

    The biggest challenge for any startup is finding investors willing to back your business. However, there’s a big difference between finding investors and finding investors that are the right fit for your company.

    Jayna Cooke, founder and CEO of EVENTup, said it’s important for business owners to think about their financing options. It can be tempting to jump at every company that’s interested, but this may not be the best use of time. You need to ask yourself what companies they are investing in and at what stage, Cooke said. This was a lesson she learned while raising capital for her own company.

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