So, what will you do if you can't find VC funding?
Here's how to think about your options especially in a bear market where investors aren't deploying as quickly.
Statistically, only a small percentage of start-ups receive venture capital (VC) funding.
In fact, it's estimated that only one out of every 100 start-ups will receive VC funding, and many start-ups ultimately fail.
Given these odds, it's important for you to consider what you will do if you are unable to secure VC funding.
Photo by Christina @ wocintechchat.com on Unsplash
What will you do?
Entrepreneurs are driven by a desire to make the world a better place, and to reap the economic and social benefits of doing so. They are motivated by the challenge of creating something that has never been done before, the satisfaction that comes with knowing that they are making a difference and the potential wealth that comes too.
If you don’t raise VC funding, none of that changes. You’re still an entrepreneur.
You’re still a builder. You’re still a creator.
However, building a financially successful startup is no easy feat. It requires a tremendous amount of hard work, persistence, and resilience. Even the most successful entrepreneurs experience doubt and anxiety as they navigate the ups and downs of building a company.
If you are unable to secure VC funding, it's important to stay focused and keep pushing forward. Here are a few tactics you can use to keep it moving :
1. Ask yourself honestly; what’s working, and what isn’t?
Take stock. Honestly. Soon you might run out of your own funding and it is possible that you aren’t revenue generating yet. Carry out some analysis, and keep it data driven to avoid bias. Take a step away from the weeds and look inwards.
What have you learnt? What have you proven so far? What customer problems are likely to be monetizable in the short term? There might be a gap in the market but is there a market in the gap? Without bias, what does the data say? What does the data not say? What was the over-arching feedback from investors during fundraising?
Time to make a big decision based on what the data is saying.
2. Optimise for some revenue to cover basic costs
If you are solving a strong enough problem, people are likely to pay for it. At this point, it might be time to attempt the best funding of all; non-dilutive, and sustainable customer revenue.
You might have run your startup for enough time to have some insights that allow you solve a problem painful enough to begin to earn some revenue, no matter how little.
This is not a cure-all solution, because it is unlikely at this stage that you will earn enough revenue to run the business, even in great businesses. But monetisation is a great pulse check that helps and some money is better than no money at all.
3. Keep Your Options Open
Assuming you haven’t moved to building your startup full-time, you want to keep your options open. As an entrepreneur it isn’t always ideal to rely on an early business for your daily survival. It is usually so early and so risky and can sometimes be counterintuitive to its success.
It is one who has eaten and is physically safe and well that can run a business. You want to keep your options open and try to earn income from other sources than the startup. If you haven’t already, begin to explore this. You can freelance, you can keep your day job, explore your options.
4. Turn Your Investor Pipeline Into A Community
It can feel disappointing to have to tell existing and prospective angel investors that you weren’t able to fundraise but it can be an opportunity to demonstrate how you handle difficult situations. Turn investors, customers and supporters you’ve engaged with during the process to ambassadors.
Even if you are unable to secure funding from investors, you can still maintain a relationship with them. Keep them updated on your progress, share your insights, and continue to build relationships with them. They may not invest in your current venture, but they may be willing to support you in other ways, perhaps your next - given they’ve been part of your journey.
5. Keep Building What People Want
There are so many problems to solve in the world and many times the solution you start out with isn’t often the solution that the market wants, is ready for, and is ready to pay enough for it to be a business that you can dedicate your time to. Also founders often fail many times before they stumble on the one that actually works quickly, and is right for the market.
Keep experimenting, and iterating, as cheaply as possible, and with that - it is only a matter of time till you stumble on a pulse of the market, one that’s potentially strong enough as the beginnings of a successful business.
The most successful startups are those that are able to pivot and adapt as they learn more about their customers and their market. Keep testing new ideas, iterating on your product, and gathering feedback from your users. With persistence and dedication, you will eventually find the right formula for success.
The journey of entrepreneurship is one that is ridden with failures. But failure isn’t a bad thing. Failures are just examples of instances where it didn’t work and that’s data. Data to help you better design what will work.
With or without VC funding you are an entrepreneur. Keep building. Keep innovating.
Till next time.
Maria